In the News: China Resumes Business; Beijing Quarantines Foreigners; and US Companies Profits Fall

Although China is seeing more of its companies and factories up and running again, the business outlook is nowhere near pre-outbreak levels due to the increasingly dire global situation, now officially a pandemic according to the World Health Organization. As a result, Chinese companies that have resumed operations are now facing another wave of business disruption as demand overseas looks set to plummet in the coming days and weeks. According to a Chinese customs survey released on Mar. 7, more than 80% of 2,552 Chinese companies involved in trade have resumed operations. However, export data show that sales abroad in January and February dropped 17.2% year-on-year. 

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Beijing quarantines incoming travelers for 14 days

Beijing has announced that it will quarantine international travelers arriving in the capital city for 14 days. According to local media reports on Mar. 15, a Beijing municipal government official said that all international travelers will be transferred to a central isolation facility for monitoring from Mar. 16. The reports also say that the travelers must cover the cost of the quarantine, although the amount is unclear.

China has seen the number of new coronavirus cases fall significantly in recent days. However, with the situation worsening in other parts of the world, China is increasing its measures to stop cases imported from abroad, which have accounted for the majority of new cases in the country in recent days. People who falsely report or hide relevant health information will also be punished, the Beijing government official warned. As part of the new measure, all inbound international flights scheduled to land at Beijing's new Daxing International Airport have been moved to Beijing Capital International Airport where a special processing area has been set up.

Shanghai also ramped up its airport screening measures on Mar. 7, with customs officials announcing that passengers from seriously affected countries will all be checked for the virus, in addition to existing requirements for such passengers to be quarantined for 14 days. Reuters reported that some passengers have said that they had to wait as long as seven hours at Shanghai's Pudong International Airport. China's growing scrutiny of travelers entering the country has resulted in collateral damage for major conference events. The Boao Forum for Asia, China's answer to the World Economic Forum in Davos, announced on Mar. 9 that the conference, originally scheduled for Mar. 24-27, has been postponed.

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U.S. companies in China report drop in profitability

The American Chamber of Commerce in China (AmCham China) has published its annual Business Climate Survey (BCS) Report, showing the lowest percentage of profitable U.S. companies in China in almost two decades. According to the report published on Mar. 10, the proportion of AmCham China members that described their financial performance as "profitable" fell from 73% in 2017 to 61% in 2019. Around a fifth of surveyed members saw revenues fall in 2019, a significant increase from 7% in 2017.

With input from around half of AmCham China's members, the survey shows growing concern among U.S. companies in China over bilateral China-U.S. relations. Close to a third of members cite bilateral uncertainties as the key reason for delaying additional investments in 2020. China's stagnating economic outlook was also cited as a key reason for companies' pessimistic outlook for their operations. Close to one-in-four companies do not expect their markets to grow in 2020.

Despite the pessimistic outlook conveyed by the report, there is more optimism to be found on the market opening front. The survey, conducted before the phase one trade deal had been signed as well as the coronavirus outbreak, reports 63% of members saying that foreign companies in their industry are treated "equally or preferentially in comparison with local companies." Moreover, half the members said that the investment environment in China improved in 2019, in comparison with 38% the previous year. However, more than half of companies in the technology sector still said that they are treated unfairly. More than half of companies also said that they would increase investment in China if the markets were opened as much as their U.S. equivalents.

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