U.S. Businesses in China Concerned About Geopolitics and Slowing Economy, Survey Shows
SHANGHAI, Sept 19 – A recent survey released on Tuesday reveals that U.S. businesses operating in China are growing increasingly pessimistic about their five-year outlook in the country. Geopolitics and a slowing economy are the major factors fueling this lack of optimism.
According to the annual survey published by the American Chamber of Commerce (AmCham) in Shanghai, even after the easing of COVID restrictions, the percentage of surveyed U.S. firms optimistic about the five-year China business outlook has fallen to a record low of 52%. This marks the lowest level of optimism reported since the survey was first introduced in 1999.
Sean Stein, Chairman of AmCham Shanghai, expressed surprise at this low level of optimism, stating, “By the time we did this year’s survey, a lot of the illusions had fallen away that we would see a sustained rebound in economic growth (post-COVID).”
The survey also found that U.S.-China tensions and China’s economic slowdown are cited as top business challenges by 60% of the respondents. Additionally, one-third of the respondents reported that policies and regulations towards foreign companies in China had worsened in the past year, with concerns rising over the transparency of China’s regulatory environment.
The deteriorating relations between the two countries have put companies at the center of the tensions. China has criticized U.S. efforts to block its access to advanced technology, while U.S. firms have expressed concerns about fines, raids, and other actions that make doing business in China risky.
During her visit to China last month, U.S. Commerce Secretary Gina Raimondo stated that U.S. companies have complained to her about China becoming “uninvestible.”
Geopolitical tensions were also highlighted as the top risk to China’s future economic growth in the AmCham report. Respondents stated that improved U.S.-China relations would be the number one factor to improve their industry’s prospects in China.
AmCham Shanghai’s Stein mentioned that the survey was conducted prior to Raimondo’s visit, and since then, companies have started reconsidering whether they had been “too pessimistic” about the prospects of U.S.-China relations.
The survey also revealed that a larger percentage of firms, 40% compared to 34% last year, are currently redirecting or looking to redirect their investment that was initially earmarked for China, primarily towards Southeast Asia.
This trend aligns with a recent report by Rhodium Group, which stated that India, Mexico, Vietnam, and Malaysia are receiving the majority of investment that U.S. and European firms are shifting away from China.
In conclusion, U.S. businesses operating in China are increasingly concerned about geopolitical tensions and the slowing economy. This lack of optimism is reflected in the record-low percentage of firms positive about their five-year outlook in the country. As companies redirect their investments to other regions, the future of U.S.-China relations remains uncertain.