Chinese businesses in the United States have seen their revenue return to pre-pandemic levels but investment has shrunk amid increasing pessimism about China-US relations, according to a survey of Chinese enterprises in the US.
The annual survey conducted in March and April by the China General Chamber of Commerce (CGCC) in the US asked 111 Chinese companies – 48 per cent were private companies and 19 per cent were government-owned – about their revenue from the US market in the past year as well as their outlook for the future.
“To a large degree, the changes in revenue reflected an annual growth prior to Covid-19, and even bounced back to the level of 2018 survey results,” the report launched on Thursday said.
Around 54 per cent of the surveyed companies have had revenue grow in the past year, and 48 per cent of respondents reported revenue of US$50 million or more, a six-year high, according to the report.
Washington has imposed further restrictions on Chinese businesses, especially in the tech sector, ranging from tightening policies on Chinese access to critical materials, increasing scrutiny of Chinese investments in US tech companies and imposing new requirements on Chinese companies to be listed on US stock exchanges.
Amid worsening ties between the two biggest economies in the world, US businesses have also cited an increasingly challenging business environment in China, according to the American Chamber of Commerce in China.
According to the survey, only 74 per cent of respondents reinvested most of their US profits in their US business in the past year, which the report noted was lower than the 90 and 80 per cent recorded in the past two years.
Almost half (49 per cent) of respondents said they believed the next year would see China-US relations get moderately to substantially worse, amounting to the worst expectation in five years. Meanwhile, the same percentage of respondents said they still forecast an increase in revenue for the next two years.
The three challenges for companies to carry out business in the US in the near term were a stalemate in bilateral relations, friction in economic and trade relations, as well as inflation and an unstable US economy.
In the survey launch, companies highlighted how increasing scepticism in the business environment challenged their development in the US, especially for new investors.
Electric vehicle battery parts manufacturer Semcorp Group, which is listed in Shenzhen, was interested in investing in a US state but decided not to after state laws were passed to limit access by Chinese companies to critical infrastructure, said James Shih, head of global projects and legal of the company’s US operations, although he did not give specifics.
“There is a lot of demand in the public sector to be seen as acting strongly against the Chinese threat, so to speak, or the risk created by Chinese companies … That is an example in one state, but in other states when you talk to decision makers you can see that the fact that we are Chinese [creates] some level of concerns,” Shih said, adding that the company did not continue with plans in that state and instead is opening a factory in Ohio.
Dennis Blair, who was US director of national intelligence from 2009 to 2010, said at the survey launch that the US government’s two main concerns about Chinese companies working in America related to security and human rights.
He said the safest sectors to be in were the consumer sector or business-to-business enterprises.
“But if part of your business relates to these two other areas – military, security concerns or human rights concerns – specific questions have to be answered and specific decisions have to be made,” said Blair, a retired United States Navy admiral now working as a professor at the University of North Carolina.
Washington’s latest law targeting China and citing human rights concerns is the Uygur Forced Labour Prevention Act that came into effect on June 21.