US companies optimistic about China business under Biden, survey finds

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US and China flags.

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BEIJING – The outlook for American businesses in China is improving, whether politically or revenue-wise, the American Chamber of Commerce in Shanghai said in a poll released on Friday.

Of the 124 company leaders surveyed from 11 to 15 November, only two said they were more pessimistic about doing business in China after the victory of this month’s presidential election, Joe Biden.

More than half, or 54.8%, said they are “more optimistic” and 8.1% are “far more optimistic”, the survey found, given the expected change from President Donald Trump’s administration.

“Most of our respondents see this as a positive,” Amkham Shanghai president Kerr Gibbs told CNBC in a phone interview. “The Biden administration will be positive for environmental sustainability, relationship stability.”

Tensions rose between the US and China under the Trump administration, which adopted a tougher approach to addressing longstanding complaints about unfair trade practices in the Chinese state-dominated system. Both countries implemented tariffs on billions of dollars worth of goods from the other. The White House later put Chinese telecommunications giant Huawei and other companies on a blacklist that prohibits them from purchasing parts from major US suppliers.

Under a Biden administration, AmCham expects only 5.6% higher tariffs of Shanghai survey respondents. Instead, 70.2% of the anticipated new US leadership would work more with other countries to stress trade relations with China.

The AMCH Shanghai study was conducted with PwC and included 50 chamber members with global revenues of over $ 1 billion. The scale of the survey was smaller than that of 346 respondents who participated in Amcham Shanghai’s annual business climate survey conducted from 16 June to 16 July this year.

Higher revenue than

China’s economic recovery from the coronavirus epidemic – while the US is still struggling to control the outbreak – is also helping businesses.

With just over a month to 2020, nearly half – or 47.6% of respondents – estimate that their 2020 revenue will exceed last year. This is just one-third, or less than 32.5%, expected in July.

Most companies with manufacturing operations in China intend to keep production in the country for the next three years, with only three companies planning to move at least 30% of manufacturing overseas, the survey found.

Kovid-19 first emerged in the Chinese city of Wuhan late last year. The disease intensified its spread around the Lunar New Year, leaving more than half of the countries temporarily closed. While its outbreak within the country had halted by the end of the first quarter, coronovirus had turned into a major global economy in Europe and North America as a global epidemic.

Business challenges remain

The increased optimism is not at all apparent to the American business sentiment in China. A third of respondents are concerned about possible exit restrictions, restrictions on their employees and other restrictions.

The survey also found that only 13.7% of respondents intend to increase investment in China, with the majority sitting tight or unspecified on their local development plans.

“Business friction is not going to go away,” Gibbs said. “There are still structural problems that need to be resolved.”

Over the years, the Chinese government has issued new policies to improve the foreign trade environment. But critics point out that implementation is uneven and forced technology transfer, lack of intellectual property protection and limited market access issues.

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