Share of U.S. companies in China looking to relocate hits a record high, survey finds
Published On Jan 23, 2025, 1:00 AM
A recently released survey from the American Chamber of Commerce in China revealed that a record 30% of U.S. companies operating in China are considering or have started plans to relocate their manufacturing and sourcing away from China. This marks an increase from the previous high of 24% in 2022. Factors influencing this trend include rising U.S.-China tensions, the impacts of COVID-19, and slow economic growth in China. While India and Southeast Asia are preferred relocation destinations, a notable 18% of companies are also considering returning to the U.S. The majority of companies (67%) reported that they do not plan to diversify their operations. The challenges cited include U.S.-China tensions and competition from local companies. Despite these concerns, many companies remain optimistic about Chinese consumer prospects as a market.
Stock Forecasts
FXI
Negative
The shift of U.S. companies relocating manufacturing outside of China can potentially weaken the Chinese economy further, particularly in sectors dependent on foreign investment. Conversely, companies in the countries these firms relocate to—most notably India and Southeast Asia—may benefit from increased foreign direct investment.
MCHI
Negative
A surge of companies exploring relocation could negatively impact Chinese ETFs and stocks concentrated in the manufacturing sector, indicating further slowdowns in those areas.
INDA
Positive
As global companies diversify away from China, Indian market ETFs may witness an upward trend as they become new focal points for manufacturing, driving investments into such ETFs.
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