US companies in China grow more pessimistic about bilateral ties

The American Chamber of Commerce in China labeled worsening bilateral relations as a “key challenge” this year. PHOTO: REUTERS

BEIJING - American companies in China are increasingly pessimistic about the relationship between Washington and Beijing as geopolitical tensions escalate, even as they have a more favourable view of the nation’s economic recovery, according to a new survey.

About 87 per cent of respondents to a flash survey taken last week said they were at least slightly pessimistic about US-China ties, according to the survey published on Wednesday by the American Chamber of Commerce (AmCham) in China. That was 14 percentage points higher than in the chamber’s previous poll.

“Bilateral relations between the United States and China have substantially deteriorated,” said Mr Lester Ross, chairman of AmCham China’s Policy Committee. “It’s hard to see at this point when they will begin to improve – and this, of course, affects the ability of business to operate across borders.”

The April flash poll comprised 109 respondents. The chamber’s earlier survey featured 319 responses, which were collected in October and November 2022, as well as February 2023.

The data underscores the headwinds facing American companies operating in the world’s second-largest economy.

Alongside the April survey, AmCham on Wednesday released its 2023 White Paper report, which labelled worsening bilateral relations as a “key challenge” in 2023.

“The deteriorating relationship has placed the American business community in the crosshairs as economic and trade issues have become deeply intertwined with national security and other law enforcement issues,” the report said.

AmCham called on the US and China to prioritise “high-level engagement” to address such concerns.

Working-level officials should be empowered to engage with their counterparts on less sensitive issues so as “to widen the lines of communication available for cooperative discussions”, the report added.

Ties between the two countries have worsened in recent months, led by trade restrictions, blacklists and investment curbs that have challenged China’s technological development. Chinese President Xi Jinping in March criticised the US for what he called a strategy of “containment and suppression”.

US Treasury Secretary Janet Yellen last week said the Biden administration was prepared to accept economic costs as it sought to protect US national security interests from threats posed by China, saying “we will not compromise on these concerns”.

The latest AmCham report echoes concerns held by others in China’s foreign business community about geopolitical tensions.

A survey published last week by the European Union Chamber of Commerce in China found that Beijing’s push to become self-reliant in the technology sphere is driving more European companies operating there to rethink their research and development plans.

While geopolitical tensions have dominated concerns among American companies in China, AmCham’s flash poll indicated that members were becoming more optimistic about other aspects of the business outlook, including China’s recovery.

About 59 per cent of respondents to the April survey reported a positive outlook on the economic rebound, up 22 percentage points from the earlier poll.

The new survey was taken just after official data showed growth picked up in the first quarter, fuelled by strong consumer spending.

In addition, despite recent attention on companies such as Apple moving more production of key products to other nations, the survey found that 73 per cent of the companies polled are not moving their supply chains outside of China.

At the same time, 27 per cent said their companies are re-prioritising other countries, up 21 percentage points from the previous survey. BLOOMBERG

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