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Customers at a Tesla dealership inShanghai. [Photo by Wang Gang/For China Daily]

Survey: Companies say they'reprofitable, plan to remain despite strained relations

Despite an unprecedented downturn inrelations between the world's top two economies during the COVID-19 pandemic,United States businesses are not leaving the Chinese market, where most aremaking profits and optimistic about future growth, the US-China BusinessCouncil said in its annual member survey on Tuesday.

The survey was conducted in late May andJune among more than 100 of the council's member companies doing business inChina; half of them are manufacturers, and 45 percent provide services.

It found that projections by the companiesfor the five-year business outlook in China seem bullish, with nearly 70percent expressing optimism about market prospects, and 87 percent saying theyhave no plans to shift production out of China.

Only a small fraction－4 percent－of those that are planning to movetheir operations out of the China market are planning to return to the US, thesurvey found.

China was reported to be either the top oramong the top five priorities for their companies' global strategy, accordingto 83 percent of respondents.

The findings suggest US companies remaincommitted to the China market over the long term, despite years of tradefriction and ever-rising calls for economic decoupling by political hawks.

Profitability is also a key component oflong-term confidence in the China market, the survey found, as 91 percent ofcompanies indicate their China operations are profitable, albeit at a lowermargin than in years past.

"According to our data, the primaryrestraint on profitability is COVID-19 and its impact on the economy," itsaid. "The majority of respondent companies also saw an increase inrevenue last year."

But despite long-term optimism, bilateraltrade friction and especially the outbreak of COVID-19 are weighing on theinvestment decisions and near-term economic prospects of US companies in China.

When asked "Why did your companyreduce or stop planned investment in China in the last year?", 93 percentof the US companies said the top reasons were increased costs or uncertaintiesarising from US-China tensions and COVID-19.

Only 11 percent cited "better businessprospects in another country" as a reason to curtail their activities inChina.

The tensions between the two countries seemto be escalating, observers say, with the US administration churning out abarrage of hard-edged actions against China, mostly citing national securityconcerns.

In 2020, the most debilitating impact of bilateraltrade tensions－according tohalf of respondents－was lost sales due to customer uncertainty about continued supply,the US-China Business Council survey said.

"Recent US policies restricting thesales of certain products and services to some Chinese companies have begun toimpact more commercial interactions between US companies and their Chinesecustomers," it said.

As to protecting intellectual property,which has been at the center of the bilateral trade friction, the survey foundthat 61 percent of the US companies reported China's IP protection had"greatly improved "or "somewhat improved", the highestrating in a decade. Only 2 percent reported otherwise.

Companies reported that disputes areincreasingly handled by judges with a nuanced understanding of IP issues and bymore motivated police willing to raid infringing factories. It appears thatthere is a general awareness on the part of partners and license-holders aboutthe importance of protection, the survey noted.

"US-China trade and investmentsupports about 2.6 million American jobs," USCBC President Craig Allensaid. "We need to sustain and grow those jobs in future years, whilefinding ways to reduce conflict in other areas of the relationship."

Companies said tariffs remain a key issue,because even with the signing of the phase one trade deal, tariffs remain on$370 billion of Chinese goods and more than $110 billion of US goods.

The USCBC said US businesses regard theagreement as a stabilizing force in an otherwise rapidly deterioratingbilateral relationship and remain overwhelmingly supportive of it.

It noted that since the deal's signing,China has taken steps to liberalize its financial services sector to foreigncompanies, significantly reduce barriers to trade in the agriculture sector andstrengthen its domestic legal and enforcement regime for protectingintellectual property rights.

Claire Reade, senior associate and trusteechair in Chinese business and economics at the Center for Strategic andInternational Studies in Washington, also said that even as policy fireworksexplode on both sides, the phase one trade deal is still being implemented,with China further opening its financial markets and reducing nontariffbarriers.

Liu Yinmeng in Los Angeles contributed tothis story.

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记者：赵焕新

播报：AndrewPasek

原文链接：

https://www.chinadaily.com.cn/a/202008/13/WS5f347a06a31083481725ff13.html