SHANGHAI (Reuters) – U.S.-based businesses reported more pessimism about operating in China due to bilateral tensions, ongoing COVID-19 curbs, regulatory restrictions and a slowing economy, a survey from the American Chamber of Commerce showed on Tuesday.
Optimism toward domestic market growth dropped 11 percentage points from the previous year, according to the Chamber’s report, based on responses from more than 300 member companies.
Businesses reported rising tensions between the U.S. and China as the top business challenge, followed by inconsistent or unclear laws.
Alan Beebe, president of the American Chamber of Commerce in China, said in a media session there was a brief “bump” optimism among companies in China, following Biden’s election in 2020.
“But what we’ve seen in the course of last year is that there is a new reality that has set in, where the policies and sentiment of the Trump administration remain in place with the Biden administration,” Beebe added.
Companies also reported difficulties in hiring both foreign and local talent.
Strict COVID-19 protocols in China make it difficult for overseas hires to begin working in China.
Politics have also impeded domestic hiring.
“Many Chinese talents would rather not work for an American firm. The ‘Brand America’ has started losing value because of the tensions in the [bilateral] relationship,” one unnamed survey respondent wrote.”
Slowing economic growth has also proven a challenge both for Beijing and U.S. companies in China.
According to the survey released on Tuesday, 59% of respondents anticipate 2021 profits will be up from 2020. But that figure remains lower than pre-COVID levels.
Despite the dour forecast and challenges, the survey revealed that most companies planned to stay, with two-thirds of them planning to increase investment in China in 2022.
(Reporting by Josh Horwitz)