Despite positive commercial gains in the last year, American companies have strong concerns about the increasingly rocky US-China relationship and implications for the business environment in China. American companies are less optimistic about China's policy direction and the trajectory of the bilateral relationship. They remain concerned about the discriminatory industrial policies and the advantages enjoyed by Chinese companies. These issues raise questions about American companies' future competitiveness in the China market.
In this context, three major themes dominated the US-China Business Council's 2018 member survey outcomes:
US-China trade tensions are affecting American companies
- 73 percent of companies report their business has been affected by current bilateral trade tensions.
- Companies report increased scrutiny from regulators and loss of sales due to both US and Chinese tariffs and uncertainty about supply chains.
Regulatory issues in China continue to be a significant challenge for foreign companies
- Since 2009, when USCBC began asking about signs of protectionism in China, companies have regularly reported that they see favoritism for Chinese companies in China's licensing and regulatory processes. In 2018, almost 60 percent of respondents cite protectionism in licensing.
- While companies are generally still optimistic, China's policy and regulatory environment affect American companies' five-year business outlook for China.
- 88 percent of companies are concerned about China's preferential policies for domestic companies.
Despite these challenges, China remains an important market for American companies
- Most American companies invest in China to access and compete for Chinese customers.
- China remains among the top priority markets for 90 percent of US companies, and most plan to maintain or accelerate their resource commitment to China in the coming year.
- China's government should not take that commitment for granted, however: China is no longer consistently outperforming other markets.
- If trade tensions begin to affect market access for American companies, or if alternative supply chains become a more effective way for companies to meet their business targets, investment may begin to shift to other markets that face fewer challenges.