‘Biden bump’ vanishes in China as US firms’ bilateral outlook revisits levels seen under Trump
- Annual
survey of AmCham China members, conducted before Russia’s invasion of
Ukraine, flags growing concerns among American companies operating in
China
- Vast majority of surveyed members say they have come under intensifying political pressure from China, the United States or both
A top US business lobby group in China is sounding the alarm about “economic nationalism”, protectionism and a fading “Biden bump” in bilateral ties, saying these factors have led to growing pessimism among American firms doing business in China.
Their outlook on US-China relations for this year appears to have regressed to levels seen under former US president Donald Trump, with 73 per cent of respondents in the group’s latest survey – conducted in late 2021 – expecting the status quo to continue or even deteriorate.
The results of the annual Business Climate Survey, released on Tuesday by the American Chamber of Commerce (AmCham) in China, portend a bleaker outlook under the administration of US President Joe Biden than was seen just a year prior when 45 per cent of surveyed members expected bilateral ties to improve.
The sharp decline in optimism suggests that the “Biden bump” – reflecting hope that his administration would alter the course of America’s relationship with China – has vanished, the report says.
“Largely speaking, many kinds of the policies and the sentiment of the Trump administration remain in place with the Biden administration,” said Alan Beebe, president of AmCham China.
The business association surveyed its members from October-November, before and after a virtual summit between Biden and President Xi Jinping.
The results come as exchanges between Washington and Beijing show little sign of improving, even in light of the recent 50th anniversary of Richard Nixon’s historic visit to China.
Trade tensions between the world’s two largest economies have escalated in recent months, and diplomatic uncertainties and disagreements have only worsened following Russia’s invasion of Ukraine.
Increasing geopolitical frictions have also left foreign business communities in China between a rock and a hard place.
For instance, they have faced growing pressure from Washington and its allies to curb business ties to Xinjiang amid concerns over alleged human rights abuses, but taking a stand risks subjecting themselves to backlash from Chinese officials and consumers.
American companies operating in China have witnessed rising pressure to make or not make statements about politically sensitive issues in the last year, the AmCham survey shows.
Two-thirds of the surveyed members who said they felt political pressure cited the Chinese government as the main source, followed by Chinese media.
Meanwhile, one-third of those polled said they had received similar pressure from the US government.
[Pressure is] really coming from all sides, and that’s something that companies are just going to have to contend with
“So, it’s really coming from all sides, and that’s something that companies are just going to have to contend with,” Beebe said at a press conference on Tuesday.
Compared with the year prior, more than twice as many member companies felt “much less welcome” in China – particularly in the consumer and tech sectors – up from 6 per cent to 15 per cent. On this basis, almost half of respondents said they felt “less welcome” in the country.
There are also increasing fears that Chinese talents may be deterred from working for US companies out of a sense of nationalism, as US-China tensions continue unabated, according to the survey.
Beebe added that the fresh sanctions against Russia are already affecting, or have the potential to affect, AmCham’s member companies in China.
“For those companies that are exporting to Russia, if sanctions are within the scope of the products or services that they provide, obviously they cannot do that,” he said.
“But probably more significant is the foreign direct product rule whereby US companies that are selling products and services to Chinese companies that may, in turn, be exporting to Russia – those companies are also subject to these sanctions and various types of restrictions.”
Rising US-China tensions remain the main challenge for American companies in China, and such tensions were cited for the first time as a top factor specifically contributing to human resource challenges, according to the survey.
The association advised the White House to refrain from engaging in aggressive rhetoric and tit-for-tat sanctions, and to pursue an in-person meeting between Xi and Biden.
The group also reiterated its call for Beijing to follow through on its vows to ensure a level playing field for US businesses in China.
Furthermore, the survey showed that just 47 per cent of companies were confident in Beijing’s commitment to further open China’s market to foreign investment in the coming three years, down from 61 per cent last year.
Surveyed companies’ revenue and profitability did begin to rebound in 2021, but did not return to pre-pandemic levels.
“Our member companies view China as a top priority market, but at the moment, they’re hesitant to continue making a significant increase in investments due to uncertainties and kind of increasing pessimism on a number of fronts,” Beebe said.