The Chinese and US flags meet their counterparts for China consultations on July 30, 2019, before meeting their counterparts for China’s consultations before the US trade delegation.
Aly Song |Reuters
BEIJING – Almost half of US companies have redirected planned Chinese investments over the past year to other regions – a record high – Shanghai’s US Chamber of Commerce said Wednesday.
The business chamber investigation of members from May 19 to June 20 was conducted shortly after escalating US-China trade tensions and a temporary rollback of tariffs from mid-May. The two countries agreed last month to extend the trade ceasefire for another 90 days to mid-November.
“For a 90-day company, that’s just too short,” Amcham Shanghai president Eric Zheng told reporters, noting that supply chain plans are much longer.
“At least we don’t need to deal with even higher tariffs [for now]But the problem hasn’t disappeared, it’s still here,” Zheng said.
47% of survey respondents said they diverted investments planned primarily in Southeast Asia. This is the best share since the survey first asked about plans to move investment away from China in 2017.
The Indian subcontinent, including Bangladesh, was the second most popular destination for redirected investments, but the US and Mexico were much lower.
US President Donald Trump has tried to encourage businesses to return manufacturing to America. Several companies, particularly in advanced technology, have announced that they are attracting attention to investing in the US
Amcham Shanghai members include Apple, Ford, Honeywell, Meta and Tesla. Business group chair Jeffrey Lehmann noted that members were affected by Beijing’s obligation to retaliate, as well as US tariffs on China.
According to the US-based Peterson Institute for International Economics, US tariffs on Chinese goods are almost 58%, with China at around 33%. Customs fees may vary depending on the product.
Although competition in China’s domestic market is also increasing, trust in the outlook for local businesses over five years has reached record-breaking fourth year, Amcham Shanghai research found.
Only 28% of respondents said China’s operating margins were higher than that of global businesses in 2024, while 33% said China’s performance had actually deteriorated.
The US company also said that Chinese competitors have made more progress in six of eight categories, particularly in speeds into the market and speeds in adoption of artificial intelligence. In the survey, 41% of respondents said that Chinese companies have made even more progress in AI adoption, rising to 62% in the retail and consumer industries.
Members of Amcham Shanghai saw only overwhelming advantages over China’s competition in product quality and development.
Improving the business environment
Trade tensions and concerns over China’s economic slowdown have been heavy on the upcoming outlook, but survey respondents showed significant improvements in the local regulatory environment.
Almost half, or 48%, say the regulatory environment is transparent for the industry, a major jump from just 35% in 2024. The share of companies that say lack of transparency is preventing them from hindering has dropped by 12 percentage points to 16%.
The share of respondents indicating that foreign and local businesses were treated equally increased by 5 percentage points to 37%.
Beijing in recent years has strengthened its efforts to attract and maintain foreign investment, accompanied by increased engagement and friendly policy announcements. Earlier this year, China released an “action plan” that includes measures to facilitate foreign companies’ investment in biotechnology, while clarifying standards for government procurement.
However, in the Amcham Shanghai survey, 14% of respondents reported a deterioration in the environment of foreign operations in China, and the high-tech sector saw the highest level of challenges in 31% of respondents in the industry.
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