US and European companies operating in China continue to report record-low business confidence and profits amid geopolitical tensions between Beijing and the West and a slowing Chinese economy, two separate reports published last week by the American Chamber of Commerce in Shanghai and the EU Chamber of Commerce in China showed. The reports also found that more companies than ever are pessimistic about their business outlook in China due to Beijing’s failure to implement policies to stimulate and revive the world’s second-largest economy.
The American Chamber of Commerce’s report showed that only 47 percent of US firms were optimistic about their business outlook in China over the next five years, 5 percentage points lower than a year earlier and the lowest level since the US business group started the survey in 1999. Meanwhile, just 66 percent of the US businesses surveyed said they were profitable last year, a record low, the report said.
Similarly, 44 percent of European companies polled said they were pessimistic about their profitability in China over the next two years, the highest level since records started in 2012, the EU Chamber of Commerce’s report showed. Nearly two-thirds of respondents also said their profit margins in China had sunk to equal to or below the global average.
The reports underscore a trend of a persistent decline in foreign direct investment into China this year, which fell 31.5 percent during the January-to-August period from a year earlier, greater than the 29.6 percent fall during the first seven months and accelerating from the 26.1 percent decline in the first quarter, Chinese Ministry of Commerce data released on Saturday showed.
They also come after IBM Corp last month said it would shut down a key research division in China, affecting more than 1,000 employees, three months after Microsoft Corp confirmed it had offered to relocate some of its employees in China. Meanwhile, Taiwanese restaurant chain Din Tai Fung last month also announced it would close 14 stores in northern China by the end of next month, although the chain’s stores in Taipei, New York and London still have customers lining up to dine on a first-come, first-served basis.
While geopolitical tensions and tough regulations have long been risk factors for Taiwanese firms, China’s struggling economy has increasingly emerged as a major concern, driving more of them to repatriate funds to Taiwan instead of parking them in China for potential investment purposes, the latest data released last week by the Financial Supervisory Commission (FSC) showed. Publicly listed firms repatriated NT$65.6 billion (US$2.06 billion) of investment gains from China in the first half of this year, an 8.25 percent increase from a year earlier, the highest figure on record for the period. Firms — including those listed on the Taiwan Stock Exchange and the Taipei Exchange — remitted their investment income, dividends and proceeds from share sales back home to align with their business groups’ capital planning strategies, the commission said.
FSC data also showed that 1,198 listed Taiwanese companies had invested in China as of the end of June, 11 fewer than at the end of last year, the largest decline in seven years for the same period.
The data reflect a trend that more Taiwanese firms have become cautious about their investment across the Taiwan Strait and are preparing global strategies in light of rising risks in China’s business environment and a slowing economy, along with the strained relationship between Taipei and Beijing and the intensifying rivalry between the US and China, not to mention fierce competition with Chinese firms who benefit from extensive government support. Most importantly, as Chinese authorities still do not understand the full scale of their country’s dire economic situation, they are likely to see more international firms scale back their operations there in the near to medium term.
The Chinese Communist Party (CCP) has long been expansionist and contemptuous of international law. Under Chinese President Xi Jinping (習近平), the CCP regime has become more despotic, coercive and punitive. As part of its strategy to annex Taiwan, Beijing has sought to erase the island democracy’s international identity by bribing countries to sever diplomatic ties with Taipei. One by one, China has peeled away Taiwan’s remaining diplomatic partners, leaving just 12 countries (mostly small developing states) and the Vatican recognizing Taiwan as a sovereign nation. Taiwan’s formal international space has shrunk dramatically. Yet even as Beijing has scored diplomatic successes, its overreach
After 37 US lawmakers wrote to express concern over legislators’ stalling of critical budgets, Legislative Speaker Han Kuo-yu (韓國瑜) pledged to make the Executive Yuan’s proposed NT$1.25 trillion (US$39.7 billion) special defense budget a top priority for legislative review. On Tuesday, it was finally listed on the legislator’s plenary agenda for Friday next week. The special defense budget was proposed by President William Lai’s (賴清德) administration in November last year to enhance the nation’s defense capabilities against external threats from China. However, the legislature, dominated by the opposition Chinese Nationalist Party (KMT) and Taiwan People’s Party (TPP), repeatedly blocked its review. The
In her article in Foreign Affairs, “A Perfect Storm for Taiwan in 2026?,” Yun Sun (孫韻), director of the China program at the Stimson Center in Washington, said that the US has grown indifferent to Taiwan, contending that, since it has long been the fear of US intervention — and the Chinese People’s Liberation Army’s (PLA) inability to prevail against US forces — that has deterred China from using force against Taiwan, this perceived indifference from the US could lead China to conclude that a window of opportunity for a Taiwan invasion has opened this year. Most notably, she observes that
The Chinese Nationalist Party (KMT) said on Monday that it would be announcing its mayoral nominees for New Taipei City, Yilan County and Chiayi City on March 11, after which it would begin talks with the Taiwan People’s Party (TPP) to field joint opposition candidates. The KMT would likely support Deputy Taipei Mayor Lee Shu-chuan (李四川) as its candidate for New Taipei City. The TPP is fielding its chairman, Huang Kuo-chang (黃國昌), for New Taipei City mayor, after Huang had officially announced his candidacy in December last year. Speaking in a radio program, Huang was asked whether he would join Lee’s
RSS