China-US relations shaky: Survey

Chinese direct investment in the US totaled $1.8 billion between January and May. That's a 92 percent drop compared to the same period in 2017, and the lowest level in seven years, according to a report released Wednesday by Rhodium Group, a US research firm which tracks Chinese direct investment in the US.

Another survey carried out by China General Chamber of Commerce-USA showed that 44 percent of respondents see deterioration in China-US economic and trade relations in 2018.

And the same proportion believe that a stable and healthy relationship between the two countries is extremely important to the success of their company's business in the US.

The CGCC 2018 Annual Business Survey Report was released in Washington on Wednesday.

Foreign direct investment from China to the United States declined 30 percent in 2017 compared to a record high in 2016, according to the CGCC report.

"It's clear that the US-China relationship is facing incremental challenges. And perhaps even roadblocks for further development and co-operation," said Xu Chen, chairman of the CGCC and president of Bank of China USA.

Xu said that Chinese companies operating in the US have "bought American-made products, created American jobs, benefited American communities and paid American taxes."

It is the fifth consecutive year the CGCC has conducted its annual business survey on Chinese enterprises in the US.

This year's survey was carried out in March 2018 and included a total of 249 responses, an increase of 17 percent over last year.

"In terms of the trade tensions, we haven't seen any real effect from that yet. Of course it's going to be a negative effect," said Daniel J. McQuade, group president of AECOM Construction Services.

Respondents were especially concerned with high tariffs on imports (60 percent) and the prospect of tighter senior executive work visas and immigration policies (63 percent).

Concerns are rising among Chinese executives in the US about the tone and temperament of relations between China, the US, and their respective companies. More than 40 percent of respondents expressed concern about accusations of intellectual property theft or cyber attacks, and 25 percent by the nativist "Buy American, Hire American" rhetoric.

According to the survey, nearly 60 percent of respondents said the headcount of their workforce rose in 2017, despite the trade tensions. The same percentage expects to increase their workforce in the next two years — with two-thirds anticipating an increase of at least 10 percent.

Jeff Zhao, vice-president of BeijingWest Industries, said that recruiting talent was not easy for his company. Steve Tan, president of China Telecom Americas, said that hiring talent was not a problem for them.

Looking to the future, 48 percent of respondents are optimistic about the US commercial environment over the next three years, and only 11 percent are pessimistic.

"I think it's going to be still like that for the next 6-12 months," said Shau Zhang, partner and market leader of Ernst & Young's Americas China Overseas Investment Network.

"We want Chinese investors in Kentucky," said Kentucky Governor Matt Bevin.

"We can not be an island unto ourselves here in America," Bevin added. "We need each other. We want each other… and investment makes everything fall in line."

The business community should be unified to address their needs, suggested Michael McDonough, chief economist at Bloomberg.

"If businesses coming together saying this is the right policy, this is something we should do, I think we can go a long way to influence what's happening here over the course of next couple of years," he said.