Page 9 - 2021 White Paper
P. 9
The American Chamber of Commerce in South China
other legacies of COVID-19 will shape global growth context of reduced public spending and elevated
for years to come. Some are already discernible. The debt, institutional reforms to spur organic growth are
takeover of factory and service jobs by robots will particularly important.
advance, while white-collar workers get to stay home
more. There’ll be more inequality between and within According to the results of the AmCham South China’s
countries. Governments will play a larger role in the 2021 Special Report, our annual State of Business Study,
lives of citizens, spending—and owing—more money. the opportunities outweigh the challenges. As the first
Nevertheless, policy makers must move decisively. major economy to show a recovery, China has successfully
Although the world economy is already growing again navigated the extreme hardship brought by the COVID-19.
following the 4.3% contraction of 2020, the pandemic AmCham South China members have withstood the impact
caused a heavy toll of deaths and illness, plunged to various degrees. While a combination of factors including
millions into poverty, and may depress economic activity the coronavirus pandemic severely impacted the global
and incomes for a prolonged period. To overcome the economy in 2020, only a slight decrease in reinvestment
impacts of the pandemic and counter the investment from profits in China was realized, with 17% of the studied
headwind, there needs to be a major push to improve companies having reduced their reinvestment quota in
business environments, increase labor and product 2020 in China compared with 2019. Factors including huge
market flexibility, and strengthen transparency and market potential, preferential policies and uncertainties
governance. China’s economy is expected to expand by of pandemic in other countries, have whetted companies’
7.9% in 2021 following 2% growth last year. Excluding interest to increase investment in China or shift investment
China, emerging market and developing economies to China. Furthermore, a vast majority of companies still have
are forecast to expand 3.4% in 2021 after a contraction expansion plans in China in the next three years. Nearly all
of 5% in 2020. Among low income economies, activity is the studied companies express their willingness to stay in
projected to increase 3.3% in 2021, after a contraction China despite US-China trade friction. Compared to the
of 0.9% in 2020. According to the United Nations and previous year, more companies firmly believe that they will
the World Bank, the pandemic is expected to leave long see further improvement in US-China relations in 2021.
lasting adverse effects on global activity with a likely American business has obviously not given up on China. Our
slowdown in global growth stretching through the next governments must get back to the table immediately for a
decade, due to underinvestment, underemployment, new Phase II deal. As Henry Ford once said, what is good for
and labor force declines in many advanced economies. business is good for America.
The global economy could be heading for a decade An interesting finding of the 2021 Special Report is
of growth disappointments unless policy makers the direct connection between the reduced number of
put in place comprehensive reforms to improve the expatriate executives in China and the massive reduction
fundamental drivers of equitable and sustainable in the number of very large planned reinvestments.
economic growth. Policymakers need to continue to While total dollar amount of budgeted reinvestments
sustain the recovery, gradually shifting from income has held steady due to the increase in number of large,
support to growth-enhancing policies. In the longer medium and small reinvestment projects (between 1
run, in emerging market and developing economies, million and 250 million US dollars each), the number
policies to improve health and education services, of very large foreign planned reinvestment projects
digital infrastructure, climate resilience, and business involving 250 million US dollars or more each have
and governance practices will help mitigate the reached the lowest levels in several years (a 4/5th
economic damage caused by the pandemic, reduce reduction year on year for all foreign companies and
poverty and advance shared prosperity, while in the nearly 3/4th for US companies). We predict that this will
9
other legacies of COVID-19 will shape global growth context of reduced public spending and elevated
for years to come. Some are already discernible. The debt, institutional reforms to spur organic growth are
takeover of factory and service jobs by robots will particularly important.
advance, while white-collar workers get to stay home
more. There’ll be more inequality between and within According to the results of the AmCham South China’s
countries. Governments will play a larger role in the 2021 Special Report, our annual State of Business Study,
lives of citizens, spending—and owing—more money. the opportunities outweigh the challenges. As the first
Nevertheless, policy makers must move decisively. major economy to show a recovery, China has successfully
Although the world economy is already growing again navigated the extreme hardship brought by the COVID-19.
following the 4.3% contraction of 2020, the pandemic AmCham South China members have withstood the impact
caused a heavy toll of deaths and illness, plunged to various degrees. While a combination of factors including
millions into poverty, and may depress economic activity the coronavirus pandemic severely impacted the global
and incomes for a prolonged period. To overcome the economy in 2020, only a slight decrease in reinvestment
impacts of the pandemic and counter the investment from profits in China was realized, with 17% of the studied
headwind, there needs to be a major push to improve companies having reduced their reinvestment quota in
business environments, increase labor and product 2020 in China compared with 2019. Factors including huge
market flexibility, and strengthen transparency and market potential, preferential policies and uncertainties
governance. China’s economy is expected to expand by of pandemic in other countries, have whetted companies’
7.9% in 2021 following 2% growth last year. Excluding interest to increase investment in China or shift investment
China, emerging market and developing economies to China. Furthermore, a vast majority of companies still have
are forecast to expand 3.4% in 2021 after a contraction expansion plans in China in the next three years. Nearly all
of 5% in 2020. Among low income economies, activity is the studied companies express their willingness to stay in
projected to increase 3.3% in 2021, after a contraction China despite US-China trade friction. Compared to the
of 0.9% in 2020. According to the United Nations and previous year, more companies firmly believe that they will
the World Bank, the pandemic is expected to leave long see further improvement in US-China relations in 2021.
lasting adverse effects on global activity with a likely American business has obviously not given up on China. Our
slowdown in global growth stretching through the next governments must get back to the table immediately for a
decade, due to underinvestment, underemployment, new Phase II deal. As Henry Ford once said, what is good for
and labor force declines in many advanced economies. business is good for America.
The global economy could be heading for a decade An interesting finding of the 2021 Special Report is
of growth disappointments unless policy makers the direct connection between the reduced number of
put in place comprehensive reforms to improve the expatriate executives in China and the massive reduction
fundamental drivers of equitable and sustainable in the number of very large planned reinvestments.
economic growth. Policymakers need to continue to While total dollar amount of budgeted reinvestments
sustain the recovery, gradually shifting from income has held steady due to the increase in number of large,
support to growth-enhancing policies. In the longer medium and small reinvestment projects (between 1
run, in emerging market and developing economies, million and 250 million US dollars each), the number
policies to improve health and education services, of very large foreign planned reinvestment projects
digital infrastructure, climate resilience, and business involving 250 million US dollars or more each have
and governance practices will help mitigate the reached the lowest levels in several years (a 4/5th
economic damage caused by the pandemic, reduce reduction year on year for all foreign companies and
poverty and advance shared prosperity, while in the nearly 3/4th for US companies). We predict that this will
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