Sentiment at US firms operating in China has seen a small improvement compared to a year ago, but most are still cautious about investing in the country amid geopolitical tensions and a heightened technology war between the world’s two biggest economies.
US firms surveyed by the Beijing-based American Chamber of Commerce (AmCham) said they were feeling more optimistic about their profitability potential in China, compared to a year ago.
Around half of the AmCham members polled also said China was among their top three global priorities, a survey published on Thursday showed.
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That marked a slight increase from last year’s all-time record low.
Surveyed US businesses also said they felt more optimistic about relations between Beijing and Washington. But continuing tensions between the two economic rivals were still the main concern for most businesses.
“Despite the expansion in bilateral trade in recent years, mistrust between the United States and China remains high, and relations are strained,” said AmCham China Chair Sean Stein.
The tense relations have meant that most US firms in China still remain on the back foot about when it comes to investing in the factory floor of the world.
Over 40% of respondents said they had no plans to increase their investment in China in 2024 and another 37% anticipate only a minor increase.
A similar sentiment survey released by the British Chamber of Commerce in China last December found UK businesses were also delaying new investments in China.
China regulatory environment weighs
Responses for the survey from 343 AmCham members were collected in October 2023, prior to US President Biden and Chinese President Xi Jinping’s meeting in San Francisco, an event that was seen as a significant step toward normalising relations between the world’s two biggest economies.
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Among other concerns for China-based US businesses were Beijing’s regulatory inconsistencies, increasing labour costs and data security concerns.
One-third of companies surveyed by AmCham said they were treated unfairly compared to Chinese counterparts. Those in the tech sector reported the largest decline in equity, as the US and China continue their battle for high-tech supremacy.
More respondents, 39%, reported that China is less welcoming to US businesses, while 31% said it is more welcoming, compared to a year ago.
Chinese leaders, including President Xi Jinping and Premier Li Qiang, have vowed to open up the Chinese economy battered by two years of unpredictable Covid lockdowns.
Even so, foreign firms in the country face a complex business and geopolitical environment in the year ahead as Western nations move to de-risk their supply chains from China.
Also looming on the business environment are potential counter-moves by Beijing and a vague but stringent anti-espionage law that is part of the Xi Jinping-government’s pledge to eliminate national security risks.
- Reuters, with additional editing by Vishakha Saxena
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