Chinese businesses in the United States have endured a “slightly worse” financial landscape and see a gloomier picture ahead amid growing tensions between the two nations, a new survey has found.
Roughly one in five Chinese companies, or 19 per cent, that took part in the 2023 annual business survey conducted in February and March by the US chapter of the China General Chamber of Commerce (CGCC), expected their revenues in the US to decline over the next two years – up from the 14 per cent the survey found last year.
Of 101 responding firms, 24 per cent reported year-over-year revenue declines of more than one-fifth in 2022 – more than doubling the number of companies (11 per cent) which did so in the previous survey. Only 42 per cent of companies reported revenue growth, down from 54 per cent a year earlier.
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“The global economy experienced continued turbulence in 2022, and Chinese companies operating in the US continued to face an exceptionally complex environment,” CGCC said.
The business group believed that the severe setback caused by more than two years of the Covid-19 pandemic, in addition to rising inflation and interest rates, were still being felt.
US-China tensions continue to be a primary concern for Chinese companies in the US, the survey found: 81 per cent of respondents expressed apprehension about the state of relations, up from 75 per cent last year.
Additionally, 44 per cent of companies anticipate further deterioration in the relations between the two nations.
“There has been no meaningful improvement to the strained relationship between the US and China, which compounded the challenge for companies doing business in both markets,” the 2023 report said.
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Of the companies surveyed, 14 per cent said they expected to cut investment in the US in the coming year, up from 10 per cent last year, though an overwhelming majority said they would maintain or increase their input.
Business communities in both nations have found themselves caught up in fierce political strains between Washington and Beijing.
In February, authorities in North Dakota cancelled a corn mill project by Fufeng Group of China, acting on local residents’ concern that the venture – to be built near a US Air Force base – might pose a threat to national security.
And Virginia Governor Glenn Youngkin rejected a US$3.5 billion EV battery plant, and 2,500 new jobs for his state, because the Ford Motor project included a Chinese partner, Contemporary Amperex Technology.
The deterioration of ties is also raising concerns among US businesses operating in China, according to a recent survey by the American Chamber of Commerce in China – even though their overall outlook on the Chinese economy was improving.
US Treasury Secretary Janet Yellen last month called for better economic relations with Beijing. US National Security Adviser Jake Sullivan also said that the Biden administration is looking to “de-risk” but not decouple with China.
Persistent inflation is also among the primary concerns of the Chinese firms in the US, the latest CGCC survey showed, with 68 per cent of respondents citing it and 83 per cent reporting that inflation and economic uncertainty had already had a negative impact on their business.
Year-end lay-offs in the US technology industry further reinforced a cautious attitude towards full recovery, the report said.
The survey found that more than 80 per cent of Chinese companies remained satisfied or neutral concerning all aspects of the US business environment.
“While challenges do exist, the cumulative synergy and the benefits of the partnership between the US and China far outweigh any risks,” Hu Wei, chairman of CGCC and president of the Bank of China’s US branches, wrote.
The chamber advised Chinese companies to take advantage of current conditions to enhance their capabilities, leverage the US market’s propensity for innovation and consider “regional expansion” into Mexico and Canada.
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