U.S. business optimism about China outlook falls to record low - survey
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[September 19, 2023] By
Casey Hall
SHANGHAI (Reuters) - Political tensions and a slowing economy are
sapping the confidence of U.S. businesses operating in China, with the
number of companies optimistic about their five-year outlook falling to
a record low, a survey published on Tuesday showed.
Even after the ending of COVID curbs, which weighed heavily on revenues
and sentiment in 2022, the percentage of surveyed U.S. firms optimistic
about the five-year China business outlook fell to 52%, according to the
annual survey published by the American Chamber of Commerce (AmCham) in
Shanghai.
This was the lowest level of optimism reported since the AmCham Shanghai
Annual China Business Report was first introduced in 1999.
"Frankly, if there was one thing that surprised me about the survey this
year it was that number," said AmCham Shanghai Chairman, Sean Stein. "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)."
Tensions between major world powers remained a concern for many
companies, with U.S.-China tensions cited as a top business challenge by
60% of the survey's 325 respondents, equal to the number who pointed to
China's economic slowdown as a significant challenge.
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Unease about the transparency of China's regulatory environment also
rose, with one third reporting that policies and regulations towards
foreign companies had worsened in the past year, although many
respondents pointed to U.S. government policy rather than China's when
asked about pressure to decouple.
The European Union Chamber of Commerce's European Business in China
position paper, released later on Tuesday, outlined how European
companies are already struggling with competing requests from Chinese
and Western customers to produce goods containing no Chinese or
U.S.-made components or software.
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U.S. and Chinese flags are seen in this illustration taken Jan. 30,
2023. REUTERS/Dado Ruvic/Illustration/File Photo
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Companies have been at the centre of deteriorating relations between
the two countries for several years. China has criticized U.S.
efforts to block China's access to advanced technology and U.S.
firms have expressed concern about fines, raids and other actions
that make doing business in China risky.
Last month, U.S. Commerce Secretary Gina Raimondo said during a
visit to China that U.S. companies have complained to her that China
has become "uninvestible".
Rising political and trade tensions were also cited as the top risk
to China's future economic growth in the AmCham report, with
improved U.S.-China relations the number one factor respondents said
would improve their industry's prospects in China.
AmCham's Stein said that the survey had been conducted prior to
Raimondo's visit and, since then, he believed companies had begun to
reconsider whether they had been "too pessimistic that there wasn't
any way to get out of a constant downward slide (in U.S.-China
relations)".
A larger percentage of firms - 40%, up from 34% last year - are
currently redirecting or looking to redirect investment that had
been earmarked for China, mainly to Southeast Asia.
This echoed a report published by Rhodium Group last week, which
said that India, Mexico, Vietnam and Malaysia were receiving the
vast majority of investment U.S. and European firms were shifting
away from China.
(Reporting by Casey Hall; Additional reporting by Joe Cash; Editing
by Alex Richardson and Louise Heavens)
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