US-China Trade: American companies have claimed in a report that China’s unclear rules and tensions with America have affected business. 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.
Nine out of 10 companies cited rising costs as a problem.
The survey revealed that such disruptions were the main reasons 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 the 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. He said this was followed by an economic recession, which dashed hopes of a strong recovery after the global pandemic. 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.
China is coming out of the impact of recession after Covid
After Covid, the effect of increased inflation and economic recession in China is being seen on the world. However, China has controlled inflation in its country to a great extent. Along with this, it is also trying its best to come out of the economic recession. According to the latest report, China’s factories have gained momentum and retail sales have also increased in August. The report released by the government on Friday indicated that the economy may gradually recover from the situation after the global pandemic. However, despite busy activity in restaurants and shops, the data showed continued weakness across all key property sectors. Real estate developers are struggling to repay loans due to sluggish demand. Real estate investment declined by 8.8 percent on an annual basis in August. The decline has been increasing continuously since the beginning of the year. To reduce the burden on banks, the People’s Bank of China or the central bank said late Thursday that the reserve requirement for most lenders will be reduced by 0.25 percentage points by Friday.
Retail sales in China increased 4.6 percent year-on-year in August
According to the central bank, this will make more money available for lending to strengthen the foundation of economic recovery and maintain appropriate and adequate liquidity. According to the report released on Friday, retail sales in August increased by 4.6 percent on an annual basis, auto sales increased by 5.1 percent. There was a slight increase of 2.5 percent in retail sales in July. Industrial production grew at an annual pace of 4.5 percent, the fastest increase since April. It had increased by more than 3.7 percent in July. Julian Evans-Pritchard of Capital Economics said in the report that the trends in August were slightly better than expected. China’s economy grew 0.8 percent in the April-June quarter compared to the previous quarter.