US Firms Express Record Low Outlook Over Business In China, Blame Geopolitical Factors: Survey

The survey noted that the percentage of US companies expressing optimism regarding their prospects in China over the next five years has reached an all-time low of 52 per cent.

Many companies expressed significant apprehension about geopolitical factors, with 60% of the 325 survey participants identifying US-China tensions as a primary business obstacle, the survey stated. ( Image Source :Getty )

American businesses in China are getting increasingly pessimistic about their outlooks credited to heightened geopolitical tensions along with economic slowdown, a recent survey revealed. The survey, published by the American Chamber of Commerce (AmCham) in Shanghai, noted that the percentage of companies expressing optimism regarding their prospects in the country over the next five years has reached an all-time low.

Despite the lifting of COVID-related restrictions, which significantly impacted both industrial earnings and confidence throughout 2022, the proportion of surveyed U.S. companies expressing optimism regarding their five-year business prospects in China diminished to 52%, the annual survey revealed. 

This marks the least optimistic sentiment recorded since the inception of the AmCham Shanghai Annual China Business Report in 1999, reported Reuters.

Sean Stein, Chairman of AmCham Shanghai, commented on the findings and said, “Frankly, if there was one thing that surprised me about the survey this year it was that number,” the report stated. He also expressed that by the time the survey was being conducted, all expectations of a sustainable recovery in economic growth after the COVID-19 pandemic had been dispelled. 

Many companies expressed significant apprehension about geopolitical factors, with 60% of the 325 survey participants identifying US-China tensions as a primary business obstacle, a figure equivalent to those who highlighted China's economic slowdown as a major concern, the survey stated.

Worries around the transparency of China's regulatory framework also increased, with approximately one-third of respondents indicating that policies and regulations concerning foreign enterprises deteriorated over the past year. However, when questioned about the push for decoupling, many respondents attributed it more to US government policies rather than those of China.

In recent years, companies have been caught in the crossfire of worsening US-China relations. China has expressed criticism over US restrictions on technology access, while US firms have voiced concerns about risks like fines and raids in China. 

During a visit to China last month, US Commerce Secretary, Gina Raimondo, revealed that she received complaints from American companies that China has become ‘uninvestible’. 

The AmCham report highlighted geopolitical tensions as the top risk to China's future economic growth, while respondents stated that improved US-China relations are the key factor to help better their industries' prospects in China. The survey further noted that an increasing number of firms, about 40 per cent, compared to 34 per cent last year, are redirecting investments originally planned for China, primarily toward Southeast Asia.