A record portion of US companies have ranked China as their top global investment priority, in a sign that regulatory challenges and slowing growth have not prompted an aggregate retreat in the world’s second-biggest economy.
Sixty-seven percent of the US companies surveyed by the American Chamber of Commerce in Shanghai said they intend to increase the level of investment in China, compared with last year’s 65 percent, according to the chamber’s survey released yesterday.
Among the 377 companies that responded, 29 percent said the country was their top global priority, which was the highest ever, the group said in a statement.
The results show that China’s vast market of middle-class consumers, improved infrastructure and rising technology standards are still drawing investment, the chamber said.
China is aiming to purge most foreign technology from banks, the military, state-owned enterprises and key government agencies by 2020, according to people familiar with the effort.
“We still think that consumer demand is quite solid, so if they’re manufacturing consumer goods or something related to consumer services, it might be a good investment,” Hong Kong-based Societe Generale SA economist Claire Huang said. “Policymakers are trying to level the playing field for all kinds of companies. We’re going to see more of these kinds of reforms going forward, so that could help their confidence.”
US companies that said laws and regulations favoring locals hurt their business in China rose to 78 percent, a 20 percentage point increase from the year before, the chamber said.
China’s plan for changes in four segments of the economy is driven by national security concerns and marks an increasingly determined move away from foreign suppliers under Chinese President Xi Jinping (習近平), sources said, who asked not to be named because the details are not public.
“Uncertainty surrounding China’s reform program, perceptions of bias in regulation, especially with antimonopoly laws, corruption and rising costs are impacting optimism,” the chamber said.
The portion of companies that said they are optimistic about China’s economy over the next five years held at 85 percent from 86 percent the previous year, according to the survey. The country’s GDP last year grew the slowest since 1990.
The chamber’s survey also showed that nearly three-quarters of US firms in Shanghai say China’s first free-trade zone (FTZ) offers them no business benefits almost 18 months after it was established.
The Chinese commercial hub set up the zone in September 2013, promising a range of financial reforms, including full convertibility of the yuan and free interest rates, which remain unfulfilled.
“More than one year after the FTZ’s opening, US companies remain skeptical about the business benefits,” the chamber said.
A total of 73 percent of the 377 member companies answering the survey said the zone offers “no tangible benefits” for their business and almost half of them reported no noticeable changes for their operations so far.
However, the US business group said the zone had brought improvement in customs procedures in Shanghai.
About a quarter of companies surveyed said they had already established a presence in the zone or planned to do so, despite the slow start, it said.
Beijing has already announced intentions to expand some reforms from the first zone nationwide, while three more locations plan to set up their own zones.
In January, Shanghai Mayor Yang Xiong (楊雄) pledged greater efforts toward financial liberalization in the zone, but made clear they would depend on central authorities.
Additional reporting by AFP
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