Roundup: U.S. businesses in China optimistic despite Trump tariffs

0 Comment(s)Print E-mail Xinhua, September 24, 2021
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BEIJING, Sept. 24 (Xinhua) -- Close to 78 percent of U.S. businesses surveyed in a report released Thursday were optimistic about the business outlook in China, a rate not seen since before the trade war.

"Five-year optimism levels were almost back to their pre-trade war levels, 2020 revenues exceeded expectations and revenue projections for 2021 are even more upbeat," said the American Chamber of Commerce in Shanghai (AmCham Shanghai) in its annual China Business Report.

That was echoed by an article by two political scientists published Wednesday in The Washington Post, which concluded that "U.S. tariffs on Chinese goods didn't bring companies back to the United States."

Though "the architects of the trade war" believed that faced with high costs, U.S. and allied businesses would leave China, tariffs backfired on individual customers and small businesses in the United States, said the authors, Jiakun Jack Zhang at the University of Kansas and Somantha A. Vortherms at the University of California at Irvine, in a paper cited by the article.

"For 40 years, commercial ties between the two nations have brought immeasurable benefits to both peoples. Further decoupling will unravel that progress," said the AmCham Shanghai report.


A total of 77.9 percent of the 338 surveyed companies considered the five-year business outlook "optimistic" or "slightly optimistic," near the 80 percent figure from 2015 to 2018, according to the report.

More than 82 percent of the respondents anticipated higher revenues in 2021 than in 2020, with the most confident industries being pharmaceuticals, medical devices and life sciences, auto-motive, non-consumer electronics and industrial manufacturers.

"This bump in optimism reflects the fact that in most industries, COVID no longer weighs as heavily on minds -- or operations -- as it did a year ago," said the report.

The aviation industry sees great potential in the Chinese market. On Thursday, Boeing said in its latest market forecast released in Beijing that over 20 years, China's aviation market would create new commercial aircraft demand valued at 1.47 trillion U.S. dollars and a commercial aviation services market valued at around 1.8 trillion U.S. dollars.

"The rapid recovery of Chinese domestic air travel highlights the country's economic vitality and resilience. Notably, the underlying demand from international long-haul travel and air freight transport will boost the widebody deliveries," said Richard Wynne, managing director of China Marketing at Boeing Commercial Airplanes.

Despite negative expectations in early 2020 due to the pandemic, the AmCham Shanghai report said business performance did not decline with over 77 percent of respondents reporting profits in 2020, which is in line with the past several years and deemed "surprisingly strong."

Companies also intend to hire more, as 63.7 percent in the report planned to increase their headcount in China this year after a decrease during the pandemic.


The optimism may well disappoint the last U.S. administration, which imposed a succession of tariffs on China and assumed that U.S. businesses in China would be discouraged and leave.

The AmCham Shanghai report found that no companies were relocating their production from China to the United States, and 72 percent of manufacturers producing in China "had no plans to move any production out of China in the next three years."

In the article published in The Washington Post, the authors said that "new U.S. tariffs in 2018 and 2019 had a minimal effect on divestment," estimating that in the period, "less than 1 percent of the increase in U.S. firm exits was due to U.S. tariffs."

"The degree of decoupling, measured by foreign direct investment, has been greater in the minds of politicians and pundits than the reality of firms in China," they said in their paper.

Instead, the tariffs backfired on U.S. consumers, as firms raised prices to cover increasing costs rather than "leaving China or finding alternative suppliers," the authors wrote in the article.

As raw materials from China became more expensive because of the tariffs, small businesses in the United States struggled finding alternatives or affording expensive lobbyists, and "lacked the leverage to pass these costs on to customers or the resources to mitigate them," they said.

"Economic coercion can be a double-edged sword: These tools tend to inflict collateral damage on one's economy while hurting that of the target, but tariffs are the bluntest tool of all," said the authors. Enditem

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