US firms in China face hardest year in decades, says AmCham

A growing number of chamber members report feeling less welcome in China than previously

PUBLISHED : Tuesday, 18 April, 2017, 5:55pm
UPDATED : Tuesday, 18 April, 2017, 10:09pm

US companies in China face one of the most challenging environments in decades this year, the American Chamber of Commerce in China says.

Political and economic transitions in the United States and China, an increasing perception of animosity toward foreign businesses and slowing growth are dimming the outlook, AmCham said in a report on Tuesday. Despite recent rhetoric regarding opening up and globalisation, investment barriers remain high, the chamber said in its annual American Business in China White Paper.

“The pace of economic reforms and market opening has been slow and faltering,” AmCham said. While administration, regulatory transparency and intellectual property protection have improved, policies designed to support domestic industries and national champions have narrowed the space for participation by foreign companies, it said.

Is China making life difficult for foreign companies?

The warning is the latest by the Beijing-based non-profit group, which said in January that more US companies are slowing investment. About 81 per cent of its members reported feeling less welcome in 2016 than previously, up from 77 per cent in 2015.

“We are experiencing a clear increase in uncertainty as the US-China relationship enters a new era,” AmCham Chairman William Zarit wrote in his introduction to the report. “The Trump administration is still finding its feet, and China itself will be undergoing a political transition this year. Multinational companies spanning this relationship, both American and Chinese, are paying close attention to developments as they make their plans.”

More transparency would aid the government’s anti-corruption fight and give private companies more confidence that their investments would be fairly protected under the law, Zarit said. The stability and predictability provided by an unambiguous regulatory environment would be important for China’s continued growth, he said.

Why foreign companies are shutting shop in China

At a briefing on Tuesday, Lester Ross, chairman of the lobbying group’s policy committee, said the Chinese government recognises that current policies are not sufficient to welcome foreign investment, and that policymakers are seeking ways to open their markets further.

We are experiencing a clear increase in uncertainty as the US-China relationship enters a new era
AmCham Chairman William Zarit

He saw it as a positive sign that the two sides agreed to work together for 100 days, during which he said China might make some concessions on issues that had been pending for a long time to show progress and build rapport. The real question was whether the 100-day plan would provide momentum to address more complicated issues, Ross said.

Zarit also said it would be a shame if President Donald Trump’s administration stopped short of pressing Beijing to open more markets to US businesses and level the playing field in exchange for China’s objectives.

Trump told the Wall Street Journal last week he had offered Chinese President Xi Jinping more favourable trade terms if China helped to resolve the threat from North Korea.