Simmering tensions between Beijing and Washington continue to be a major concern for American companies operating in China, as highlighted in a recent report by the American Chamber of Commerce in China. The report, released on Tuesday, revealed that inconsistent and unclear policies, rising labor costs, and data security issues are among the top worries for U.S. businesses in China.
Despite assertions from Chinese leaders that foreign businesses are welcome, many American companies still face obstacles hindering free competition. The report emphasized that barriers to investment and operations persist, including discriminatory policies and public relations campaigns that foster suspicion of foreigners.
While there was a noted improvement in U.S.-China relations in 2023, culminating in summit meetings between Chinese leader Xi Jinping and President Joe Biden, the upcoming U.S. presidential election in November looms large over the future business landscape.
During a recent visit to Beijing, U.S. Treasury Secretary Janet Yellen expressed concerns about potential overcapacity in Chinese industries like electric vehicles, steelmaking, and solar panels, which could impact foreign manufacturers.
The report underscored the importance of high-level exchanges and communication between the two countries as a top priority. Despite American companies seeing improved profits in China last year, less than half expect to remain profitable in 2024.
While optimism about China's own economic growth is on the rise among American Chamber members, the report urged China to implement transparent and equitable economic policies for both domestic and foreign entities.
Recommendations included clarifying and narrowing the scope of China's anti-espionage law to prevent interference with normal business operations and providing clear visa policies for Chinese students studying in the U.S. and vice versa. The report also advised against unilateral controls that may prove ineffective in achieving national security and foreign policy objectives.
With a wide array of recommendations spanning various industries, the 617-page bilingual report called for continued engagement between the U.S. and China to address concerns and foster a more conducive business environment. While American companies are not currently planning to relocate their supply chains from China due to its significant market size, the report noted a decreasing willingness to increase investments and strategic focus in the country as its advantages diminish.
