Some Chinese businesses in the U.S. are considering reducing and holding off investment in the U.S., or shifting investments to other markets. According to the Annual Business Survey on Chinese Enterprises in the U.S. by the China General Chamber of Commerce – USA (CGCCUSA), about 74% of the Chinese companies responding to the survey said that the complex China-U.S. relations present the most difficult challenges in conducting business in the U.S. in 2020. The concern, which had topped the list of difficulties in recent years under the Trump administration, has not changed under the Biden administration, which labels China as a “strategic competitor.” According to the survey, most companies cite fraying relations as the biggest impediment to their future investment plans in the U.S.
About 43% of the Chinese companies reported cultural conflicts, including anti-Asia/China sentiment. Different management styles are emerging as their second-biggest concern in 2020. In 2019 before the U.S. hyped the coronavirus origin issue, the ratio only stood at 28%. The tariff war continued to weigh on the operation of Chinese businesses in the U.S. in 2020, inflating the costs of imported finished products and sourcing supplies. The survey showed that some 78% of respondents reported being negatively impacted and others expected long-term implications.
Taken together, these difficulties are leading to an atmosphere that would further deter Chinese investment, and analysts said in the long-term, the trend will drive up inflation in the U.S. The survey showed that 52% of the respondents said that uncertainty in the policy environment could lead to reducing their investment in the U.S., as 30% said they will delay or cancel future investment in the U.S., and 44% intend to increase investment in other regions, including Asia, Europe and South America. Tian Yun, Vice Director of the Beijing Economic Operation Association, told the Global Times that it is likely that the decoupling would accelerate in the high-tech sector, as the Biden administration is doubling down on efforts to build a “China-free” high-tech supply chain.
