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US firms bullish on prospects in China

Companies from the United States doing business in China are becoming more optimistic about the China-US business environment despite fears of trade tariffs and political rhetoric. According to the 2018 China Business Climate Survey from the American Chamber of Commerce in China and Bain & Company, about 36 percent of respondents believe relations between the two major trading partners will improve this year, up substantially from just 17 percent in 2017. "Regarding the economy, there is cautious optimism that the 'new normal' rate of growth is sustainable for the foreseeable future, providing opportunities for business to expand," said William Zarit, chairman of AmCham in China.

The survey found that the top challenges for companies doing business in China was lack of clarity in regulations, inconsistent application of the law and rising labor costs.

This is the 20th year that AmCham China has polled its members on the business environment in China. The survey was conducted in the fall of 2017 and was completed by 411 company representatives. Here are a few of the charts that I found most interesting.

bilateral relations China US 2018

It is quite clear that heading into 2017, many businesses worried about the new administrations tough words on China during the Presidential campaign which included labeling China a currency manipulator and potential trade tariffs. 2018 turned out to be quite benign between the two superpowers and Trump and Xi met several times throughout the year.

China liberalizing

The survey found that 46% believed the government was committed to further opening China to foreign investment over the next three years, up from 34% last year. In the fall, China announced plans to ease limits on foreign ownership of financial services groups including commercial banking, securities, futures, asset management and insurance. China will lift the cap on foreign equity stakes to 51 percent from the current 49 percent, and the cap will be removed entirely three years after the new limit takes effect. Examples like this show that China continues to open its economy to foreign investment.

China tech leaders

This chart is especially interesting. 52 percent of businesses feel that China is more advanced or the leading-edge digital market globally. It is even more pronounced in the consumer sector where 67 percent see China as a tech leader - this is no surprise given China's e-commerce and mobile payment innovation.

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About the Author: Chris Wang

Chris Wang

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