Departing US enterprise chiefs warn of expat exodus from China

Departing US business chiefs warn of expat exodus from China

The head of a leading American business lobby in China has warned of an exodus of Western executives from the world’s largest consumer market as President Xi Jinping tightens coronavirus controls.

As part of China’s strategy to eradicate the coronavirus, Beijing has enforced strict border security for more than 18 months, including three-week quarantine and fewer visas for business people and their families.

The rules are credited with helping to suppress coronavirus outbreaks and lower the death toll from the pandemic. However, a worsening delta coronavirus variant outbreak has led to a return to local lockdowns and travel bans after spreading to two-thirds of China’s regions.

Without articulating an exit strategy and just as the rest of the world is reopening, US business leaders have warned Beijing that the exodus of foreigners from China could be accelerated.

Ker Gibbs and Alan Beebe, the presidents of the American Chambers of Commerce based in Shanghai and Beijing, respectively, are among the increasing number of business people in China who will be leaving their jobs in the coming months.

“China has developed rapidly because of the hard work and entrepreneurship of the Chinese people. [but] It’s also true that opening up to the outside world played an important role, ”said Gibbs, a Chinese business veteran who left his role earlier than originally planned.

“By bringing foreign capital, ideas and management expertise to China, the country accelerated its transition to one of the most important and advanced economies in the world,” he said.

A recent survey of 338 AmCham Shanghai member companies in China found that more than 70 percent had difficulty attracting and retaining foreign talent, with “Covid-related travel restrictions” being the main concern.

“It has been extremely difficult to get leaders – and their families – into and out of China since the global pandemic began,” Gibbs said.

Strict quarantine protocols, including rare episodes of separating mothers from their children, have further terrified some expats. The abolition of decades of tax breaks for foreigners and the rising cost of living in Chinese cities were also cited as major concerns.

Aside from fewer expats in China, there has been an “almost complete decline in foreign students,” another blow to the “people-to-people exchange” that has been a major pillar of US-China diplomacy for decades, he said .

Beebe could not be reached for comment.

Fears that travel restrictions could be extended until the end of 2022 have increased uncertainty among many.

Foreign spectators are not admitted to the Winter Olympics in February. Many businesspeople now expect China to prioritize tight security – and then sealed borders – before a major party conference takes place late next year, when Xi takes on a historic third term as president.

“Given the success of the current containment policy and public support for restricting international travel, it is overwhelmingly likely that China will continue its domestic zero-tolerance policy and strict quarantine requirements for international travel for at least another year,” said Ernan Cui, a Chinese analyst at Gavekal, a consulting firm.

With its locally produced Covid vaccines, China said it had fully vaccinated more than 1 billion of its 1.4 billion population. The country’s official death toll from coronavirus is less than 5,000. This compares to more than 730,000 in the US and 140,000 in the UK.

Still, a number of outbreaks of the highly infectious Delta variant over the past few weeks have made the outlook difficult. Parts of several northern cities, including Beijing, are on lockdown, raising concerns among officials ahead of the Winter Games.

One such case was attributed to a single person who had returned to Beijing from a domestic trip and spread the virus while playing a mah-jong game, officials said. Foreign language tests were one of the canceled events in the Chinese capital last week.

Due to strict pandemic controls, companies are also struggling to keep foreign workers in Hong Kong. The number of U.S. companies using the city as their regional headquarters is down 10 percent this year from 2020 to 254, an 18-year low.

As a further sign of the increasing pressure to which the international business world in China is exposed, the American Chamber of Commerce in southwest China, based in Chengdu, has had to cease operations in recent months.

Chinese officials in August cited a rule that each country can only have a single registered chamber to justify the closure.

The State Department described the move as “just the latest example” of how China’s “opaque, arbitrary regulatory environment is contributing to an investment climate that is increasingly hostile to foreign companies.”

Additional reporting from Emma Zhou in Beijing