US companies in China oppose trade tariffs, says AmCham survey

Most US businesses operating in China oppose the use of tariffs in retaliation for the challenges they face, from an uneven playing field to poor protection of intellectual property rights, a survey showed on Thursday (July 12).

Almost 69 per cent of the 434 respondents to the annual China Business Climate Survey of the American Chamber of Commerce (AmCham) in Shanghai opposed tariffs, while just 8.5 per cent backed them, the body said.

Nevertheless, companies operating in China say they plan to increase investment there in 2018, signalling that optimism about the business outlook is offsettingrising trade tensions.

Almost 62 per cent of companies surveyed by AmCham expect to increase investment this year, led by technology hardware, software and services companies, and aerospace and aviation firms, the group said in the survey.

Companies saw broadly positive operating results as the yuan held up against the dollar, financial deleveraging continued, consumer spending remained firm, and the global economy supported demand.

Still, regulatory barriers and persistent government favouritism towards local companies impede US companies, and market access restrictions and the distorting effects of China's industrial policies concern members, according to the survey.

"Resolving these challenges in an equitable manner is essential for the United States and China to have a healthy long-term commercial relationship that brings benefits to both our peoples," AmCham said in a statement on the survey results.

The survey, conducted between April 10 and May 10, reflects the mix of key concerns and realities for American businesses in China at a time of heightened uncertainty as the Trump administration raises the ante in its trade war with Beijing.

US President Donald Trump has accused China of unfair trade practices that give its companies an advantage, while hobbling American companies and creating an outsized trade deficit for the United States.

On Tuesday, the office of the US Trade Representative said it would impose 10 per cent tariffs on an extra US$200 billion (S$273 billion) worth of Chinese imports, from food products to tobacco, chemicals, coal, steel and aluminium.

The survey showed that while US companies continue to face challenges in China, 34 per cent of respondents felt that Chinese government policies towards foreign companies had improved, up from 28 per cent last year.

The number of companies that felt policies had worsened for foreign firms fell to 23 per cent from 33 per cent, although 60 per cent of respondents said China's regulatory environment lacked transparency, on a par with last year.

Insufficient intellectual property rights protection and the need to get licences were the top two regulatory challenges, although slightly fewer companies found both to be a hindrance in the 2018 poll, compared with that of 2017.

The biggest operational challenge of all was rising costs, an issue confronting more than 95 per cent of respondents, the poll showed. More than 85 per cent of respondents saw domestic competition as a challenge.