Biz optimism on U.S.-China back to Trump era, AmCham survey says
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In this image taken on January 25, 2022, you can see chess pieces in front of the displayed flags from China and America.
Dado Ruvic | Reuters
BEIJING — American businesses in China no longer expect relations between the two countries to improve from the tensions of the Trump administration, according to a business association survey.
Following President Joe Bidenwas elected in the latter half of 2020. There was a rise in business optimism, with 45% of respondents expecting improved U.S.-China relations.
That level of optimism has dropped to 27% of respondents in the latest survey — conducted in fall 2021 — the same as when Donald TrumpPresident and implemented tougher Chinese policies. According to the survey, rising tensions between the U.S. and China have been ranked as one of the five biggest challenges facing Chinese businesses since 2019.
According to AmCham China president Alan Beebe Tuesday, there was hope that things would improve once Biden assumed office.
“But, I think we’ve witnessed over the last year that there’s now a new reality where largely speaking most of the policies and sentiments of Trump remain in place with Biden’s administration,” he stated.
Biden assumed office in 2021. Trump-era tariffs remain in effect, but the U.S. added Chinese companies to its blacklists, which prevents them from purchasing from American suppliers.
Trump used tariffs and sanctions in his attempt to force China to solve long-standing problems of intellectual property theft, unfair market access, and forced transfer or critical technology.
AmCham stated, despite the Chinese central Government announcing policies that address most of these issues AmCham believes local implementation still remains inconsistent.
Survey results showed that the last year’s regulatory crackdowns and new data privacy laws have increased American business’ difficulties in China, as well as caution about future investments.
Last month, economists stated that the worst of the crackdown was likely overAlthough Beijing’s focus is more on growth they also noted that regulation does not disappear.
China’s economic slowdown has also affected business operations. Covid-19 travel restriction restrictions have discouraged new talent from joining the local team.
AmCham stated that the share of companies expecting a year-on–year rise in profits rose to 59% from 54% for 2020. This is well below the 73% recorded in 2017, before the pandemic, and U.S. – China trade war.
Beebe stated that the reason there is so much pressure on profits today is because companies are unable to absorb rising production costs and remain competitive in their local markets.
Political pressure is rising
The survey revealed that U.S. companies in China are increasingly feeling less welcomed and under increasing political pressure from Washington, Beijing and the media.
The report stated that more than 40% of respondents felt pressured to comment on politically sensitive topics, especially among consumers businesses.
For many multinational companies, geopolitical tensions are business risk at local levels.
Foreign brands like Nike and H&M faced backlash on Chinese social media last yearOver comments on reports of forced labour in Xinjiang, western China. Recent developments include U.S. and European businesses have cut ties with Russia after the Ukraine war began,While Russian tech firms have been doing business with Chinese companies, they remain silent.
Beebe noted that the U.S. has not yet determined what sanctions Russia might have on Chinese businesses.
Investment plans remain steady
According to the survey, around two-thirds of those surveyed plan to invest more in China this year. The survey found that 83% of respondents did not consider relocating manufacturing to China. This is the same percentage as in 2019.
Respondents to the AmCham survey were optimistic about Chinese market opportunities. This was not only for consumers, but for industrials as well.
Over two-thirds (63%) of those surveyed said China’s investment climate is improving in areas like energy and oil and gas.
A greater proportion of businesses plan to make investments on a lower scale than usual this year. Only 18% believe that U.S. tensions with China could cause delays or cancellations in China’s investment decisions. A significant decrease in confidence was seen in companies regarding Beijing’s willingness to make the local market more open to foreign investors over the next three-years.
Globally, foreign companies increased their investments in 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.
In January, investors from Germany, Singapore, and Germany increased their investment by 29,7% and 16,4% respectively. However, figures were not disclosed for other countries.
According to data from Wind, nearly 20% of the foreign direct investments in China came from the United States in the period leading to the pandemic.
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