Foreign companies are pulling out of China’s weakened markets, demonstrating a clear lack of confidence in the Communist regime’s ability to stabilize the economy and avert a financial collapse.
The South China Morning Post (SCMP) on Monday noted two more big names headed for the exits over the past two weeks:
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U.S. law firm Cleary Gottlieb Steen & Hamilton this week became one of the latest companies to pull out of China, saying that it would close its office in Fortune Financial Center in Beijing’s bustling central business district in July.
Last week, a BlackRock fund forfeited two office towers at Waterfront Place in Shanghai’s premier Lujiazui financial district to Standard Chartered after failing to repay a U.S. $780 million loan that was rolled over for more than a year. The world’s largest asset manager could not find a buyer even after offering a 30 per cent discount.
Law firms and real-estate developers appear to be at the forefront of the exodus from China, but other industries are also considering their options as overall profits slipped by almost 18 percent over the past three years. Some foreign firms are evidently concerned that they cannot lower their prices enough to contend with domestic competitors, a concern made worse by the Chinese government’s tendency to bend the rules in favor of domestic companies.
The SCMP found it easy to measure the size of the foreign exodus by looking at how much office space has suddenly become available in Beijing at cut-rate prices. Foreign companies make up about 20 percent of the market for office space in China’s capital city, and at the end of 2024, over 20 percent of that space had become vacant.
Similar conditions could be seen in the office market for the trade hub of Shanghai, where analysts said 22.1 percent of office space is now vacant. At least ten Chinese cities have passed the “dangerous” threshold of 20 percent vacancy, and the vacancy rate is expected to grow at least 3 percent worse over the coming year. […]
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