Daily Management Review

Foreign Business Pessimism Being Fueled by China Protectionism, U.S. Lobby says


Foreign Business Pessimism Being Fueled by China Protectionism, U.S. Lobby says
A survey released on Wednesday showed that among the respondents surveyed, most say that they have little confidence in China's vows to open its markets while more than 80 percent of members of a U.S. business lobby in China say foreign companies are less welcome than in the past.
As it grapples with a slowing Chinese economy and complains of increasing protectionism, growing pessimism in the foreign business community was reinforced in the American Chamber of Commerce in China's annual survey.
It was just a day before that Beijing unveiled proposals to reduce restrictions on foreign investment in China and China's President Xi Jinping gave a speech at the World Economic Forum (WEF) championing open markets.
having pledged to brand China a currency manipulator and threatened to impose tariffs on its goods and as President-elect Donald Trump prepares to take office, business circles are particularly concerned over the future of U.S.-China commercial ties.
"More companies are slowing investments and deprioritising China as an investment destination due to slowing growth and increased concerns over barriers to market entry, the regulatory environment, and rising costs," the chamber said.
It said that the chamber's members would "significantly increase investment" if China took action, including removing "discriminatory barriers" to foreign-invested companies and investment restrictions.
Noting a record for investor confidence, the chamber noted that compared with a peak of 78 percent in 2012, the share of companies that identified China as a top three global investment priority dropped to 56 percent this year.
Up from 77 percent in 2016 was the belief that foreign business was less welcome in China than in the past. The survey showed that eighty-one percent of the 462 companies included in the survey, among them U.S. and multinational firms, had this belief.
A lack of market access in China and restrictive policies that run counter to its pledges to free up markets are the long standing complaints that foreign businesses in China, as well as foreign governments, have been making.
More than 60 percent of the chamber's members had "little or no confidence that the government is committed to opening China's markets further in the next three years" even though President Xi's speech at the WEF in Davos painted a picture of China as a "wide open" economy.
Below what sources have said would be a government target of around 6.5 percent, respondents estimated on average that China's economic growth for 2017 would be 6.1 percent.
72 percent of members felt that positive U.S.-China relations were "critical" to business, but only 17 percent thought they would improve in 2017, the survey, with responses compiled both during and after Trump's November election victory, showed.
Months ahead of an annual lobbying trip, to engage with the Trump administration, some of its members would go to Washington in early February, Chamber chairman William Zarit said.
"We certainly are not going there to lecture the administration, but we are there to share our ideas on ... a more constructive path forward," Zarit said at a briefing on the survey.
Especially if a Trump administration and other political changes limit export growth, it will be tough for its foreign trade to improve this year, China has warned.

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