Chess items are seen in entrance of displayed China’s and U.S. flags on this illustration taken January 25, 2022.
Dado Ruvic | Reuters
BEIJING — American companies in China now not count on relations between the 2 nations to enhance from the tensions of the Trump administration, in line with 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 — performed in fall 2021 — the identical as when Donald Trump was president and enacted more durable insurance policies on China. Rising U.S.-China tensions has ranked among the many high 5 challenges for doing enterprise in China since 2019, the survey mentioned.
“There was a degree of maybe hope and optimism as soon as Biden entered workplace that the connection would enhance,” Alan Beebe, president of AmCham China, mentioned Tuesday in a name with reporters.
“However I believe what we have seen over the course of the final yr is that there is a new actuality that has set in, the place largely talking most of the insurance policies and sentiment of the Trump administration stay 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 corporations 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 doubtless over as Beijing focuses extra on development, however they famous that doesn’t imply the tip 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 corporations anticipating a year-on-year improve in income ticked as much as 59% in 2021 from 54% in 2020, however properly under the 73% seen in 2017 earlier than the pandemic and U.S.-China commerce struggle, AmCham mentioned.
Beebe mentioned a motive for the continued stress on income is that corporations haven’t been in a position to go on rising manufacturing prices whereas remaining aggressive regionally.
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 nations, the survey discovered.
Greater than 40% of respondents mentioned they obtained stress to make or keep away from making statements about politically delicate points, significantly amongst client companies, the report mentioned.
Geopolitical tensions have turn into enterprise dangers at a neighborhood degree for a lot of worldwide corporations.
Overseas 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.
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.
