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

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

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

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

Chinese officials have made a slew of pledges in recent weeks about strengthening fiscal policy this year as the world’s second-largest economy grapples with a property downturn, weak demand and persistent pressures from deflation. They promised on Thursday to maintain the “necessary intensity” for government spending this year, including by using the central budget to support investment.

Some of the positivity found in the survey could be because it 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% of survey respondents expressed optimism in ties between the superpowers over the next two years, up from 8% a year ago. Back then relations were souring, especially after a Chinese balloon traveled over the US, sparking concern over espionage.

AmCham’s survey also contrasts with pessimistic polls of firms from other nations. A recent 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.

There were some signs in the AmCham survey that the battle that China and the US are fighting over technology issues was having an impact on companies. Some 16% of firms in the tech and research sectors said they started moving their manufacturing or turning to sources overseas, up from 9% last year. Another 16% said they were considering the moves.

Adding to those tensions, on Wednesday the Pentagon added China’s leading memory chipmaker, Yangtze Memory Technologies Co., and a prominent AI player to a list of companies it accuses of aiding the Asian nation’s military, The move expands a roster intended to warn allies against potential national security threats.

By: DocMemory
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