US firms in China see record-low profits amid geopolitical tensions

HONG KONG, Sep 15 (AP): American companies in China are seeing record-low profits, with business confidence at an all-time low amid US-China tensions and a slowing Chinese economy, according to a report of a US business group.
Out of 306 companies polled, a record-low 66 per cent were profitable in 2023, according to the China business report published by the American Chamber of Commerce in Shanghai.
The report also found that only 47 per cent of respondents were optimistic about their business outlook in China over the next five years, the lowest in the survey's history of more than two decades. Beijing and Washington have been at odds in recent years over issues like trade and manufacturing, as well as China's claims over the South China Sea.
China is also grappling with a slowing domestic economy, with lackluster consumer demand and deflationary pressures persisting even post-Covid.
The geopolitical tensions between both countries was the top challenge to businesses' operations in China, the report found.
It's a balance between risk and reward, said Eric Zheng, president of AmCham Shanghai, during a news conference ahead of the report's publication.
The perceived risks of doing business in China have gone up in the past few years, but at the same time the market is slowing down, with soft demand and overcapacity, he said. Many businesses are now redirecting investments to other regions such as Vietnam, Malaysia and South Asia, Zheng said.
A record high of 25 per cent of companies polled cut investment in China in 2023, AmCham's report found, largely driven by concerns over China's slowing growth.
While just over half of US companies expect their revenue to increase over last year, only 37 per cent are expecting growth in China to outpace global growth in the coming three to five years.