Thu Sep 12 01:06:04 UTC 2024: ## US Businesses Lose Faith in China: Record Low Optimism Amid Geopolitical Tensions and Economic Slowdown

**Shanghai, China** – A new survey by the American Chamber of Commerce in Shanghai reveals a bleak outlook for US businesses in China, with confidence in the five-year business outlook hitting a record low. Only 47% of US firms surveyed expressed optimism, a five percentage point drop from last year. This marks the lowest level of optimism since the survey began in 1999.

The decline in confidence is attributed to a confluence of factors, including China’s slowing economic growth, fierce domestic competition, and escalating political tensions between the US and China.

“It’s domestic demand, it’s deflation, and of course we can’t ignore the membership’s perceptions and concerns about geopolitics,” said Allan Gabor, Chairman of AmCham Shanghai. “This touches investments and touches operating plans in China in terms of how we develop business plans in China for the future.”

The survey also found that a record low of 66% of US firms reported profitability in 2023, highlighting the challenges businesses face in the Chinese market.

Geopolitical tensions are the biggest challenge cited by 66% of respondents, with uncertainty surrounding the future of US-China relations heightening ahead of the US presidential election. The potential imposition of higher tariffs on Chinese-made products, including EVs, semiconductors, and solar cells, has further strained the relationship.

In response to these challenges, 40% of US firms are either redirecting or considering redirecting investment away from China, with Southeast Asia and India emerging as popular alternative destinations.

The survey echoes sentiments expressed in a recent report by the European Union Chamber of Commerce in China, which noted that the challenges of doing business in China are beginning to outweigh the returns.

While there was a slight increase in the number of businesses perceiving China’s regulatory environment as transparent, a growing number of companies reported favoritism towards local businesses.

These findings paint a stark picture of the evolving landscape for US businesses in China, highlighting the growing challenges and uncertainties they face in navigating the complex geopolitical and economic environment.

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