Askume SHANGHAI, Sept 12 – U.S. businesses have lost confidence in China amid political tensions, slowing economic growth and fierce domestic competition, a survey showed, raising concerns the country’s five-year outlook could hit a record low.
A survey released on Thursday by the American Chamber of Commerce in Shanghai showed that only 47% of US companies are optimistic about their business prospects in China over the next five years, down 5 percentage points from last year. This is the lowest level of optimism since the American Chamber of Commerce in Shanghai began releasing its annual China Business Report in 1999. The number of companies expecting to be profitable in 2023 also fell to a record low of 66%.
Alan Garber, president of the American Chamber of Commerce in Shanghai, said the downward trend in profitability is due to a combination of several factors.
“It’s domestic demand, it’s deflation, and of course we cannot ignore the geopolitical considerations and concerns of member countries,” Gabor said.
“This will impact our investment and operating plans in China and how we develop future business plans in China.”
The 306 US companies interviewed were from a variety of industries. The US State Department estimates that US foreign direct investment in China in 2023 is expected to fall 14% from the previous year to $163 billion.
Geopolitics remains the biggest challenge facing most US businesses in China, while uncertainty grows over the future of relations between the world’s two largest economies ahead of the US presidential election.
US President Joe Biden announced earlier this year that the United States would soon impose a ban on Chinese products.will take the final decision on imposing higher tariffs . A 100% tariff on electric vehicles, a 50% tariff on semiconductors and solar cells, and a 25% tariff on lithium-ion batteries were originally scheduled to come into effect on August 1 but have been postponed twice.
In response, China urged the United States to immediately remove all tariffs on Chinese goods and vowed to take retaliatory action.
66% of respondents consider bilateral relations the biggest challenge, and 70% consider it the biggest challenge to China’s economic growth.
One small positive is that the number of companies reporting that China’s regulatory environment is transparent is slightly higher this year than last year – an increase of 35%. However, the number of companies reporting bias against local companies also increased by 60%.
The AmCham report said that, as of last year, 40% of US companies are currently redirecting or trying to redirect investments, particularly targeting China, but also India.
The drop in US business sentiment is in line with a paper published by the European Union Chamber of Commerce in China on Wednesday which said the challenges of doing business in China are beginning to outweigh the benefits .
