Beijing: American companies operating in China see tensions with the US over technology, trade and other issues as a major obstacle to their business. This came to light in a survey released on Tuesday. According to a survey by the American Chamber of Commerce in Shanghai, China’s reputation as a foreign destination for investment is continuously declining.
However, two-thirds of the 325 companies surveyed said they had no immediate plans to change their China strategy. More than one in five companies surveyed said they are reducing their investments in China this year, mainly due to uncertainty in US-China trade relations and expectations of slower growth in China.
Overall the survey showed that sentiment has worsened compared to last year. At that time, China’s strict policies regarding the Covid-19 global pandemic had an impact on these companies. The survey revealed that such disruptions were the top reason cited by companies for expanding their operations outside China.
52 percent of those surveyed said they are optimistic about their five-year business outlook in China. The figure is at its lowest since the American Chamber of Commerce in Shanghai began the annual survey in 1999. Nearly nine out of 10 companies also cited rising costs as a major challenge.
Companies cited geopolitical tensions as a major concern. This was followed by an economic recession, which dashed hopes of a strong rebound after the global pandemic, he said. American companies are also urging Chinese officials to clarify various rules.
He says changes in regulations create ‘grey areas’ where companies are unsure about what is allowed and what may be illegal. According to official data, foreign investment in China has declined by 2.7 percent on an annual basis in the first half of 2023.