US firms in China are reporting “record-low” optimism and are increasingly looking to move investment away from the country, as slowing growth and geopolitical tensions hurt investor confidence, the American Chamber of Commerce (AmCham) Shanghai said in a report released yesterday.
The findings by AmCham Shanghai come as the government enacts a series of measures to prop up the sluggish economy.
AmCham Shanghai said that “2023 was supposed to be the year investor confidence and optimism bounced back after years of COVID disruptions and restrictions.”
Photo: EPA-EFE
“According to our 2023 survey of US businesses in China, however, the rebound has not materialized and business sentiment has continued to deteriorate,” it said.
Tensions between Beijing and Washington are also weighing heavily on US businesses in China, AmCham Shanghai said.
Respondents’ optimism about the next five years was the lowest ever recorded in the survey, with just 52 percent saying they had an optimistic outlook, down 3 percentage points from a year earlier, the report said.
Last year, those surveyed expected a post-COVID-19 rebound, but by the time the survey was conducted this June, “a lot of the illusions had sort of fallen away, where we thought there was going to be a real sustained rebound,” AmCham Shanghai chairman Sean Stein told a news conference on Monday.
Asked to pick the top three challenges to their company, 60 percent of the 325 businesses that responded to the survey chose US-China relations, while the same amount pointed to the economic slowdown.
Four out of 10 companies were planning or already in the process of redirecting their investment away from China to other countries, up 6 percentage points from last year, with Southeast Asia the top alternative destination.
Two-thirds of respondents under pressure to decouple from the Chinese market had pointed to US policy as the largest push factor, rather than Beijing policy, AmCham Shanghai said.
Despite rising uncertainty, a series of visits by senior US officials to China this summer, including US Secretary of Commerce Gina Raimondo, as well as the release last month of the Chinese State Council’s 24 measures to promote foreign investment, have all been positive signals, AmCham Shanghai said.
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