Over 90% of U.S. companies in China say they won't leave despite bilateral tensions: Survey
Updated 22:56, 09-Sep-2020


Over 90 percent U.S. companies in China said they were committed to remaining in China, but more than half of them are increasingly fretful that trade tensions between the world's two biggest economies will drag out over years, a survey showed.

Around 70 percent of the more than 200 firms surveyed that own or outsource production in China said they did not intend to shift manufacturing to other countries, according to an annual business sentiment survey conducted by the American Chamber of Commerce in Shanghai and consultancy PwC China.

Only less than 4 percent are shifting some production back to the United States while 14 percent are moving some production to non-U.S. locations. The rest represent a mix of moving some production within China and some outside China.

However, the rising tensions between the two countries has made the U.S. companies worried. Half of the firms said they believe soured ties will last at least three years, up sharply from 30 percent in 2019, said the survey.

Of those, 27 percent said they believe tensions will last indefinitely, compared with just 13 percent last year.

"U.S.-China tension is the top concern for the American business community here," Ker Gibbs, president of the business chamber, said at an event to mark the release of the report. "This Beijing-Washington dialogue, they need to work this out, because it's having an impact on business performance here."

U.S.-China tensions, already high after last year's trade war, have further intensified this year due to the COVID-19 outbreak and as Washington blacklists or threatens to blacklist Chinese technology companies on national security grounds.

Thirty-two percent of respondents said they believe the deterioration in relations was affecting their ability to retain both local and expatriate staff – a view that was particularly pronounced in the education and logistics sectors.

"It's about the attractiveness of a U.S. brand given this atmosphere of tensions," said Mark Gilbraith, management consulting leader for PwC China.

However, the proportion of companies with a pessimistic five-year outlook receded slightly, at 18.5 percent versus 21.1 percent in 2019.

The improvement may be attributable to the Phase One trade deal, the report said, although it noted pessimism remained historically high. Until 2019, firms with pessimistic five-year outlooks had hovered at around 7 percent for several years.

This year's survey was conducted June 16-July 16 and garnered responses from 346 companies spanning sectors such as industrial manufacturing, automotive and pharmaceutical.

(With input from Reuters)