US Growth in China Slows, but Profits Still High, Says USCBC
The number of U.S. companies that plan to boost investment in China over the next year is notably fewer than in the previous 12 months, said the U.S.-China Business Council (USCBC) on Sept. 29, while releasing a survey on the business climate in China for U.S. companies. Rising local competition and costs are cutting into U.S. profit margins, but U.S. companies are still widely profitable, said an executive summary of the findings. “Policy uncertainty continues to temper executive optimism,” said the USCBC. “Companies have seen little tangible impact from China’s economic reforms and report little improvement in any of the top 10 issues over the past year.”
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Still only 2 percent of U.S. companies aim to reduce investment in China over the next year, while 50 percent plan to boost investment, said the USCBC. “While American companies report that their primary competition is with other US and foreign companies in China, competition from domestic industry is growing,” said the summary. “Some observers focus concern on preferential treatment received by Chinese state-owned enterprises, but survey data shows again that nationality may trump ownership -- Chinese companies, whether state-owned or private, receive benefits that foreign companies do not.”
U.S. businesses continue to criticize the Chinese Anti-Monopoly Law, now in effect for more than five years but sluggishly implemented, as a tool for the Chinese government to disproportionately scrutinize foreign companies. Many U.S. industry representatives have railed against the law in the recent past (see 14091005). Among the other areas of concern, Chinese intellectual property rights protections are improving, but remain inadequate, said the USCBC. “American companies continue to limit their operations and IP exposure in China because of the lack of adequate protections,” it said.