Currently, 18% of the U.S. businesses in China have reported higher margins than they were globally, which is lower than the 22% to 26% share reported in previous years from 2017 to 2021. Michael Hart, the president of AmCham China, expressed concern over the lack of profitability among member companies and highlighted the need for the Chinese government to address this issue. China’s economic growth has slowed due to multiple factors such as the pandemic, a dip in the real estate market, and reduced exports, prompting calls for further stimulus measures from Beijing. While there have been efforts to support growth, it remains unclear whether large-scale stimulus will be implemented as China aims to move away from reliance on real estate to others sectors. The survey conducted by AmCham China found that 49% of members reported profit margins in China comparable to the global average, with expectations of increased revenue in 2023. Despite remaining cautious about investing in China, almost half of the surveyed companies still regard China as one of their top three investment destinations globally. However, there is a growing consideration among some companies to relocate manufacturing capacity outside of China, citing decreased foreign direct investment in the country. Another survey from the German Chamber of Commerce in China echoed concerns about low market expansion and slower growth, with most respondents expecting China’s economy to take one to three years to regain robust economic development. The German Chamber’s survey also identified the main reason for increasing investment in China as the need to remain competitive. The Chinese government has made efforts to attract foreign investment and create a more predictable business environment, with some progress seen in areas such as life sciences and taxation policies. However, concerns remain about inconsistent regulatory interpretation, unclear laws, and enforcement, as well as the impact of cybersecurity rules on data protection for tech and research companies.
