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Business optimism on US and China returns to Trump era, AmCham survey finds

Business optimism on US and China returns to Trump era, AmCham survey finds

BEIJING — U.S. businesses in China no longer expect relations between the two countries to improve following tensions from the Trump administration, a trade association survey has found.

After President Joe Biden was elected in late 2020, there was a spike in business optimism, with 45% of respondents expecting better U.S.-China relations, the annual member survey found. the American Chamber of Commerce in China.

That level of optimism fell to 27% of respondents in the latest survey – conducted in the fall of 2021 – similar to when Donald Trump was president and adopted tougher policies against China. Rising US-China tensions are among the top five challenges to doing business in China since 2019, according to the survey.

“There was perhaps a level of hope and optimism once Biden took office that the relationship would improve,” Alan Beebe, president of AmCham China, said on a call with Tuesday. journalists.

“But I think what we’ve seen over the last year is that there’s a new reality that’s set in, where a lot of the politics and the sentiment of the Trump administration remain in place with the Biden administration,” he said. noted.

Since Biden took office in early 2021, Trump-era tariffs have remained in place, while the United States has added more Chinese companies to blacklists that prevent them from buying from American suppliers. .

Trump has used sanctions and tariffs to try to pressure China to address longstanding complaints of intellectual property theft, unequal market access and forced transfer of critical technology.

While China’s central government has announced policies to address many of these concerns, AmCham said local implementation remains patchy.

The past year of regulatory crackdowns and new data privacy laws have added to challenges for U.S. companies to operate in China and caution about future investments, the survey found.

Economists said last month that the worst of the crackdown was likely over as Beijing focuses more on growth, but noted that this did not mean the end or reversal of regulation.

China’s economic slowdown is also affecting business operations in the country, while Covid-19 travel restrictions discourage new overseas talent from joining local teams.

The share of companies anticipating a year-over-year increase in profits fell from 54% in 2020 to 59% in 2021, but well below the 73% seen in 2017 before the pandemic and the US-trade war. China, AmCham said.

Beebe said one reason for the continued pressure on earnings is that companies have been unable to pass on rising production costs while remaining locally competitive.

Political pressure is mounting

U.S. companies in China feel increasingly unwelcome and face increasing political pressure from Beijing, Washington and the media in both countries, the survey found.

More than 40% of respondents said they had been pressured to make or avoid making statements on politically sensitive issues, particularly among consumer businesses, according to the report.

Geopolitical tensions have become local business risks for many international companies.

Foreign brands like Nike and H&M have faced backlash on Chinese social media last year following comments about reports of forced labor in Xinjiang, western China. More recently, American and European companies severed ties with Russia after the start of the war in Ukraine, while Chinese technology companies doing business in Russia remained silent.

For U.S. companies in China, it’s too early to tell what the impact of U.S. sanctions on Russia might be, other than for companies that export to Russia, Beebe said.

Investment plans hold

The share of respondents planning to increase business investment in China remained stable from last year at around two-thirds, according to the survey. The share of respondents not considering outsourcing manufacturing or sourcing also remained stable at 83%, the same level since 2019.

Respondents to the AmCham survey remained optimistic about opportunities in the Chinese market, not only for the consumer market, but also for resources and industrials.

Aerospace, oil and gas, and energy are sectors where well over two-thirds of respondents said the quality of the investment environment in China is improving.

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