Chinese companies still like US market

Chinese enterprises in the US are generally committed to the country's market, despite strained bilateral relations and an increasingly hostile business environment, according to a survey of Chinese companies published Wednesday.

The report, released by the China General Chamber of Commerce (CGCC), reflects the sentiment of senior executives at more than 1,000 US-based Chinese companies.

The survey was conducted in February and March, before the onset of the coronavirus pandemic and the deterioration of China-US relations.

The report was released just a few days before Chinese Vice-Premier Liu He and US Trade Representative Robert Lighthizer are reportedly scheduled to meet on Aug 15 to review the implementation of the phase one trade deal enacted on Feb 15.

2019 marked the fifth year of downturn in both growth and profitability, the survey noted. The trade war and the subsequent punitive tariffs from both sides have resulted in a decline of bilateral trade flows in the first three quarters of 2019, with US imports from China falling by 13 percent.

The trade dispute has had an adverse impact on business operations as well, with more than 78 percent of Chinese companies reporting they've been negatively impacted by the escalating decline of trade relations in 2019.

Sixty-five percent of respondents either already have experienced an impact to their business relationship with US partners and/or clients or expect long-term implications.

Effects on operations cited by the companies included the decrease of price competitiveness in the US market due to tariffs on products (41 percent) and the difficulty of obtaining work visas for cross-border personnel exchanges (40 percent).

As a result of those challenges, 30 percent of companies planned to delay or cancel future investments in the US. Forty-four percent intend to increase investment in other regions, such as in other Asian countries or in Europe.

The survey also cited cultural differences and unfamiliarity with laws as top challenges for Chinese companies in the US.

However, the increasingly complex US-China relationship remains the top reason for concern and uncertainty. The current US national strategy toward China labeled it a "strategic competitor", the survey noted.

"As the US-China relationship is changing in fundamental ways, companies generally hold conservative views on its future directions. Many of the essential ideas that once guided the relationship are being called into question, such as engagement, cooperation, and convergence," it added.

When asked about the forecast for US-China relations in 2020, 37 percent of respondents anticipate it to remain the same; the number last year was 29 percent.

The US remains a key investment target for Chinese companies, with 51 percent indicating that it is a top three priority. Their motivation for entering the US market is a desire to fully engage in the global economy, according to the research.

Despite the souring of US-China trade relations, 95 percent of respondents said they had no plan to withdraw headquarters from the US, and 70 percent indicated they had no intention to hold off on investments in the US.

Reports of declining China-US relations have not dampened the outlook of Chinese companies.

Two-thirds of respondents expect the US investment and business environment to either remain the same or improve over the next two years, and more than 90 percent of respondents expect that their investments in the US will either remain the same or grow over the next year.

Nearly half of respondents said they intend to increase hiring in the next two years, while only 4 percent of respondents anticipated cutting staff.

"Business communities in both countries understand the mutual beneficial and mutually dependent nature of US-China economic relations," said Tan Xu, vice-chairman of CGCC and president of China Telecom Americas, during a Wednesday webinar to launch the report.

"In a year marked by uncertainties and tumult, this survey demonstrates how much we value our relationship with American consumers, labor force and communities," he added.

Chinese member companies invested more than $123 billion in the US economy, according to the CGCC. They employ more than 220,000 people, and indirectly support more than 1 million jobs in the US labor market.

Craig Allen, president of the US-China Business Council, and William Zarit, chairman of the American Chamber of Commerce in China, said that the CGCC results mirrored similar research conducted by their organizations.

"I think the similarities that both countries' companies are facing in each other's countries are more similar than different," said Zarit, who cited rising tensions in the bilateral relationship, unclear laws and difficulty with regulatory compliance as the top concerns faced by American companies in China.

Allen said he remains cautiously optimistic about US-China trade in the near term. "I'm hopeful that we will continue the phase one negotiations, and after the election, can engage in robust phase two negotiations, which I would hope would bring some relief to Chinese investors in the US, or future Chinese investors in the US," he said.