Fri. Aug 7th, 2020

American companies are increasingly reluctant to pour money into China

Many US companies said that in the past year, they shifted their investment away from China when they reduced revenue due to import duties.

A survey published on 9/11 by the American Chamber of Commerce in Shanghai showed that more than a quarter of participating companies said they had diverted their investment. This rate increased nearly 7% compared to last year. Technology, hardware, software and service industries have the highest destination change rates.

Many US businesses say that their limited access to the Chinese market makes it difficult for them to do business. About 56% of companies said it was not easy to get a license here.

When asked about the most feasible outcome of trade negotiations, more than 40% said that increased access to the Chinese market would be the most important factor for their business success. 28% are more concerned about intellectual property protection.

China is still an important market, generating huge revenue for US companies. However, retaliatory taxes from both countries are affecting the business of American businesses. About half of the companies in the survey said sales fell due to increased import taxes. A third recorded this reduction of about 1-10%.

The level of pessimism is also higher. About 21% felt less optimistic about this year’s business prospects, partly due to China’s economic slowdown.

The survey also shows that American businesses are ready for a long-running trade war between the world’s two largest economies. About 35% of businesses think that tensions will continue in the next 1-3 years. Nearly 13% predicted this period to be 3-6 years. Even 17% believe it will last indefinitely.

“Because the prospect of reaching this year’s trade agreement is very vague, 2019 will be a difficult year. If this situation persists next year, 2020 will be worse,” the report concluded.

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