SHANGHAI: Shanghai’s lengthy Covid-19 lockdown pushed a quarter of US firms in the city to cut investment plans and nearly all to drop revenue forecasts, a business group said Wednesday.
The downbeat findings of the American Chamber of Commerce (AmCham) Shanghai survey were the latest sign of the impact of virus controls in China—the only major economy still pursuing a zero-Covid strategy, using lockdowns and mass testing to eliminate all outbreaks.
But such measures left its biggest city Shanghai sealed off for around two months, with a shortage of truckers leaving goods piled up at its port and business closures battering firms.
Over 90 percent of US companies in the metropolis surveyed by AmCham Shanghai have cut their revenue projections for the year, the group said in a report on Wednesday.
The survey of 133 companies also found a quarter were expecting revenues to be more than 20 percent lower than projected.
Nearly 25 percent of companies surveyed have cut investment plans, AmCham Shanghai said.
The commercial hub of 25 million people was closed in sections from late March, when the Omicron variant fuelled China’s worst Covid outbreak in two years.
Signs of resentment and anger emerged throughout the lockdown, with some residents struggling to receive fresh produce or access non-Covid medical care.
Although authorities drew up a “white list” of companies that could continue production, this was generally with limitations to minimise virus spread and many smaller firms continued to grapple with restrictions.
AmCham said around a quarter of manufacturers surveyed were speeding the localisation of their China supply chains while moving production of global goods out of the country.
As of early June, only 35 percent of the manufacturers polled were operating at full capacity and close to three-quarters of all firms surveyed had yet to enjoy economic support measures since Shanghai’s lockdown.
AmCham Shanghai president Eric Zheng said the lockdown’s impact on businesses has been “profound”.
“The Shanghai government must act quickly to ensure unhindered supply chains, logistics and worker mobility and to accelerate the provision of financial support to businesses,” Zheng said.
This week, analysts at Fitch ratings downgraded China’s growth predictions for the year to 3.7 percent based on “the cautious pace at which pandemic-related restrictions have been eased”. This would be far below China’s target of around 5.5 percent full-year growth.
