A health worker takes a swab sample from a man to be tested for Covid-19 coronavirus at a makeshift testing site along a street in Beijing on May 7, 2022. (Photo by JADE GAO/AFP via Getty Images)
By Dorothy Li
A top business group warns China’s zero-COVID policy has made European companies weigh a shift of investment out of China.
The strict COVID lockdown and supply chain disruptions have rattled business confidence, according to a survey by the European Chamber of Commerce in China published on May 5.
“Our members are weathering the storm for now, but if the current situation continues, they will increasingly evaluate alternatives to China,” said Jorg Wuttke, the chamber’s president.
“A more expensive, functioning market is better than one that is relatively cheaper but paralysed,” Wuttke said.
Some 92 percent of businesses responded to the survey saying they had been impacted by recent port closures, a decline in road freight, and rising sea freight costs.
Nearly a quarter of the 372 respondents were considering moving current or planned investments out of China, more than double the number at the beginning of the year and marking the highest proportion in a decade.
About 60 percent of businesses have cut their business revenue projections this year, while nearly a third said they had cut staff levels.
Workers mark a perimeter around a neighbourhood under a Covid-19 lockdown in the Jing’an district in Shanghai on May 4, 2022. (HECTOR RETAMAL/AFP via Getty Images)
The survey, conducted in late April, is one of the few indicators of business sentiment over Beijing’s heavy-handed COVID control measures.
The Chinese regime’s determination to eliminate the virus through lockdown and mandatory quarantine has brought major manufacturing and tech hubs to a halt. As of May 3, 43 cities are under full or partial lockdowns or have implemented district-based controls, which involve strict mobility restrictions for local residents, according to Nomura.
There is no sign that the regime will change its course. The lockdown in the financial center of Shanghai has entered the second month. The capital city of Beijing is stepping up COVID curb measures, with about 15 percent of subway stations closing on May 4.
In a recent interview with a Swiss news outlet, the top European business community’s president said the Chinese Communist Party leaders have become “prisoners of their own narrative” after declaring their handling of the pandemic as being “much better than the decadent West.”
Domestically, many experts and economists have also expressed concerns about the expensive policy, to which the regime often responded with censorship. A prominent market strategist Hao Hong got his social media accounts blocked earlier this month after he warned of the economic impacts of the lockdown and the capital outflow from China.
Reuters contributed to this report.