79% Chinese companies see business conditions in the US worsening since last year, survey shows
Published: Jun 25, 2021 01:01 PM Updated: Jun 25, 2021 07:45 PM
Photo: Xinhua

Photo: Xinhua

A newly-released survey by a Chinese business community in the US has presented a dismal picture of Chinese companies operating in the US, where companies are becoming more concerned on how to navigate through unchartered water amid deteriorating bilateral relations between the world's two largest economies and rising anti-China rhetoric. 

With Washington intensifying efforts to crack down against Beijing, growing uncertainties have prompted some Chinese businesses to considerer reducing and holding off investment in the US, or even shifting to other markets as a result - a decoupling trend which industry observers said could weigh on US economy and gradually weaken the competitiveness of US companies.

About 29 percent of the Chinese companies view US investment and business environment to have worsened substantially in 2021, and a significant majority of 79 percent of the respondents see US business conditions worsening since last year's survey, according to a survey the China General Chamber of Commerce - USA (CGCCUSA) sent to the Global Times on Friday.  

The survey is titled Annual Business Survey on Chinese Enterprises in the US, which reflects on the US business environment and challenges encountered while Chinese businesses operating in the US. 

The concern on complex China-US relations, which had topped the list of difficulties in recent years under former Trump administration, shows no sign of a turning point under Biden administration which labels China as a "strategic competitor." According to the survey, most companies hold conservative views on the forecast of China-US relations, with 65 percent citing fraying relations as one of the biggest impediments to their future investment plan in the US.

As part of the ongoing effort to restrict China's rise, the US House of Representatives Foreign Affairs Committee has scheduled a meeting next Wednesday to consider sweeping legislation to boost economic competitiveness and push Beijing on human rights, the Strait Times reported on Thursday. 

What's noteworthy in the survey is that 18 percent of the Chinese companies reported cultural conflicts, including anti-Asia/China sentiment and operation management styles, are continuing as one of their top concerns in 2021. In 2019 before the US hyped the coronavirus origin issue, the ratio stood at 28 percent.

Also, the tariff war continues to weigh on the operation of Chinese businesses in the US this year, inflating their cost on importing finished products and sourcing from upstream supplies. The survey showed that in 2021, some 59 percent of respondents reported being negatively impacted by the tariffs in place, compared with 73 percent in 2020.

While some investors remain indifference to trade relations, they took note of the Committee on Foreign Investment in the United States (CFIUS) which screens foreign investment, criticizing the organizations as "politicized and opaque." 

Taken together, these difficulties are leading to an atmosphere that would further deter Chinese investment, and analysts said in the long-term, the trend will drive up inflation in the US and make US consumers suffer from higher spending on daily necessities. 

The survey showed that 16 percent of the respondents said they plan to decrease their investments in the US this year, a small increase from the 7 percent recorded in 2020. 

China US Photo:GT

China US Photo:GT

In light of the trade disruption that poses threat to supply chain management last year, 30 percent of respondents impacted by the decline in trade relations said they will delay or cancel future investment in the US, and 44 percent intend to increase investment in other regions, including Asia, Europe and South America, according to  the 2020 business report issued by CGCCUSA. 

Tian Yun, vice director of the Beijing Economic Operation Association, told the Global Times on Friday that it is likely that the decoupling streak would accelerate in the high-tech sector, as the Biden administration is doubling down efforts to build a "China-free" high-tech supply chain.

"Washington could further mobilize political power to squeeze Chinese high-tech firms out of the US market. Also, tech cooperation with US companies could face more hurdles than ever," Tian said, while suggesting Chinese companies speed up diversification efforts.

Some analysts said that the US' hostile policy environment will ultimately make Chinese firms strong within the international sphere, as they're reducing expenditures, controlling costs, and improving their competitiveness to cope with difficulties. Whereas in the US side, local companies are protected well at home and may gradually lose their competitive edge.