U.S. and Chinese flags are shown in this illustration from January 30, 2023. Portal/Dado Ruvic/Illustration/File Photo Acquire License Rights
SHANGHAI, Sept 19 (Portal) – Political tensions and a slowing economy are weakening confidence among U.S. companies operating in China, with the number of companies optimistic about their five-year prospects falling to a record low, as a survey published on Tuesday showed.
Even after the end of COVID restrictions that weighed heavily on sales and sentiment in 2022, the share of U.S. firms surveyed optimistic about the next five years of business prospects in China fell, according to American’s annual survey Chamber of Commerce to 52% (AmCham) in Shanghai.
This was the lowest level of optimism since the launch of the AmCham Shanghai Annual China Business Report in 1999.
“Honestly, if there was anything that surprised me about this year’s survey, it was this number,” said Sean Stein, chairman of AmCham Shanghai. “When we conducted this year’s survey, many of the illusions that we would see a sustained recovery in economic growth (post-COVID) had disappeared.”
Tensions between major world powers continued to be a concern for many companies, with US-China tensions cited as the top business challenge by 60% of 325 respondents. This corresponds to the number of respondents who described China’s economic slowdown as a major challenge.
Unease about the transparency of China’s regulatory environment also increased: a third said policies and regulations toward foreign companies had worsened in the past year, although many respondents pointed to U.S. government policies rather than Chinese policies, when asked about pressure to decouple.
The European Union Chamber of Commerce’s position paper “European Business in China,” published later on Tuesday, explained how European companies are already struggling with competing requests from Chinese and Western customers to produce goods that do not have components made in China or the United States or software included.
Businesses have been at the center of deteriorating relations between the two countries for several years. China has criticized U.S. efforts to block China’s access to advanced technology, and U.S. firms have expressed concern about fines, raids and other measures that make doing business in China risky.
Last month, US Commerce Secretary Gina Raimondo said during a visit to China that US companies had complained to her that China had become “uninvestable.”
Rising political and trade tensions were also cited in the AmCham report as the biggest risk to China’s future economic growth, with improved U.S.-China relations the top factor cited by respondents as improving their industry’s prospects in China would.
AmCham’s Stein said the survey was conducted before Raimondo’s visit and he believes companies have since begun to reconsider whether they had been “too pessimistic” that there was no way to get out of a steady downward trend ( in the USA). -China relations)”.
A larger percentage of companies – 40%, up from 34% last year – are now redirecting or attempting to redirect investments earmarked for China primarily to Southeast Asia.
That reflected a report released last week by Rhodium Group that said India, Mexico, Vietnam and Malaysia received the vast majority of investments while U.S. and European companies turned away from China.
Reporting by Casey Hall; Additional reporting by Joe Cash; Editing by Alex Richardson and Louise Heavens
Our standards: The Trust Principles.
Acquire license rights, opens new tab