US companies turning more optimistic in China outlook, shows survey

By Bloomberg News
 

US companies expressed increased optimism about the near-term business environment in China, according to a new survey, though many are still holding off on investments.
 

Some 40 per cent of survey respondents were optimistic about their profit potential over the next two years, up from 33 per cent a year earlier, according to the American Chamber of Commerce in China report on Thursday. And 44 per cent indicated they were optimistic about market growth, a slight uptick from a year ago.

Still, 43 per cent of surveyed AmCham members indicated they don’t plan to expand their investments this year, and another 5 per cent planned to cut the spending.

The overall optimism of the US firms is a marked contrast to the gloom over markets and the halting economic rebound. On Wednesday, China reported that factory activity contracted again in January.

Some of the positivity could be because the survey was conducted as China-US relations improved in the run-up to a meeting between Presidents Joe Biden and Xi Jinping in November in California. Those discussions led to a stabilization in ties that has largely held, yielding talks this week in Beijing on the flows of fentanyl. Tensions do remain over tech and the Taiwan issue.

Some 19 per cent of survey respondents expressed optimism in ties between the superpowers over the next two years, up from 8 per cent a year ago. Back then relations were souring, especially after a Chinese balloon traveled over the US, sparking concern over espionage.

The AmCham survey also contrasts with more pessimistic polls of firms from other nations this month. A survey by the German Chamber of Commerce in China found most respondents said the Asian nation “is facing a downward trajectory” economically.

A poll by the Japanese Chamber of Commerce and Industry in China said that most companies from Japan cut investment or kept it flat last year, and a majority don’t have a positive outlook for 2024.