A quarter of US companies in Shanghai have cut their investments and nearly all expect a drop in their income this year, according to a study published Wednesday that notes the effects of confinement in the great Chinese city.
China’s economic capital and most populous city has been closed for nearly two months due to the worst Covid outbreak on record in the country since the first wave of the pandemic in 2020.
This blockade has paralyzed local economic activity, headquarters of several multinational companies that, according to the American Chamber of Commerce in Shanghai, are adjusting their forecasts for this year.
According to a survey of 133 subsidiaries, 25% have revised their planned investments downward, and more than 90% are preparing for lower turnover.
Eric Cheng, president of the chamber, said the prolonged shutdown had had a “profound impact” on the activity of the companies surveyed, and called on local authorities to “restore confidence” in business.
China is the last major global economy to maintain a “zero COVID” strategy against the epidemic, which consists of imposing restrictions, extensive testing, and quarantining those present to stem the spread of the virus.
This policy advocated by President Xi Jinping has an impact on the economy: Rating agency Fitch lowered its growth forecast for China in 2022 to 3.7% on Tuesday, far from the 5.5% target set by Beijing.
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