China's business outlook remains largely optimistic despite worsening trade relations with the U.S. and the ongoing coronavirus pandemic, a poll of 345 companies by the American Chamber of Commerce revealed.
Political tensions between the world's two largest economies was the largest source of concern for companies in the annual survey published on Tuesday, with 50% of respondents fearful of the impact on their businesses.
"Our members are cautiously optimistic regarding business growth in China, with nearly half of them hopeful that the bilateral relationship will improve," said AmCham China Chairman Greg Gilligan. "Yet we remain keenly aware that certain bilateral tensions will continue to create business challenges.
Despite the ouster of former president and China hawk Donald Trump earlier this year, China-U.S. relations under the Biden administration remain strained.
However, half of those surveyed expressed optimism about U.S.-China relations under Biden, a sharp increase from the 30% of companies that responded positively in last year's Business Climate Report.
The majority of respondents are also hopeful about returning to future profitability, in part due to "the speed of China's post-pandemic economic recovery," the report noted, while three-quarters hold a positive two year business outlook for market growth in the country.
Only 12% of those surveyed said that the Chinese investment environment has been deteriorating, while 21% believe the pandemic has brought new business opportunities.
Profitability hit record lows last year due to the pandemic and the survey found that only 56% of companies were profitable in 2020 while 15% reported more than a 25% decline in revenues.
The worst appears to be over for companies in China. 44% of those polled in a May 2020 pandemic impact survey expected the virus to seriously harm revenues that year. By November when the 2021 Business Climate Survey was conducted, this number had fallen to 16%.
To be sure, responses varied across sectors. More than a third of resource and industrial companies reported a positive effect on their revenues due to the pandemic, while most consumer sector businesses experienced massive revenue losses last year and likely will for the first half of 2021 at least.
AmCham is a non-government organization made up of more than 4,000 businesspeople from roughly 900 companies active in China. It has published an annual business climate report since 1998.
