Biz optimism on U.S.-China back to Trump era, AmCham survey says

Biz optimism on U.S.-China back to Trump era, AmCham survey says

BEIJING — American companies in China now not count on relations between the 2 international locations to enhance from the tensions of the Trump administration, in accordance to a enterprise affiliation survey.

After President Joe Biden was elected in late 2020, there was a spike in optimism amongst companies, with 45% of respondents anticipating higher U.S.-China relations, the American Chamber of Commerce in China’s annual survey of members discovered.

That degree of optimism has dropped to 27% of respondents within the newest survey — carried out in fall 2021 — the identical as when Donald Trump was president and enacted harder insurance policies on China. Rising U.S.-China stress has ranked among the many prime 5 challenges for doing enterprise in China since 2019, the survey mentioned.

“There was a level of perhaps hope and optimism once Biden entered office that the relationship would improve,” Alan Beebe, president of AmCham China, mentioned Tuesday in a name with reporters.

“But I think what we’ve seen over the course of the last year is that there’s a new reality that has set in, where largely speaking many of the policies and sentiment of the Trump administration remain in place with the Biden administration,” he mentioned.

Since Biden took workplace in early 2021, Trump-era tariffs have remained in place, whereas the U.S. has added extra Chinese language firms to blacklists that forestall them from shopping for from American suppliers.

Trump used sanctions and tariffs in an try to stress China to deal with longstanding complaints of mental property theft, unequal market entry and compelled switch of essential know-how.

Whereas the Chinese language central authorities has introduced insurance policies to deal with many of those considerations, AmCham mentioned native implementation stays uneven.

The final yr of regulatory crackdown and new legal guidelines on knowledge privateness have added to American companies’ challenges to working in China and warning on future investments, the survey discovered.

Economists mentioned final month that the worst of the crackdown was probably over as Beijing focuses extra on progress, however they famous that doesn’t imply the top or reversal of regulation.

China’s financial slowdown can be affecting enterprise operations within the nation, whereas Covid-19 journey restrictions discourage new, abroad expertise from becoming a member of native groups.

The share of firms anticipating a year-on-year improve in income ticked up to 59% in 2021 from 54% in 2020, however effectively under the 73% seen in 2017 earlier than the pandemic and U.S.-China commerce warfare, AmCham mentioned.

Beebe mentioned a cause for the continued stress on income is that firms haven’t been ready to go on rising manufacturing prices whereas remaining aggressive domestically.

Political stress rises

U.S. companies in China more and more really feel much less welcome and face rising political stress from Beijing, Washington and media in each international locations, the survey discovered.

Greater than 40% of respondents mentioned they acquired stress to make or keep away from making statements about politically delicate points, significantly amongst shopper companies, the report mentioned.

Geopolitical tensions have change into enterprise dangers at an area degree for a lot of worldwide firms.

International manufacturers like Nike and H&M confronted backlash on Chinese social media last year over comments about reports of forced labor in Xinjiang in western China. More recently, U.S. and European businesses have cut ties with Russia after the Ukraine war began, while Chinese tech companies doing business in Russia have remained silent.

For American businesses in China, it’s too early to tell what the impact might be of U.S. sanctions on Russia, other than for businesses that export to Russia, Beebe said.

Investment plans hold steady

The share of respondents planning to increase business investment in China held steady from last year at around two-thirds, the survey found. The share of respondents not considering a relocation of manufacturing or sourcing also held steady at 83%, the same level since 2019.

AmCham survey respondents remained optimistic about the Chinese market opportunities, not just for the consumer market but also for resources and industrials.

Aerospace, oil and gas and energy were industries where well over two-thirds of respondents said the quality of China’s investment environment was improving.

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But a greater portion of businesses planned investments at a smaller scale this year, while 18% said U.S.-China tensions could delay or cancel China investment decisions. Significantly fewer companies were confident in Beijing’s commitment to open the local market further to foreign investment in the next three years.

Foreign companies overall increased their investment into China last year, up by 14.9% from a year earlier to 1.1 trillion yuan ($171.88 billion), according to China’s Ministry of Commerce.

Investors from Singapore and Germany increased their investment by 29.7% and 16.4%, respectively, the ministry said in January, without disclosing figures for other countries.

U.S. investment in China accounted for nearly 20% of foreign direct investment in the country in the years leading up to the pandemic, according to National Bureau of Statistics data accessed through Wind.

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