BEIJING—U.S. companies are planning their lowest rate of expansion in China since 2016 in response to growing uncertainty about U.S.-China relations and a slowing Chinese economy, according to a survey by the American Chamber of Commerce in China.

About 32% of 314 U.S. companies that responded said they have no plans to expand investment in China or plan to expand less this year, compared with 26% last year, according to the survey released Monday. Companies that have moved capacity outside of China or are considering doing so cited U.S. tariffs on Chinese exports as their chief concern, along with rising costs and slower economic growth.


“If you have to make the investment now, then you may decide to invest in a third country,” said Timothy P. Stratford, Amcham China chairman and lawyer at Covington & Burlington LLP in Beijing. “And if you can delay, then you’ll try to delay.”

The annual survey was conducted between Nov. 13 and Dec. 16, a time of seesawing tensions in the U.S.-China trade fight, in which both sides have slapped punitive tariffs on goods making up about 60% of their trade.

READ  Host Pandas opens national volleyball championships with win over Toronto (News)

In early December, President Trump and Chinese leader Xi Jinping agreed to a tariff cease-fire and set a March 1 deadline to reach a trade agreement. Mr. Trump said Sunday the deadline is being delayed, citing progress in negotiations.

The survey’s findings broadly line up with criticisms from U.S. and other foreign companies in recent years that business conditions in China are getting tougher, with government regulations and policies favoring domestic firms.

In recent years large U.S. companies including McDonald’s Corp. and Hewlett-Packard Co. have pared their stakes in Chinese businesses. Media giant Viacom Inc. is in talks to sell a majority stake in some of its Chinese operations.

To longstanding complaints about unclear laws and inconsistent regulatory interpretation and enforcement, U.S. companies are adding a fresh point of concern: a new foreign investment law that is on track to be enacted next month. Amcham said a recent draft was shorter than previous versions and included fewer details.

READ  Pope endorses same-sex civil unions in new documentary film – Thetcanada

The last time the Amcham survey showed U.S. companies as downbeat about an expansion was 2016, after China’s stock markets crashed and the government botched a currency revaluation and mishandled measures to restore investor confidence.

In the latest survey, nearly three-fourths of the companies expect U.S.-China relations to deteriorate or not improve this year. Some 28% said they were delaying or canceling investment decisions because of trade tensions, while 19% said they were seeking components or looking to assemble their products outside China. In energy, machinery and industrials, more than half of companies said they were looking outside China.

Caterpillar Inc. pointed to China’s slowing economy in its latest earnings call, saying its profit would rise less than analysts expected this year. The company, which said it expects more than $200 million in tariff-related costs this year, manufactures hydraulic excavators, tractor diesel engines and components in several provinces in China. Caterpillar said it expects the China market to be roughly flat after two years of robust growth.

READ  Peru farm workers block highway to protest police violence, demand higher wages – Thetcanada

Last year total deal volume for U.S. companies in China was the lowest since 2014, according to data from Dealogic, as companies delayed both investments and divestitures amid an uncertain political climate, trade tensions and concerns about whether increased tariffs on U.S. and Chinese goods would affect their business operations.

Companies were split on how the U.S. should handle China, with some believing the Trump administration should allow Chinese companies access only to markets that were open to American firms in China, and others believing the two countries should resume high-level talks about bilateral investment. Only 4% of companies thought the U.S. should continue to apply tariffs on China.

Write to Chao Deng at [email protected] and Julie Wernau at [email protected]



Please enter your comment!
Please enter your name here