MNCs reaffirm commitment to mainland market

Most of the U.S.-based companies operating in China have no plans to relocate their supply chains, even though bilateral tensions continue to pose a significant business challenge for them, a survey released on Wednesday revealed.

The document, titled the 2023 China Business Climate Survey Report, is based on a survey conducted by the Beijing-based American Chamber of Commerce in China (AmCham China). It said a positive bilateral relationship is extremely important to the businesses of its member companies in China.

The study found that half of the chamber's member companies are pessimistic about the future of China-U.S. relations in the coming year with three-quarters of members reporting their businesses have been impacted by trade tensions.

For instance, about 24 percent of AmCham China's company members from technology, research and development sector said that deteriorating China-U.S. relations were the primary cause of lower margins, worse than the impact of COVID-19 in that sector.

"While China-U.S. trade has continued to grow throughout the pandemic, bilateral relations have become increasingly complex for the U.S. business community in China to navigate," said Colm Rafferty, chairman of AmCham China.

About 74 percent of the chamber's members are maintaining operations in China, emphasizing a long-term commitment to the Chinese market.

They said that improved China-U.S. relations are seen as vital for business growth and both the U.S. and the Chinese governments have a critical role to play. Their priority suggestions for the U.S. and China governments are to refrain from aggressive rhetoric and tit-for-tat actions toward each other to establish a floor under the deteriorating relationship.

China-U.S. economic and trade cooperation is in line with the interests of consumers and companies in the two countries, and is also important for world economic growth. Any moves toward "decoupling from China" would make it difficult for U.S. companies to operate in the Chinese market, enjoy its benefits, and seize the opportunities to expand their innovation capability, said Fang Ning, a researcher at the Institute of Political Science of Chinese Academy of Social Sciences in Beijing.

Following China's COVID-19 policy adjustments, there has been a sharp rebound in economic activity, with demand for business, trade and investment also increasing, said Harley Seyedin, president of the Guangzhou, Guangdong province-based American Chamber of Commerce in South China.

Seyedin said China's economy will be a crucial locomotive in promoting global economic growth in 2023.

As more markets resume normal travel after three years of combating COVID-19, a third of international citizens plan to relocate to another destination or return to their home market within the next 12 months, whereas 75 percent of survey respondents in the Chinese mainland said they would stay in their host location during the same period, according to findings of a survey announced by HSBC on Tuesday.

This proportion ranks among the highest across the nine host locations surveyed, demonstrating that the Chinese mainland market is attractive to international citizens.

"China's reopening has promoted international trade and business exchanges as well as the movements of international citizens, and the country's connections and communications with the outside world will become closer and more frequent," said Zhang Jun, head of distribution, wealth and personal banking at HSBC for China.

The interviews were conducted with over 7,000 international citizens across nine host locations, including Australia, Singapore and the United States.

More than three quarters of those who have relocated to the Chinese mainland, or are planning to do so, are interested in making long-term investments in their new host location. This is about 10 percentage points higher than the average across the nine host locations covered in the survey.

The China Council for the Promotion of International Trade said last week that 98.2 percent of the 390 foreign companies and business chambers in China that were recently surveyed have expressed confidence in China's economic development in 2023.