BEIJING — A business survey released Thursday revealed that a record number of U.S. companies in China are expediting their plans to relocate manufacturing or sourcing.
According to the American Chamber of Commerce in China’s annual surveys, around 30% of respondents either considered or initiated diversification in 2024, surpassing the previous high of 24% in 2022. This figure also exceeded the 23% reported in 2017 when U.S. President Donald Trump began his first term and imposed tariffs on Chinese goods.
Apart from U.S.-China tensions, the impact of COVID-19 was highlighted as a significant factor driving this trend. Michael Hart, the president of AmCham China in Beijing, mentioned that the pandemic led to China isolating itself from the world, prompting companies to rethink their supply chains.
During the pandemic, China restricted international travel and implemented lockdowns to contain the virus. Despite India and Southeast Asian countries being the preferred destinations for relocating production, the survey indicated that 18% of respondents considered moving production to the U.S. in 2024, up from 16% the previous year.
While the majority of U.S. companies did not have plans to diversify, with 67% of respondents stating they were not considering relocating manufacturing, there was a 10% drop from 2023.
The survey, conducted from Oct. 21 to Nov. 15, included 368 members. Trump’s re-election as U.S. president on Nov. 5 coincided with the survey period.
Trump recently announced intentions to increase tariffs on Chinese goods by 10%, with potential implementation by Feb. 1. This decision aligns with the U.S.’s tougher stance on China, emphasizing competition and imposing restrictions on Chinese companies’ access to U.S. tech.
Over 60% of respondents identified U.S.-China tensions as the primary challenge for doing business in China in the upcoming year. Competition from local Chinese companies was cited as the second-largest challenge for U.S. businesses in China.
Geopolitical pressures have been compounded by a slowdown in China’s economy, marked by subdued consumer spending post-pandemic. Efforts to stimulate growth and address the real estate downturn were initiated by Chinese authorities in late September.
For the third consecutive year, more than half of AmCham China respondents reported no profits in the country, attributing this to decreased competitiveness compared to other global markets.
The survey noted a doubling in the proportion of companies no longer considering China as a preferred investment destination, reaching 21% post-pandemic levels.
Looking ahead, tech, industrial, and consumer businesses identified growth in domestic consumption as the top business opportunity for 2025. Services firms highlighted Chinese companies expanding overseas as a key opportunity.
Despite challenges, many members remain optimistic about the Chinese consumer market, viewing it as a significant and promising sector.
