U. S. corporations in China are confident that relaxing the country’s strict zero-covid-19 policies will pave the way for trade improvement, U. S. Chamber of Commerce President Michael Hart said Thursday in an interview from Beijing.
“Most of our member companies are now pretty confident that the effect of Covid itself will be quite short-lived: one to three months, and it will be over,” Hart said via Zoom. “Everyone is very happy that flights are open and that the quarantine (upon arrival) is over. “
Uncertainty about the speed of a recovery in customer spending in the world’s second-largest economy remains as Covid-19 cases continue to spread. “It’s still an unanswered question about how customer spending will recover. I think it’s going to take a little while, probably not in the first trimester,” Hart said. relationships, he said.
The Beijing-based American Chamber of Commerce in China has only about 1,000 members, making it one of the largest foreign trade teams in the country. Members come with Boeing, Merck, Apple, Intel and KKR. Below are edited excerpts from interviews.
Flannery: How do you measure the effect of the easing of the zero covid policy for US companies?
Hart: People have liked China’s predictability. With the zero covid policy, there was no predictability. It was very disturbing due to constant testing, constant adjustments, and the inability to travel within the country. People didn’t like it.
On the one hand, U. S. companies are not allowed to do so. The U. S. is very pleased that zero-Covid is over, but the update has been a bit shocking: everyone is getting used to it.
Another detail is Covid itself, for its sweep. Our workforce went from 0% to 40% positive in about 4 days; Then, in a week or so, 60%, and in 10 days, 80%. Now, more than 80% of our staff has gone through Covid.
Most of our member companies are now pretty confident that the effect of Covid itself will be short-lived: one to three months, and it will be over. Everyone is satisfied that flights are open and quarantine is over.
Michael Hart, President of the American Chamber of Commerce in China
Flannery: What does this mean for investing?
Hart: We warned the Chinese government that FDI (foreign direct investment) will not return as soon as flights open. And what we hear is that flights may not return (much) until March. Many U. S. airlines already have their planes on other routes. Chinese airlines will increase faster.
Flannery: What will FDI do?
Hart: Normally, I would say it’s potentially a two-year process: there’s an interest in investing, then due diligence and then establishing the actual investment. The big (downward) impact will take position next year, when we will have spent 3 full years since the beginning of Covid.
Flannery: Many U. S. corporations target Chinese customers. What is the result of the recovery in customer spending?
Hart: That’s an attractive query. There have been some images over the past two days of visa application lines forming outside the U. S. Embassy. UUyears.
Most young Chinese have never experienced a recession. Because of emerging costs, many Chinese are much more conservative with their money. Overall, there is still an unanswered question about how customer spending will recover. A short time, probably not in the first trimester.
Flannery: It turns out that there is hope for an improvement in overall U. S. -China relations after the Biden-Xi assembly and other events. Do you agree with that and what do those kinds of atmospheres mean for U. S. corporations in China?
Hart: There are positive symptoms in U. S. -China relations. The U. S. and China right now. First, the Biden-Xi assembly laid the foundation for the relationship. Both teams learned that they needed each other, and that’s positive.
Second, there were some meetings last month or early December between working-level government officials. Secretary of State Blinken is scheduled to make a stopover in China in early February. There are plans for Biden to make a stopover in China in 2023. So everything turns out to be going in the right direction.
US President Joe Biden, right, and China’s President Xi Jinping shake hands before their meeting. . . [ ] on the sidelines of the G20 summit, on 14 November 2022, in Nusa Dua, Bali, Indonesia. (AP Photo/Alex Brandon, File)
A more cautious point is that Congress remains pretty bloodless on China. The House sets up a select committee to conduct investigations and (there is) some fear that any company with investments in China could be part of the committee’s work. It is based on what the elected committee does on China. With fireworks over the career of House speakers, perhaps this committee won’t be so aggressive. That’s what came out of the discussions we had with members of Congress (recently). Everyone is a hawk or a super hawk right now in China.
Flannery: Do you have any express expectations of what will come out of the next month of Antony Blinken?
Hart: First, the fact that it’s coming is a smart sign that the U. S. is coming to the U. S. The US is talking to China. La another positive thing is that Ambassador Qin Gang has been promoted to head of the Foreign Ministry. Many American businessmen who knew him love him; they think their recent delight in the United States is likely to be useful. It’s probably a smart thing to have a foreign minister who has a very transparent and sober view of U. S. -China relations in DC.
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