Page 12 - SCBJ-201703
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ER STORY 2017 budgets in the reinvestment categories of less than US$250
million. This trend suggests that executives on the ground in South
China have maintained a high level of confidence in the future of
the China market and are investing amounts within their decision-
making ability. Executives at corporate headquarters, however,
appear to be deferring large investments which require their sign-off.
We predict that the cancellation of larger reinvestments in 2016 and
reduced reinvestment budgets for 2017 will translate into reductions
in China’s exports in 2018 and 2019.
The Study also shows China is currently paying the price for a situation
which occurred in 2014, the perceived “targeting” of foreign-invested
enterprises. At the end of 2014, our Special Report, released in March
2015, revealed that 25% of multinationals with existing operations in
China postponed or cancelled their investments of US$250 million
or more. The 2015 Study showed a 9.3% reduction in planned
reinvestments by AmCham member companies; more devastatingly,
the same Study revealed a 16.9% reduction in planned reinvestments
for a three-year period from 2015.
Looking at export numbers for 2016, while total Asian exports (ex-
China) grew by above 7% year on year, China’s exports remained
sluggish at around -7%. Most reinvestments in factories require 2 to 3
years for construction before producing goods. Given that the above-
mentioned postponed or reduced reinvestments would have produced
goods for exports in 2016 - and keeping in mind that more than half
of China’s exports are produced by foreign invested enterprises, it can
be deduced that those investments were shifted to other parts of Asia
from China and are now producing exports for those countries.
10 Opening remark by U.S. Consul General in Guangzhou, Mr. Charles Bennett
million. This trend suggests that executives on the ground in South
China have maintained a high level of confidence in the future of
the China market and are investing amounts within their decision-
making ability. Executives at corporate headquarters, however,
appear to be deferring large investments which require their sign-off.
We predict that the cancellation of larger reinvestments in 2016 and
reduced reinvestment budgets for 2017 will translate into reductions
in China’s exports in 2018 and 2019.
The Study also shows China is currently paying the price for a situation
which occurred in 2014, the perceived “targeting” of foreign-invested
enterprises. At the end of 2014, our Special Report, released in March
2015, revealed that 25% of multinationals with existing operations in
China postponed or cancelled their investments of US$250 million
or more. The 2015 Study showed a 9.3% reduction in planned
reinvestments by AmCham member companies; more devastatingly,
the same Study revealed a 16.9% reduction in planned reinvestments
for a three-year period from 2015.
Looking at export numbers for 2016, while total Asian exports (ex-
China) grew by above 7% year on year, China’s exports remained
sluggish at around -7%. Most reinvestments in factories require 2 to 3
years for construction before producing goods. Given that the above-
mentioned postponed or reduced reinvestments would have produced
goods for exports in 2016 - and keeping in mind that more than half
of China’s exports are produced by foreign invested enterprises, it can
be deduced that those investments were shifted to other parts of Asia
from China and are now producing exports for those countries.
10 Opening remark by U.S. Consul General in Guangzhou, Mr. Charles Bennett
