Strict COVID-19 management measures in China have overtaken bitter U.S.-China relations as the highest concern of U.S. corporations within the nation, a enterprise foyer stated Monday.

It stated greater than half of its corporations reported the problem as a motive to cancel or delay investments on this planet’s second largest economic system.

“The looming chance that corporations will once more be pressured to partially halt operations on account of lockdowns and the impacts of native controls on shopper demand have undermined confidence within the enterprise surroundings,” the U.S.-China Enterprise Council (USCBC) stated based mostly on an annual survey of 117 member corporations.

China’s economic system narrowly averted contracting within the second quarter as widespread lockdowns and the slumping property sector badly broken shopper and enterprise confidence.

Dangers nonetheless abound as many Chinese language cities, together with manufacturing hubs and widespread vacationer spots, imposed lockdown measures in July after recent outbreaks of the extra transmissible Omicron variant of the coronavirus have been discovered.

Many of the corporations surveyed stated unfavorable results of Beijing’s COVID measures have been reversible, however 44% stated it could “take years to revive enterprise confidence,” USCBC stated.

These insurance policies, persevering with U.S.-China tensions, and “vital market entry boundaries” in China regardless of authorities assurances of equal remedy of overseas corporations, have led to “file ranges of pessimism,” affecting corporations’ choices about provide chains and future investments, the group stated.

Previously yr, 24% of corporations have moved elements of their provide chains out of China, in comparison with 14% within the 2021 survey. Optimism in five-year enterprise outlook for China has dropped from 88% in 2013 to 51% in 2022.

Nonetheless “corporations overwhelmingly stay worthwhile in China,” USCBC stated, with 63% of respondents saying profitability elevated within the final yr.

COVID journey restrictions, cybersecurity guidelines, price will increase, and U.S.-China know-how decoupling have been additionally main issues.