Executive Summary
The US-China Business Council conducted its annual Member Survey in summer 2024. The data in this report reflect responses from representatives of leading American companies. Most respondents are large US-headquartered multinationals that have operated in China for several decades, and around 40 percent generated more than $1 billion in revenue in China last year. Our survey is unique among trade associations in that it incorporates responses from US company representatives in both the United States and China. This report seeks to measure business sentiment and benchmark challenges and opportunities in the China market.
While American firms’ performance in China remains strong, the country’s economic slowdown is weighing on optimism. China’s macroeconomy, a new option added to this year’s survey, emerged as the second biggest challenge companies are facing in the China market. Weak domestic demand and overcapacity are the top constraints on companies’ increased profitability in China, in part due to price cutting. More companies than ever are pessimistic about the medium-term business outlook in China.
American companies are losing market share as China pours support into domestic innovation programs. A record high proportion of companies have seen their market share in China decline this year, while a record low say their market share is growing. Intensified competition with domestic firms coincides with expanded industrial policy support, such as subsidies, for Chinese companies.
Geopolitical tensions continue to disrupt business relationships and inhibit market access for American companies in China. Ever-expanding US export controls, sanctions, and investment screenings are damaging and, at times, severing companies’ relationships with their Chinese customers, and China continues to erect barriers around its public procurement markets, inhibiting access for US firms. More companies are adjusting their China-specific business operations, strategies, and supply chains to mitigate the impact of increasing bilateral tensions.
Even as companies take steps to diversify supply chains, China continues to be critically important to their global competitiveness. Although this year’s survey has seen a larger share of respondents de-prioritize China in the short term compared with previous years, the majority still identify China as a top priority in their company’s global investment planning, and most companies would be less competitive globally without their China operations.
Companies have seen modest improvements in the business environment, but remaining barriers to doing business in China and macroeconomic imbalances must be addressed to restore confidence in the market. The Chinese government has made improvements to market access and cross-border data transfer policies, and senior Chinese policymakers have acknowledged a dire need to boost domestic consumption. Additional progress on these fronts could help restore confidence and buffer the negative impacts of industrial policy and US-China tensions on the overall environment for doing business in China.
If you are a USCBC member, you can access more 2024 Member Survey content here.