American firms in China are seeing record-low earnings, with enterprise confidence at an all-time low amid U.S.-China tensions and a slowing Chinese language financial system, based on a report printed Thursday by a U.S. enterprise group.
Out of 306 firms polled, a record-low 66% had been worthwhile in 2023, based on the China enterprise report printed by the American Chamber of Commerce in Shanghai.
The report additionally discovered that solely 47% of respondents had been optimistic about their enterprise outlook in China over the following 5 years, the bottom within the survey’s historical past of greater than 20 years.
Beijing and Washington have been at odds in recent times over points like commerce and manufacturing, in addition to China’s claims over the South China Sea.
China can also be grappling with a slowing home financial system, with lackluster client demand and deflationary pressures persisting even post-COVID.
The geopolitical tensions between each international locations was the highest problem to companies’ operations in China, the report discovered.
“It’s a balance between risk and reward,” mentioned Eric Zheng, president of AmCham Shanghai, throughout a information convention forward of the report’s publication.
“The perceived risks of doing business in China have gone up in the past few years, but at the same time the market is slowing down, with soft demand and overcapacity,” he mentioned.
Many companies are actually redirecting investments to different areas resembling Vietnam, Malaysia and South Asia, Zheng mentioned.
A document excessive of 25% of firms polled lower funding in China in 2023, AmCham’s report discovered, largely pushed by issues over China’s slowing progress.
Whereas simply over half of U.S. firms anticipate their income to extend over final yr, solely 37% expect progress in China to outpace world progress within the coming three to 5 years.
The AmCham report got here a day after the European Union Chamber of Commerce in China printed a report with comparable sentiments on the rising dangers of doing enterprise in China. The report highlighted an absence of implementation on promised reforms and an more and more politicized enterprise surroundings.
The European Chamber’s report discovered that for some European firms, the dangers of investing in China had been starting to outweigh the returns.
“We are concerned about there being a tipping point now, and therefore we have a call for action to the Chinese government to turn the tide,” mentioned Jens Eskelund, the European Chamber’s president, at a information convention on Wednesday.
“China is becoming no longer a top priority but increasingly a top three or top five destination,” he mentioned. “We believe that the relative attractiveness as a location will continue to deteriorate unless we address some of these concerns.”
The European enterprise group referred to as on China to prioritize financial progress and reform, and to spice up investor confidence by leveling the taking part in area for all firms within the nation.
