China market ‘not top priority’ for investment as foreign firms pessimistic about prospects

Foreign businesses find it hard to expand in China because of protectionism and rising costs, and many no longer feel welcome in the country, according to an annual survey on the mainland.

The survey by the American Chamber of Commerce in China comes just days before Donald Trump’s inauguration as the 45th US president. Trump has been wooing US factories to return home and threatening punitive measures against imports from China.

Rising protectionism and higher costs are discouraging foreign investment in China, and there are concerns about Sino-US ties, according to the survey. The chamber sent a questionnaire to its 849 member companies from the US, Europe, Australia and Asia. Of those, 522 responded – a record high.

Eighty per cent of the respondents said their margins in China were “less than or only equal to” their global average, and an equal proportion of respondents said they “feel foreign companies are less welcome in China than in the past”, and more than 60 per cent said they had no confidence in Beijing’s promises of opening China’s market further.

As a result, a growing number of foreign businesses were “de-prioritising” China as a target for investment expansion, the chamber said.