AmCham South China Study - Business Confidence in China Rising, Increases in Investment Plans Observed

GUANGZHOU, China, Aug. 2, 2023 /PRNewswire/ -- The American Chamber of Commerce in South China (AmCham South China)  released its 2023 Mid-Year Report on Impact of COVID Policy Change. The study shows slow but steady improvement in business sentiment, investments, and activities in the first half of 2023.

Dr. Harley Seyedin, President of AmCham South China, winner of 2017 Oslo Business for Peace Award (together with Elon Musk, Durreen Shahnaz and Murad Al-Katib), which is awarded by an Award Committee of Nobel Laureates in Peace and Economics, said, "Our study shows China is on the road to slow but steady recovery and, as in the past, will be a major contributor to the global economic growth."

The Mid-Year study offers a comparison of data with AmCham South China's annual study, the 2023 Special Report on the State of Business in South China, released earlier this year on February 27. The gathering of data for the annual study had been completed by December 15, 2022, shortly before China ended its "Zero-COVID" policy. Therefore, that data had not been impacted by immediate emotional reaction to the policy change. As a result, this Mid-Year study offered us a unique opportunity to assess decisions made by businesses impacting various aspects including revenues, business operations, reinvestment plans, and business environment within the six months after the change in the Zero-COVID Policy. Both publications are available at http://www.amcham-southchina.com/amcham/static/publications/publications.jsp

The 2023 Mid-Year Report paints a hopeful picture of business operation in China, with 92% of the companies studied reporting full or partial recovery. Nearly half of companies experience significant or slight increases in revenue in the first quarter of 2023, including 64% of Chinese companies and 38% of American companies. 45% of American companies experience 1% to 15% revenue losses caused by cancellation and relocation of orders in the second half of 2022 due to expectations that the Zero-COVID policy would continue into 2023. American losses were higher than that of Chinese and other companies.

After the abandonment of "Zero-COVID" policy, China's economy has been on track to recovery as impacts from the pandemic has continued to gradually wane and consumer market continues to slowly bounce back. China's second-quarter gross domestic product released on Monday July 17, 2023, by China National Bureau of Statistics (NBS) showed growth at 6.3%. GDP grew at a 0.8% pace from the first quarter, slower than the 2.2% quarter-on-quarter pace reported in the first quarter. NBS statistics show a slower than expected but steady growth, which is also reflected in the AmCham South China's 2023 Mid-Year Study.

60% of companies remain positive towards the business outlook in China, including 57% of American companies. U.S. businesses show stronger confidence in the Chinese market, up by 4% compared with the sentiment prior to China's reopening. While 75% of American companies expect no change in their budgeted reinvestment plans, 25% plan to increase their reinvests in various size projects. This includes a 1% increase in reinvestment plans for projects involving US$250 million or more. This proportion was zero at the end of 2022 before China ended its "Zero-COVID" policy.

Key Takeaways of the 2023 Mid-Year Report on Impact of COVID Policy Change:

• An overwhelming majority (92%) of the companies have somewhat or fully recovered from the pandemic, with 56% reporting partial recovery and 36% reporting full recovery. Large-sized companies lead the recovery at 96%, while small and medium-sized enterprises follow at 89%. Chinese companies report full or partial recovery at 100%, followed by American companies at 93%.
• Of the companies that still suffer from the impact of COVID-19, 27% expect to recover in the last quarter of 2023, while a fifth expect to recover either in the first quarter of 2024 or after 2024.
• Compared with 2022, there is significant improvement in companies' business operation in China in 2023. Nearly half (49%) of the companies studied experienced significant or slight increases in revenue, up by 16% compared with last year.
• Overall, nearly all companies have experienced positive impacts on their operations due to change in COVID policy.
• While about two-thirds (68%) of companies expect no change in their budgeted reinvestment plans, 32% of companies plan to increase investment in projects of different scale, including 8% of Chinese companies and 2% of American companies that plan to increase investment in major projects worth over US$50 million.
• Compared with the sentiment before China's reopening, American companies show greater confidence in the business outlook in China. More than half (57%) stay optimistic towards the Chinese market, up 4% from the results of the Special Report on the State of Business in South China released on February 27 this year.
• Almost half (49%) of the studied companies state that the overall business environment in China has greatly improved or somewhat improved compared with the past three years (2020-2022).
• 79% of companies consider the adjustment of visa and entry policies as "very helpful" or "somewhat helpful".

2023 Mid-Year Report on Impact of COVID Policy Change

The 2023 Mid-Year Report on Impact of COVID Policy Change is a quantitative study of decisions made by businesses impacting various aspects including revenues, business operations, reinvestment plans, and business environment, within the six months after the change in the "Zero-COVID" policy. AmCham's member and non-member companies participated in AmCham's State of Business study, results of which were garnered and edited into a separate publication. This report provides constructive suggestions for enterprises in terms of future development strategy and investment layout in the post-pandemic era.

This document can be downloaded from the chamber's website at
http://www.amcham-southchina.com/amcham/static/publications/specialreport.jsp

About the American Chamber of Commerce in South China

The American Chamber of Commerce in South China (AmCham South China) is a non-partisan, non-profit organization dedicated to facilitating bilateral trade between the United States and the People's Republic of China. Accredited in 1995 by the US Chamber of Commerce in Washington DC, AmCham South China represents more than 2,300 corporate and individual members, is governed by a fully-independent Board of Governors elected from its membership, and provides dynamic, on-the-ground support for American and international companies doing business in South China. Over the past decade, AmCham South China has hosted on average each year more than 10,000 business executives and government leaders from around the world at its briefings, seminars, committee meetings and social gatherings. All AmChams in China are independently governed and represent member companies in their respective regions.