SHANGHAI (September 11): China-US trade war increases profits and investment prospects for US companies operating in the world's second largest economy, a study by a prominent US business association shows.
The annual poll by the US Chamber of Commerce in Shanghai found that while most of the member companies remained profitable in 2018, the number of reported revenue growth fell. Projections for future revenues also fell, highlighting the corrosive impact of the tat-for-tat escalating prices.
Five-year optimism subsided for the first time since 2015, when China's stock markets sniffed and the authorities groaned for the answer.  "Estimates of revenue growth have been reduced, optimism about the future has diminished, and many companies are redirecting investments originally planned for China," AmCham said in a report on the study published Wednesday.
The results of the downturn come as the US and Chinese dealers prepare to meet in Washington in October to stop the start-up to call off the long-standing trade line. With little progress shown so far, expectations of a breakthrough in the discussions are low.
"Without signs of a trade agreement, 201
Most AmCham member companies opposed the use of tariffs to deal with trade disputes, and three-quarters of those surveyed said they were opposed.
The study was conducted between June 27 and July 25 – before the last round of tariff increases came into force – and received 333 responses, AmCham said.
Over a quarter of the polls said they had redirected investments originally planned for China to other locations – up 6.9 percentage points from the previous year. Southeast Asia was the top destination, followed by India.
Investment directing was most prominent in technology, hardware, software and services, with 40% saying they had done so, according to the survey.
In addition, reduced investment has accelerated in 2019, emphasizing pressure on China's economy, which grew at its slowest pace of almost 30 years in the second quarter.
The survey showed a decrease of 14.4 percentage points in the number of companies expecting to increase investment, and a 12.2 percentage point increase in the number of companies planning to reduce investment compared to 2018.
The doldrums took a toll on employment.
Nearly 20% of companies said they cut employee numbers in 2019, compared to just shy of 10% last year, while the number of companies that said they increased the number dropped by 17.8 percentage points.
Next to the trade war, the declining Chinese economy delayed prospects and was named edited as the biggest challenge in three to five years by nearly 60% of companies – up 22.5% from last year.
However, AmCham said there were "pockets of optimism" in the investigation results, with corruption and fraud reported to have gone down, while government bureaucracy became more efficient and the regulatory environment improved.