American businesses operating in China have reported ongoing concerns, primarily stemming from geopolitical tensions between Beijing and Washington, according to a report by the American Chamber of Commerce in China. The survey also highlighted other worries, including inconsistent and unclear policies, escalating labor costs, and data security issues.
Despite Chinese leadership expressing support for foreign direct investment, many members of the American Chamber still face obstacles to investment and operations, including discriminatory policies and negative public relations campaigns that breed suspicion towards foreign entities.
The report acknowledged the improvement in relations in 2023, marked by summit meetings between Chinese President Xi Jinping and President Joe Biden, but noted the looming U.S. presidential election in November as a potential disruptor of the business environment.
During a recent visit to Beijing, U.S. Treasury Secretary Janet Yellen raised concerns about potential overcapacity in Chinese industries, such as electric vehicles, steel manufacturing, and solar panels, which could potentially crowd out American and other foreign manufacturers.
The report emphasized the importance of high-level exchanges and communication between the United States and China. It also urged China to establish and implement transparent and equitable economic policies that treat domestic and foreign entities equally.
In response to concerns about the risk of being accused of violating China’s national security, the report appealed to Chinese leaders to clarify and narrow the scope of the country’s anti-espionage law to prevent interference with normal business operations.
The report also provided recommendations for the U.S. side, such as establishing clear visa policies for Chinese students to demonstrate their welcome. It also encouraged American students to study in China.
American businesses have generally expressed no plans to relocate supply chains out of China due to its massive market of 1.4 billion people. However, their enthusiasm for increasing investments and maintaining China as a strategic focus has waned as its advantages have diminished.
