Survey: US business optimism about China’s prospects falls to a record low

SHANGHAI (Reuters) – Geopolitics and a slowing economy are fueling pessimism among U.S. companies operating in China, with the proportion of companies optimistic about their five-year outlook in the country falling to a record low, a survey released on Tuesday showed. .

Even after the end of Covid restrictions, which weighed heavily on revenue and sentiment in 2022, the proportion of US companies surveyed that are optimistic about China’s five-year business outlook fell to 52%, according to the annual survey published by the US Chamber of Commerce. (AmCham) in Shanghai.

This was the lowest level of optimism reported since AmCham Shanghai’s annual business report in China was first filed in 1999.

“Honestly, if there’s one thing that surprised me in the survey this year it’s that number,” said Shawn Stein, chairman of the American Chamber of Commerce in Shanghai. “By the time we conducted this year’s survey, many illusions that we would see a sustained rebound in (post-Covid) economic growth had been dispelled.”

Geopolitics remained a major concern for many businesses, with 60% of the 325 survey respondents citing tensions between the US and China as a major business challenge, equal to the number who cited China’s economic slowdown as the biggest challenge.

Concerns about the transparency of China’s regulatory environment have also grown, with a third of respondents reporting that policies and regulations toward foreign companies have worsened in the past year, although many respondents cited US government policy rather than China’s when asked about the push for decoupling. .

The companies have been at the center of deteriorating relations between the two countries for several years. China has criticized US efforts to block China’s access to advanced technology, and US companies have expressed concern about fines, raids and other measures that make doing business in China risky.

Last month, US Commerce Secretary Gina Raimondo said during a visit to China that US companies had complained to her that China had become “uninvestable.”

Geopolitical tensions were also cited as the top risk to China’s future economic growth in the US Chamber of Commerce report, with improved US-China relations being the number one factor that respondents said would improve their industry’s prospects in China.

The U.S. Chamber of Commerce’s Stein said the poll was conducted before Raimondo’s visit, and since then, he believes companies have begun to reconsider whether they were “too pessimistic about there not being any way out of (the U.S.’s) ongoing downward slide.” – Relations Chinese)”.

A larger proportion of companies, 40%, compared to 34% last year, are now redirecting or redirecting investments that were intended for China, especially to Southeast Asia.

This reflects a report published by the Rhodium Group last week, which said that India, Mexico, Vietnam and Malaysia receive the vast majority of investments that US and European companies are moving away from China.

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