U.S. business optimism about China’s outlook falls to record low, – survey. The percentage of U.S. companies enthusiastic about their five-year outlook in China fell to a historic low on Tuesday due to geopolitics and a slowing economy.
The annual study by the American Chamber of Commerce (AmCham) in Shanghai found that 52% of U.S. enterprises were confident about the five-year China business outlook once COVID limits ended in 2022, which hurt revenues and confidence.
This was the lowest optimism since the 1999 AmCham Shanghai Annual China Business Report.
“Frankly, if there was one thing that surprised me about the survey this year it was that number,” said AmCham Shanghai Chairman Sean Stein. “By this year’s survey, many of the illusions that we would see a sustained rebound in economic growth (post-COVID) had fallen away.”
U.S.-China tensions were listed as a significant business challenge by 60% of the survey’s 325 respondents, equivalent to China’s economic decline.
One-third said policies and regulations toward foreign companies had worsened in the past year, raising concerns about China’s regulatory transparency. Many respondents cited U.S. government policy when asked about pressure to decouple.
Companies have strained relations between the two countries for years. China has criticized U.S. efforts to prevent China’s access to advanced technology, while U.S. corporations are concerned about fines, raids, and other actions that make doing business in China risky.
A visit to China last month by U.S. Commerce Secretary Gina Raimondo revealed that U.S. corporations have complained that China has become “uninvestible.”
In the AmCham report, geopolitical tensions were the biggest danger to China’s economic growth, while improving U.S.-China ties were the top element respondents thought would boost their industry’s chances in China.
AmCham’s Stein said the survey was completed before Raimondo’s visit and that companies had now reconsidered whether they were “too pessimistic that there wasn’t any way to get out of a constant downward slide (in U.S.-China relations).”
40% of enterprises, up from 34% last year, are shifting or planning to redirect China-bound investment to Southeast Asia.
Last week, Rhodium Group reported that U.S. and European corporations were transferring investment away from China to India, Mexico, Vietnam, and Malaysia.