MNI Policy

BEIJING (MNI) – American businesses in China remain cautious ahead of a potential trade deal between China and the U.S., seeing it as uncertain that Beijing will move quickly to make structural economic changes demanded by Washington, the president of the American Chamber of Commerce in China told MNI in an interview.

While President Donald Trump’s decision to suspend a planned tariff increase on Chinese imports was a relief to U.S. businesses in China, more difficult issues remain unresolved, Alan Beebe said.

“There’s a slight difference between optimism and hope,” Beebe said. “I would say there’s growing hope,” rather than optimism, he said.

Beebe’s cautious outlook echoed comments by Chinese observers and economists who have told MNI that China is likely to limit its concessions to the U.S. on structural reforms such as reducing subsidies for state-owned enterprises.

About 75% of respondents to the chamber’s 2019 China Business Climate Survey Report expect bilateral relations to worsen or stay the same this year. Some 32% predicted slowing investment in China, compared with 26% last year. About 52% of resource and industrial corporations said they are outsourcing components or assembly outside of China, and 30% of technology companies are doing the same.

The survey, conducted from Nov. 13-Dec. 16, showed tariffs imposed by both sides increased manufacturing costs and sale prices while decreasing demand for American companies in China.

Some 12% of respondents reported that revenue dropped last year versus 7% in 2017.