SHANGHAI, Sept 19 (Reuters) – Geopolitics and a slowing economy are fueling pessimism among U.S. companies operating in China, with the proportion of companies optimistic about their five-year prospects in the country falling to a record low, according to a survey published Tuesday. .
Even after COVID restrictions ended, which took a heavy toll on both revenue and confidence in 2022, the percentage of U.S. companies surveyed optimistic about China’s five-year business outlook fell to 52 percent. according to the annual survey published by the American Chamber of Commerce. (AmCham) in Shanghai.
This is the lowest level of optimism recorded since the first release of AmCham Shanghai’s annual report on Chinese affairs in 1999.
“Frankly, if there’s one thing that surprised me about this year’s survey, it’s this number,” said Sean Stein, president of AmCham Shanghai. “By the time we conducted this year’s survey, many illusions had dissipated that we would see a sustainable rebound in (post-COVID) economic growth.”
Geopolitics remains a major concern for many businesses, with tensions between the United States and China cited as one of the top business challenges by 60% of 325 respondents, the same number of people who named the economic slowdown in China as a major challenge.
Concern about the transparency of China’s regulatory environment has also increased, with a third reporting that policies and regulations towards foreign companies have deteriorated over the past year, even though many respondents pointed the finger at U.S. government policies rather than those of China when asked about the push for decoupling.
Businesses have been at the center of the deterioration of relations between the two countries for several years. China has criticized U.S. efforts to block China’s access to cutting-edge technology, and U.S. companies have expressed concerns about fines, searches and other actions that make doing business in China risky.
Last month, U.S. Commerce Secretary Gina Raimondo said during a visit to China that U.S. companies had complained to her that China had become “uninvestable.”
Geopolitical tensions were also cited as the top risk to China’s future economic growth in the AmCham report, with improving U.S.-China relations the top factor respondents said would improve economic growth. prospects of their industry in China.
AmCham’s Stein said the survey was conducted before Raimondo’s visit and that since then he believes companies have begun to question whether they have been “too pessimistic and convinced that there is no There was no way out of a steady decline (in the United States). -Relations with China).
A larger percentage of companies, 40%, up from 34% last year, are currently redirecting or seeking to redirect investments that had been earmarked for China, primarily toward Southeast Asia.
That echoes a report released last week by Rhodium Group that found India, Mexico, Vietnam and Malaysia were receiving the vast majority of U.S. investment and that European companies were turning away from China.
Reporting by Casey Hall; Editing by Alex Richardson
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