US-China Conflict: From Trade War to Cold War?

US companies in China are increasingly worried that tensions between the two countries will last for years, according to a survey..

A survey found that US companies in China are increasingly worried that trade tensions between the world’s two largest economies will drag on for years. Almost a third of the respondents said that it is more difficult for them retain staff.

Half of the companies believe that, in their opinion, the damaged relationship will last at least three years. This share has skyrocketed from 30% in 2019, according to the annual Business Sentiment Survey by the American Chamber of Commerce in Shanghai and PwC China..

27% of survey participants said they believe tensions will last indefinitely, up from 13% last year.

«Tensions between the US and China are the main concern of the American business community, – said Ker Gibbs, President of the Chamber of Commerce, at the report publication event. – It dialogue between Beijing and Washington, they must resolve issues, because this affects the efficiency of the business here».

Tensions between the United States and China, which have already been high since last year’s trade war, have intensified further this year due to the COVID-19 outbreak and Washington blacklisting or promising to blacklist Chinese tech companies for national security reasons.

With the US elections approaching, the President Donald Trump this week again brought up the idea of ​​splitting the US and China economies, also known as «decoupling» (decoupling) assuming the United States will not lose money if countries no longer do business.

Highlighting concerns about bilateral tensions as well as economic uncertainty caused by the coronavirus pandemic, only 29% of companies plan to increase their investments in China this year, up from 47% in 2019..

32% of respondents said they felt a deteriorating relationship had an impact on their ability to retain both local and foreign employees – a view that was most pronounced in the education and logistics sectors.

American business in China fears protracted bilateral confrontation

«It’s about the appeal of an American brand in this atmosphere of tension», – He speaks Mark Gilbraith, Head of Management Consulting, PwC China.

However, the share of companies with a pessimistic five-year outlook slightly decreased – to 18.5% against 21.1% in 2019..

The report says that improving mood may be related to the conclusion of the first phase of the deal, although it notes that pessimism remains historically high. Until 2019, the number of companies with a pessimistic five-year forecast remained at about 7% for several years.

This year’s survey was conducted from June 16 to July 16, and 346 companies from sectors such as manufacturing, automotive and pharmaceuticals took part..

More than 90% of respondents said they intend to stay in China, and about 70% of the more than 200 companies surveyed that own or locate production in China said they do not intend to transfer production to other countries..

Less than 4% return some of their production back to the United States, and 14% move some of their production to other countries.

American business in China fears protracted bilateral confrontation

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