U.S. business optimism about China outlook falls to record low – survey

According to a study issued on Tuesday, geopolitics and a slowing economy are causing U.S. companies doing business in China to become more pessimistic, with the percentage of companies confident about their five-year outlook in the nation reaching a new low.

According to the annual poll released by the American Chamber of Commerce (AmCham) in Shanghai, even after the COVID limits were lifted, which had a significant negative impact on both revenues and attitude in 2022, the percentage of surveyed U.S. enterprises confident about the five-year China business outlook decreased to 52%.
Since the AmCham Shanghai Annual China Business Report’s inception 1999, this was the report’s most pessimistic reading.

According to Sean Stein, chairman of the AmCham Shanghai, “if there was one thing about the survey this year that surprised me, it was that number.” “By the time we conducted this year’s survey, many of the illusions that we would experience a sustained recovery in economic growth (post-COVID) had dissipated.”

Geopolitics continued to be a key issue for many businesses, with 60% of the survey’s 325 respondents citing U.S.-China tensions as their top business challenge, the same percentage who named China’s economic slowdown.

When asked about the pressure to decouple, many respondents pointed to U.S. government policy rather than Chinese policy, raising concerns about the transparency of China’s regulatory environment. However, one-third of respondents reported that policies and regulations towards foreign companies had worsened in the past year.
Businesses have been at the center of the deteriorating ties between the two nations for many years. The United States’ attempts to deny China access to cutting-edge technology have drawn criticism from China. American businesses have voiced concern over fines, raids, and other moves making business in China difficult.

During a visit to China last month, U.S. Commerce Secretary Gina Raimondo stated that American businesses had complained that China had become “uninvestible.”

The AmCham report identified geopolitical tensions as the main threat to China’s future economic growth, and respondents ranked improving U.S.-China ties as the main element that would boost the prospects of their industry in China.

The survey was taken before Raimondo’s visit, according to AmCham’s Stein. Since then, he thinks businesses have reevaluated 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).”

40% of businesses are either moving or trying to redirect investment originally allocated for China, primarily to Southeast Asia, up from 34% last year.

This was in line with a report by the Rhodium Group last week, which claimed that American and European businesses were shifting their investment away from China and toward nations like Mexico, Vietnam, Malaysia, and India.