US firms vote with their chequebooks, taking China’s side in trade war, AmCham survey finds
Most companies say they are against the tit-for-tat war between the world’s two largest economies
More than 60 per cent of US companies operating in China are bullish about their prospects in the mainland as the country’s digitalisation drive deepens, making business easier and more cost-effective, according to the American Chamber of Commerce in Shanghai.
Most of the firms are also against the tit-for-tat trade war between China and the US, with some of them continuing to seek Chinese authorities’ approval to expand their investments in the world’s second-largest economy.
Based on a survey of more than 400 American companies, the business lobby group said that American businesses “continue to perform well in China”, shrugging off the gloomy sentiment brought about by rising trade frictions between the two countries.
About 62 per cent of responding businesses expected to increase investment in China this year, up from 53 per cent that expected to in 2017.
“Uncertainty about US-China trade policy had a limited impact on investment and more companies are producing goods solely for the Chinese market,” AmCham Shanghai wrote in its 2018 China Business Report.
In Beijing, China’s Ministry of Commerce spokesman Gao Feng told a media briefing on Thursday that mainland China will continue to attract American investors.
“We hope US firms can do more to lobby the US government and work hard to safeguard their own interest,” he said.
On Tuesday, the US threatened to slap a 10 per cent tariff on a range of Chinese-made goods such as food and electronics, worth US$200 billion, in addition to duties imposed last Friday on US$50 billion of Chinese imports. Beijing has vowed to strike back.
Nearly 70 per cent of the respondents are against the retaliatory use of tariffs to achieve US President Donald Trump’s trade goal, the survey showed.
American companies in the service sector, compared with their counterparts in the manufacturing industry, are more supportive of the tariffs on Chinese goods, AmCham said. Trade punishment could be a bargaining chip to gain wider market access in the mainland.
“Obviously, there are more market access barriers for the service sector,” said Eric Zheng, chair of AmCham’s board of governors. “You get more people from the service sector supporting the overall trade policies.”
The US electric carmaker Tesla announced on Tuesday the establishment of its first overseas plant in Shanghai, with initial investment expected to hit US$10 billion.
The announcement followed Beijing’s move in April to scrap the 50 per cent foreign ownership limit for vehicles powered by alternative energy.
Manufacturing businesses continued to show improved performance for the third straight year in 2017. About 80 per cent of manufacturers reported revenue growth in 2017, compared to 54 per cent in 2015 and 71 per cent in 2016, the survey found.
China’s digitalisation drive has resulted in huge demand for technology hardware, software and service companies, with 85 per cent of respondents in those sectors anticipating raising their investments in 2018.
American companies in the aerospace and aviation sector also look to increase their investments in China, with 78 per cent of the respondents pledging to plough additional capital in the country this year.
Additional reporting by Amanda Lee