Most US companies optimistic about doing business in China after Biden’s win, survey finds

21-Nov-2020 Intellasia | CNBC | 6:02 AM Print This Post

The outlook for US businesses in China is improving, whether politically or revenue-wise, the American Chamber of Commerce in Shanghai said in a survey released Friday.

Out of 124 company leaders surveyed from November 11 to 15, only two said they are more pessimistic about doing business in China following President-elect Joe Biden’s win this month.

Just over half, or 54.8%, said they are “more optimistic” and 8.1 percent are “much more optimistic” given the expected change from President Donald Trump’s administration, the survey found.

The flags of the U.S. and China. (Getty Images)

The flags of the U.S. and China. (Getty Images)

“The majority of our respondents look at it as a positive,” Ker Gibbs, president of AmCham Shanghai, told CNBC in a phone interview. “The Biden administration would be a positive to the stability of the environment, the stability of the relationship.”

Tensions between the US and China escalated under the Trump administration, which took a tough approach to addressing longstanding complaints about unfair business practices in the Chinese state-dominated system. Both countries applied tariffs on billions of dollars’ worth of goods from the other. The White House subsequently put Chinese telecommunications giant Huawei and other companies on a blacklist that prevents them from buying parts from key US suppliers.

Under a Biden administration, only 5.6 percent of AmCham Shanghai survey respondents expect more tariffs. Instead, 70.2 percent anticipate new US leadership will work more with other countries to put pressure on trade relations with China.

The AmCham Shanghai study was conducted with PwC and included 50 chamber members with global revenue of more than $1 billion. The survey’s scale was smaller than the 346 respondents who participated in AmCham Shanghai’s annual business climate survey conducted from June 16 to July 16 this year.

Expecting higher revenue

China’s economic recovery from the coronavirus pandemic while the US is still struggling to control the outbreak is also helping businesses.

With just over a month left for 2020, nearly half or 47.6 percent of respondents anticipate their 2020 revenue would exceed last year’s. That’s up from just under a third, or 32.5%, who had the same expectation back in July.

The majority of companies with manufacturing operations in China intend to keep production in the country in the next three years, with only three firms planning to move at least 30 percent of manufacturing overseas, the survey found.

Covid-19 first emerged in the Chinese city of Wuhan late last year. The disease accelerated its spread around the Lunar New Year, forcing more than half the country to shut down temporarily. While the outbreak stalled within the country by the end of the first quarter, the coronavirus had turned into a global pandemic hitting major economies in Europe and North America.

Business challenges remain

The increased optimism isn’t an all-clear for US business sentiment in China. A third of respondents are concerned about potential exit bans, detentions and other restrictions on their employees.

The survey also found that only 13.7 percent of respondents intend to increase investment in China, with the majority sitting tight or undecided on their local development plans.

“Trade friction isn’t going to go away,” Gibbs said. “There are still structural problems that need to be solved.”

In the last few years, the Chinese government has released new policies for improving the foreign business environment. But critics say implementation is uneven and forced technology transfer, lack of intellectual property protection and limited market access remain issues.



Category: China

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