Outgoing US business leaders warn of exodus of expats from China – Community News
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Outgoing US business leaders warn of exodus of expats from China

The head of a leading US business lobby group 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 stays and reduced visas for business people and their families.

The rules have been credited with helping to quell coronavirus outbreaks and reduce the death toll from the pandemic. But a worsening outbreak of the Delta coronavirus variant has led to a return to local lockdowns and travel bans after spreading to two-thirds of China’s regions.

With no exit strategy formulated, and reopening like the rest of the world, US business leaders have warned Beijing that it threatens to accelerate the outflow of foreigners from China.

Ker Gibbs and Alan Beebe, the presidents of the US chambers of commerce in Shanghai and Beijing respectively, are among a growing number of businesspeople in China who will be leaving their jobs in the coming months.

“China has developed rapidly thanks to the hard work and entrepreneurial spirit of the Chinese people, [but] it’s also true that openness to the outside world played an important role,” said Gibbs, a veteran of China’s business who left his position ahead of schedule.

“By allowing foreign capital, ideas and management expertise into China, the country accelerated its transition into one of the world’s most important and advanced economies,” he said.

A recent survey of 338 AmCham Shanghai member companies in China found that more than 70 percent struggled to attract and retain foreign talent with the main problem being “Covid-related travel restrictions”.

“It’s been extremely difficult to get business leaders — and their families — in and out of China since the global pandemic began,” Gibbs said.

Severe quarantine protocols, including rare episodes of mothers being separated from their children, have further alarmed some expats. The abolition of preferential tax treatment enjoyed by foreigners for decades and the rising cost of living in Chinese cities were also cited as major concerns.

Aside from fewer expats in China, there is “almost a complete drop-off of foreign students,” another blow to the “people-to-people exchanges” that have been a major pillar of US-China diplomacy for decades. he said.

Beebe could not be reached for comment.

Fears that the travel restrictions could last until the end of 2022 have added to uncertainty for many.

Foreign spectators are not allowed at the Winter Olympics in February. Many businessmen now expect China to prioritize strict security — then sealing its borders — ahead of a key party congress late next year, when Xi will take up a historic third term as Communist Party general secretary.

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

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

Still, a series of outbreaks of the highly contagious Delta strain in recent weeks has hampered the outlook. Parts of several northern cities, including Beijing, have been shut down, raising concerns among officials ahead of the Winter Games.

One such case is attributed to a single person who returned from a domestic trip to Beijing and spread the virus while playing mahjong, officials said. Foreign language tests were among the events canceled in the Chinese capital last week.

Companies are also struggling to retain foreign workers in Hong Kong due to tight pandemic controls. The number of U.S. companies using the city as regional headquarters is down 10 percent this year to 254 compared to 2020, an 18-year low.

Another sign of the mounting pressures facing international business in China has forced the US Chamber of Commerce in Southwest China, which is based in Chengdu, to suspend operations in recent months.

Chinese officials in August mentioned a rule whereby each country can only have one registered chamber to justify the shutdown.

The US 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 by Emma Zhou in Beijing

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