Business

Shanghai lockdown continues to weigh on US businesses

A quarter of American companies in Shanghai are reducing their investments and almost all expect a drop in their revenues this year, according to a study published on Wednesday, which underlines the deleterious effect on the economy of the containment of the metropolis.

China’s economic capital was completely locked down for two months in April, in response to a nationwide outbreak, the most virulent since 2020.

The shutdown of the city has paralyzed local activity and, by extension, that of the world’s second-largest economy. Many multinationals are established in Shanghai.

Despite a general recovery in activity in early June, 25% of American companies are revising their investments downwards for the year, according to the American Chamber of Commerce (AmCham) in Shanghai.

In a survey of 133 companies, more than 90% said they expected a drop in turnover this year.

The long confinement had “a profound impact” on the activity of the firms surveyed, notes the president of the American Chamber of Shanghai, Eric Zheng, calling on local authorities to “restore confidence” in the business community.

At the beginning of June, only 35% of American companies surveyed were operating at full capacity despite the lifting of the containment, according to the Chamber.

China is the last major world economy to maintain a zero Covid strategy, which is based on the quarantine of people who test positive, targeted confinements or even mandatory PCR tests.

Firmly defended by President Xi Jinping, this health policy has serious repercussions on the economy, with many businesses closed, factories operating at idle and production chains very disrupted.

Arguing about the weight of health restrictions, the rating agency Fitch lowered its growth forecast this year for the second world economy to 3.7% on Tuesday.

This figure is well below the 5.5% target set by Beijing, in a politically sensitive year that should see Xi Jinping reappointed as head of the Chinese Communist Party (CCP) in the fall.

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