"US Companies Cut Investments in China to Record Lows, Here’s Why"

" US Companies Cut Investments in China to Record Lows, Here's Why \r\n \r\n\r\nAmerican companies have cut investments in China to record lows as tariffs and trade tensions continue to reshape the economic relationship between the world\u2019s two largest economies, according to a recent survey.\r\n\r\n \r\n \r\n\r\nThe\u00a0 Member Survey 2025 from the US-China Business Council \u00a0(USCBC) found that only 48% of US companies plan to invest in China this year, a sharp decrease from the 80% who had planned investments in 2024. Moreover, the survey found a steady decline in optimism regarding China\u2019s economic growth forecasts and low confidence in the prospect of improved US-China relations.\r\n\r\n \r\n \r\n\r\nThe USCBC, a\u00a0 nonpartisan, nonprofit organization \u00a0comprising more than 270 major American companies that do business in China, conducted the survey between March and May 2025 as US President Donald Trump reignited the US-China trade dispute as part of a broader effort to overhaul US trade policy.\r\n\r\n \r\n \r\n\r\n\u201cSpiraling tariff rates after April 2 and on-again, off-again talks have shaken business confidence, derailed investment planning, and led to a souring of the broader relationship,\u201d the report states.\r\n\r\n \r\n \r\n Tariff worries surge \r\n \r\n \r\n\r\nConcerns about rising and fluctuating tariffs have increased significantly amongst US companies operating in China.\r\n\r\n \r\n \r\n\r\nIn USCBC\u2019s 2025 survey, tariffs ranked as the second most pressing challenge for US firms behind general US-China relations; in 2024, tariffs ranked as the eighth most pressing challenge. The report also found that nearly 70% of companies were directly affected by tariffs and 88% were affected by US-China relations.\r\n\r\n \r\n \r\n\r\n\u201cTensions are forcing companies to reassess their investment strategies in China,\u201d the report stated. \u201cIn response to structural issues in the economy and to the political volatility seen in recent years, many US companies are reorienting their supply chains and scaling back new investments in China in the near term.\u201d\r\n\r\n \r\n \r\n A Flourish chart \r\n \r\n \r\n\r\nTariffs are taking a financial toll, too. The survey found that more than a third of firms lost sales due to US tariffs and half of respondents lost sales because of Chinese customers switching to non-US suppliers due to uncertainty. Furthermore, 27% of companies said they lost sales due to Chinese tariffs, a dramatic increase of 21 percentage points from 2024.\r\n\r\n \r\n \r\n\r\nIn response, companies are renegotiating prices with suppliers as well as shifting supply chains to alternative international markets. The top three alternative markets, the survey found, are Southeast Asia, India and Mexico.\r\n\r\n \r\n \r\n\r\n\u201cThe business community just wants to continue to grow, and have the ability to go where it needs to go and where it makes the most sense to do business,\u201d Margery Kraus, Founder and Executive Chair of APCO, said last month during the World Economic Forum\u2019s\u00a0 Annual Meeting of the New Champions \u00a0in Tianjin, China. \u201cThe disruptions in supply chains have already caused some businesses to invest in different places, to diversify and to decouple.\u201d\r\n\r\n \r\n \r\n\r\nNonetheless, the USCBC report found that the vast majority of firms surveyed remain profitable. Slightly less than half, however, are optimistic about the future, citing continued concerns over tariffs and policy uncertainty.\r\n\r\n \r\n \r\n\r\nThe USCBC survey found that various other factors are also complicating the business environment for US firms operating in China. Such factors include increased competition with Chinese companies, US export controls, China\u2019s industrial policy and localization policies that hinder market access.\r\n\r\n \r\n \r\n\r\nEconomic growth in China and fluctuating domestic demand are concerns, too. For the past two years, China has targeted 5% GDP growth; yet as noted in the World Economic Forum\u2019s May 2025\u00a0 Chief Economists Outlook , the 5% growth rate for 2025 will likely \u201cbe more difficult to achieve given the roiling of the global trade landscape in recent months.\u201d\r\n\r\n \r\n \r\n\r\nIn response to the volatility, US firms are focusing on serving core markets, reducing costs and improving efficiencies, and targeting new customers particularly tertiary Chinese cities where consumer spending is rising, the survey found.\r\n\r\n \r\n \r\n \u2018Too large to ignore\u2019 \r\n \r\n \r\n\r\nDespite the significant economic headwinds and ongoing uncertainty, the USCBC survey notes that US companies are unlikely to abandon the Chinese market.\r\n\r\n \r\n \r\n\r\n\u201cThe ability to operate in China\u2019s fiercely competitive market remains non-negotiable for American companies, allowing them to access a burgeoning middle class while honing new technologies and practices essential for maintaining global competitiveness,\u201d USCBC President Sean Stein added in a\u00a0 statement .\r\n\r\n \r\n \r\n\r\nThe survey found that 28% of the polled companies believe they would not be able to be competitive globally without operations in China. Moreover, nearly 40% say that China is a key element of their global footprint.\r\n\r\n \r\n \r\n\r\n\u201cChina\u2019s market is too large to ignore,\u201d the report states. \u201cBut confidence will not recover without meaningful tariff reductions and improved market access.\u201d\r\n\r\nUSCBC delegates\u00a0 met with the China's \u00a0commerce minister on\u00a0 Wednesday at a gathering \u00a0of leading US businesses and Chinese trade officials. The meeting followed trade talks between the US and China in\u00a0 Stockholm earlier this week \u00a0that sought to forge\u00a0 a more lasting deal \u00a0and mitigate a trade dispute that\u00a0 could blunt growth \u00a0in both countries.\r\n\r\n "

"US Companies Cut Investments in China to Record Lows, Here’s Why"

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