A record percentage of U.S. companies in China are accelerating their plans to relocate manufacturing or sourcing, according to a business survey released Thursday.
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Around 30% of respondents considered or initiated such diversification in 2024, surpassing the previous peak of 24% in 2022, according to annual surveys from the American Chamber of Commerce in China.
That figure also exceeded the 23% recorded in 2017, when U.S. President Donald Trump first took office and began increasing tariffs on Chinese goods.
Beyond U.S.-China tensions, another major factor driving relocation is the impact of Covid-19, said Michael Hart, the Beijing-based president of AmCham China. “One of the biggest triggers was how China shut itself off from the world during Covid,” Hart told reporters Thursday. “That’s when companies realized they needed to diversify their supply chains. I don’t see that trend slowing down.”
During the pandemic, China implemented strict international travel restrictions and regional lockdowns in an effort to contain the virus.
While India and Southeast Asia remain the top destinations for shifting production, 18% of respondents considered relocating to the U.S. in 2024, up from 16% in the previous year, the survey showed.
Still, most U.S. companies are not planning to diversify. Just over two-thirds (67%) of respondents said they were not considering relocating manufacturing, though this was a 10 percentage point decline from 2023.
The latest AmCham China survey, conducted between Oct. 21 and Nov. 15, included 368 members. Trump was re-elected U.S. president on Nov. 5.
This week, Trump reaffirmed his plan to impose a 10% tariff hike on Chinese goods, with duties potentially taking effect as early as Feb. 1. His stance follows an increasingly tough U.S. approach to China. The Biden administration had framed U.S.-China relations as a strategic competition and imposed sweeping restrictions on Chinese firms’ access to high-end American technology.
More than 60% of survey respondents identified U.S.-China tensions as the biggest challenge for doing business in China in the coming year. Competition from local state-owned or privately owned Chinese companies ranked as the second-biggest challenge for U.S. businesses operating in the country.
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