An increasing number of US companies operating in China are opposed to the trade war, which is hurting their business outlook from revenues to investment, according to a survey by the American Chamber of Commerce in Shanghai.
Some 75 per cent of US firms disagree with US President Donald Trump’s use of tariffs to resolve the trade dispute, compared with 69 per cent last year, the chamber said in its 2019 China Business Report released on Wednesday. Still, almost a quarter thinks the US should use trade and market access reciprocity to achieve a balance in trade.
The chamber surveyed 333 of its 3,000 members for the study.
“The tariffs and the trade tensions are eroding their profits and investments,” said Ker Gibbs, president of AmCham Shanghai. “If the US continues to use tariffs as the primary tool for achieving its trade and investment aims, we risk not only US jobs and company profits, but also giving up the market share in China to European and other international competitors. That market share will be hard to win back.”
Twenty-seven per cent of the respondents see lower revenues in 2019 than last year, compared with 6.1 per cent in 2018. Forty-six per cent of them blame the trade conflict for weaker sales.
The survey also found that fewer companies plan to increase investment in China. The proportion of companies willing to invest more decreased to 47 per cent from 62 per cent a year earlier. Almost 23 per cent plan to curtail investment this year.
Only 61 per cent of the US companies are optimistic about the business outlook in the next five years, compared with the historical rates of between 80 and 90 per cent, while pessimism about the future increased by 14 percentage points, with non-consumer electronic and chemical companies being the most pessimistic, according to the report.
While Beijing and Washington agreed to return to the negotiating table next month to start a new round of trade talks, there is no sign that a deal will be struck soon after the two sides slapped retaliatory tariffs against each other.
China announced on Tuesday that it will remove the quotas on stock investments by foreign investors, a move seen by some analysts that will probably amend the frayed relations, as widening access to China’s financial markets are among one of the demands of the US in the trade negotiations.
Still, the US companies fared well last year, with 77 per cent of them posting profits, the report said. Logistics companies were the most profitable, with all the respondents reporting profits, followed by chemical and pharmaceutical companies.
More from South China Morning Post:
- American Chamber of Commerce in China says smoothly functioning commerce in Hong Kong ‘fundamentally important’
- Half of US firms in China foresee acute pain from new tariffs as trade war escalates, AmCham survey finds
This article Trump’s China tariffs find scant support in the market where they do business: AmCham survey first appeared on South China Morning Post