US businesses in China are hesitant about increasing investment due to rising regulatory uncertainties, pessimism over market access and economic growth concerns, a survey released yesterday by the American Chamber of Commerce (AmCham) said.
About 40 percent of the 353 respondents saw the regulatory environment as one of the driving factors of pessimism over doing business in China, up 16 percentage points from a year earlier, the survey said.
More than one-third expect to lower investment due to policy uncertainties, it said.
“In terms of regulatory uncertainties, it’s the technology and R&D [research and development] intensive industries that are feeling that the most,” AmCham China president Alan Beebe said at a briefing.
China’s dual circulation strategy and the call for greater self-sufficiency means it is “working to invest further in technology and having industrial policies that would put companies at a relative disadvantage over time,” Beebe said.
Ambiguity around the “common prosperity” goal also resulted in confusion among firms over how policies might affect them, he said.
Beijing last year carried out sweeping regulatory crackdowns on sectors from education to Internet platforms to address monopolistic practices, narrow the nations’ wealth gap and make economic growth more sustainable.
The campaign has taken a breather since late last year as concerns have mounted over a growth slowdown.
Rising tensions between China and the US remain a top concern for the companies, the survey said.
The respondents’ outlook on US-China relations was less rosy for this year, with 24 percent expecting ties to deteriorate, up from 19 percent.
This could show initial optimism that followed US President Joe Biden’s appointment — and hopes for an improvement in bilateral relations — has faded with many policies of the administration of former US president Donald Trump remaining, Beebe said.
More than 80 percent of the surveyed companies said that increasing the transparency, predictability and fairness of the regulatory environment would encourage more investment, while 65 percent recommended limiting the use of industrial policies that create barriers.
Fewer than half of the companies surveyed were confident in the government’s commitment to further open the market to foreign investment in the next three years, down from 61 percent in the previous year, according to the survey, which was conducted in October and November last year.
Profitability of US firms rebounded from a year earlier, but still has not fully recovered to pre-COVID-19 pandemic levels, the survey said.
Those optimistic about domestic market growth in the next two years declined to 64 percent, from 75 percent a year earlier.
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