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AmCham: US firms plan to increase investment in China
By Agencies
September 1, 2018

Source: https://newsletter.chinadailyasia.com/daily_nc/newsletter/issue/558/articles/

SHANGHAI – US companies operating in China have said they plan to increase investment there in 2018, signaling that optimism about the business outlook is offsetting rising trade tensions, a survey showed on Thursday.

Almost 69 percent of the 434 respondents to the annual China Business Climate Survey of the American Chamber of Commerce in Shanghai oppose the use of tariffs in retaliation for the challenges they face, while just 8.5 percent backed them, according to the group.

"Resolving these challenges in an equitable manner is essential for the United States and China to have a healthy long-term commercial relationship that brings benefits to both our peoples," the group said in a statement on the survey Thursday.

Almost 62 percent of the respondents expect to increase investment this year, led by technology hardware, software and services companies, and aerospace and aviation firms, added the group.

The survey, conducted between April 10 and May 10, reflects the mix of key concerns and realities for American businesses in China at a time of heightened uncertainty as the Trump administration raises the ante in its trade war with Beijing.

Companies saw broadly positive operating results as the yuan held up against the dollar, financial deleveraging continued, consumer spending remained firm, and the global economy supported demand.

“Despite US-China trade frictions clouding the bilateral relationship over the past year, most US businesses continue to perform well in China,” the chamber said. “Uncertainty about US-China trade policy had a limited impact on investment and more companies are producing goods solely for the Chinese market.”

On Tuesday, the office of the US Trade Representative said it would impose 10 percent tariffs on imports of additional Chinese goods worth US$200 billion. The goods include food products, tobacco, chemicals, coal, steel and aluminum.

Responding to it, China said it will take necessary countermeasures to resolutely safeguard its rights and interests.

The survey showed that while US companies continue to face some challenges in China, 34 percent of respondents felt Chinese government policies toward foreign companies had improved, up from 28 percent last year.

The number of companies that felt policies had worsened for foreign firms fell to 23 percent from 33 percent, although 60 percent of respondents felt China's regulatory environment lacked transparency, on par with last year.

To force greater market access, 42 percent of respondents favored investment reciprocity, up from 40 percent last year. But the number opposing it also grew, to 16 percent, from 9 percent last year. The number of those unsure fell to 31 percent from 44 percent.

Concerns such as government favoritism for domestic firms and pressure on US ones in strategically important sectors to transfer technology were "stoking demand for reciprocity in the US-China trading relationship, even if our members generally oppose the use of retaliatory trade tariffs," the group said.

The biggest operational challenge of all was rising costs, an issue confronting more than 95 percent of respondents, the poll showed.

The proportion of companies expecting to be profitable was basically flat, at about 77 percent, but firms signaled they were pulling back slightly on investment.

The survey showed 53 percent of companies increased investment in 2017, down from 55 percent the year before, highlighting a trend of reduced investment growth since a 2012 peak, when 74 percent of respondents said they had boosted investment in China.

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