SHANGHAI (REUTERS) – US companies’ optimism about business conditions in China has recovered to hit three-year highs even though the firms have reservations about Beijing’s Covid-19 policy, an annual survey showed on Thursday (Sept 23).<\/p>\n
Beijing’s wide-ranging crackdown on companies has also unnerved US firms, an American industry lobby executive said.<\/p>\n
The American Chamber of Commerce in Shanghai, which conducted the survey with consultancy PwC China, attributed the renewed optimism to rising revenues as well as ebbing concerns over the Covid-19 pandemic in China, which has largely gotten control over its spread with a zero-tolerance policy.<\/p>\n
US-China relations reached a nadir in 2019 during the Trump administration, which launched a bruising trade war with China and also floated sanctions toward some of China’s highest-profile tech companies.<\/p>\n
The Biden administration, however, has shown more reservation towards taking direct action against Beijing, though relations remain tense.<\/p>\n
“Business in China recovered quickly from last year’s lockdown,” said Ker Gibbs, president of the American Chamber of Commerce in Shanghai which published the survey that was conducted between mid-June and mid-July.<\/p>\n
“However, we are still feeling the pandemic’s effects, with members continuing to be negatively impacted by China’s travel restrictions. Overall business performance is good but there are signs of nervousness.”<\/p>\n
Of the 338 respondent companies, 78 per cent described themselves as “optimistic or slightly optimistic” about their five-year business outlook in 2021, nearly 20 percentage points more from 2020 and a return toward 2018 levels, the survey said.<\/p>\n
By contrast, in 2021, 10 per cent of respondent companies described themselves as “pessimistic” about their five-year outlook, compared to 18 per cent and 21 per cent of respondents in 2020 and 2019, respectively.<\/p>\n
But firms expressed reservations toward some Chinese policy in the aftermath of Covid-19, especially with respect to hiring labour, the survey said.<\/p>\n
About two-thirds of respondents said they plan to increase their China headcount this year, a 31.4 percentage point increase from 2020, but 62.3 per cent of respondents described workforce availability as posing some hindrance or a serious hindrance to operations.<\/p>\n
China’s borders remained closed to most visitors without proper work and residence permits, and all entrants must complete at least two-week quarantine upon arrival.<\/p>\n
Companies also reported a slight dip in policy transparency. In 2021, 46.7 per cent of respondents called the regulatory environment transparent, down from 51.4 per cent the year prior.<\/p>\n
Those figures come during a year of ongoing regulatory tightening from Chinese authorities targeting a range of industries, as well as the implementation of new laws governing data privacy and data security.<\/p>\n
“Further hindering our members, many regulatory changes were enacted after our survey closed. While well-intentioned, they were announced with little or no warning, which has unsettled companies,” Gibbs added.<\/p>\n
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