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Foreign Companies Feeling Less Welcome in China, AmCham Says

Protectionism is one of the top challenges, along with rising labor costs and supply of skilled workers.

Three quarters of companies surveyed by the American Chamber of Commerce in China say they feel increasingly unwelcome, reflecting perceptions foreign firms aren’t treated equally to domestic competitors.

The disparity in some cases comes from uneven enforcement of the law, which some firms say has become a version of protectionism, according to a survey released Tuesday. Protectionism is one of the top challenges, along with rising labor costs and supply of skilled workers, even as an increasing share of firms report rising revenues, according to responses from more than 400 companies in the survey conducted between Oct. 23 and Nov. 26.

"There’s no question that over the last 20 years that we’ve been carrying out this survey that things have improved, and in fact it seemed like China was on a trajectory to be more open, be more market based and to be more in line with international trade rules and regulations," AmCham Chairman  William Zarit said in a Bloomberg Television interview. "But, that seems to have stopped."

Long-simmering commercial disputes between the U.S. and China came closer to escalating into a full-blown trade war this month after President Donald Trump imposed tariffs on imports of solar panels and washing machines, targeting China and other nations. While Beijing has urged restraint, officials have plenty of options to retaliate against American producers.

Some 78% of respondents said positive relations between China and the U.S. Are extremely important or very important in 2017, compared with 64% in 2015.

"That’s a quite significant change," Zarit told reporters at a briefing in Beijing. "That means they want the U.S. and China to have a smooth relationship, otherwise they think it will be detrimental to their businesses."

Further frictions between China and the U.S. could be generated in the process of redressing the two countries’ major imbalances in commercial relationship, the AmCham survey shows. Such conflicts can be mitigated through even-handed enforcement of laws regardless of shareholder nationality and reinforcing protection of intellectual property rights, according to the report.

Companies are already on edge, according to Lester Ross, AmCham’s policy committee chief, meaning that China couldn’t effectively use restrictions on activities within its borders as a lever in a trade dispute.

"It could get worse, but in some respects, it’s already very, very bad,” Ross said in an interview. "It’s hard to say that they could do much more in terms of restricting market access."

By Bloomberg News

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