American Companies In China More Optimistic On Economy, Worried About Washington-Beijing Relations

U.S. companies in China are increasingly optimistic about the country’s economic outlook but worried about overall relations between the Washington and Beijing, according to a survey released today by the American Chamber of Commerce in China.

Some 59% of members surveyed reported a positive outlook about the next two years, a 22 percentage-point increase compared with a business outlook survey released by AmCham China in early March. Similarly, 59% of members also expressed positive views on China’s domestic market growth, up from 42% in the previous survey, AmCham China said.

Nonetheless, 87% of respondents were more pessimistic about U.S.-China relations, compared with 73% who pessimistic at the end of last year. Mixed American feelings about ties with China were spelled out in a speech by U.S. Treasury Secretary Janet Yellen last week, in which she called for more collaboration yet aired complaints. (See earlier post here.)

The new AmCham China survey was conducted from April 18-20, drawing responses from 109 companies with operations throughout China. AmCham China has nearly 1,000 members including Apple, Merck, KKR, Morgan Stanley, Microsoft and Intel.

The AmCham survey also found that the majority of respondents (73%) are not moving their supply chains outside of China, while another 23% are either considering or already starting the relocation process.

Risk management was the top reason given for those considering relocation, as reported by 44% of the respondents, AmCham found. Some 27% of the respondents reported that their companies had re-prioritized other countries, a 21-percentage point increase from AmCham’s previous survey.

Meanwhile, 51% of companies said foreign expats showed interest in relocating or returning to China following the end of the country’s “zero-Covid” policies this year; 68% of members cited bilateral tensions and other geopolitical risk as the top issue for foreign expats to consider in their decision. The lack of sufficient international flights was also a main concern, cited by 44% of members, the survey found.

In a sign that China is starting to see increased engagement with executives from around the world after Covid-related disruptions, 43% of respondents reported their global or regional executives have already visited China since December 2022., AmCham China said. Another 31% of members reported their global or regional executives will visit China in the coming months, according to the survey.

AmCham China further found in a White Paper released today that impact of the past three years of the pandemic is still being felt across many industries, despite the removal of Covid prevention measures and travel restrictions. In addition, a Chinese government-led emphasis on self-reliance is creating additional uncertainty for foreign businesses, it said.

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@rflannerychina