With Sino-U.S. relations deteriorating, American companies operating in China believe tensions between the world's two biggest economies will remain in place for years, according to a new survey.
About 92% of respondents said they would continue operating in China even as soaring tensions between Beijing and Washington are expected, the study said, which was published Wednesday by the American Chamber of Commerce (AmCham) in Shanghai. These deeply rooted multinational corporations have revenues over $500 million per year - it appears these corporations are snubbing President Trump's push to decouple both economies.
"Under my administration, we will make America into the manufacturing superpower of the world and we'll end our reliance on China, once and for all, whether it's decoupling or putting in massive tariffs like I've been doing already," Trump said in a Labor Day speech on Monday.
The survey reveals an overwhelming number of respondents have zero plans on reverting manufacturing plants to the U.S. Only 4.3% said they would move back stateside.
When it comes to how long the souring relations would last, at least 25% of U.S. firms surveyed said tensions between both countries would last "indefinitely," compared to 17% a year ago. About 20% said tensions would last 3-5 years, up from 10% in 2019. Only 14% of firms believed tensions would be resolved in the next 12 months.
Ker Gibbs, president of AmCham, said U.S. firms operating in China are hoping Beijing and Washington can resolve "outstanding issues" in the near term.
"U.S. businesses in China would like to see the two countries resolve their outstanding issues quickly and reduce tensions. A workable cooperative framework for the next decade would be a good place to focus discussions," Gibbs said in a statement.
But with tensions unlikely to be resolved this year, Gibbs said AmCham members are awaiting clarity from the U.S. government about U.S. firms using popular Chinese messaging app WeChat. He said the lack of clarity surrounding WeChat from Washington is like "pins and needles right now," adding "if American businesses in China have to stop using WeChat, this would be devastating."
"Members are concerned, but dedicated to the market, which is attractive, large, and growing. We are aware of the national security issues and members hope that there can be some rebalancing of the relationship," Gibbs said. "A lot of members do feel a bit of whiplash from the past three-and-a-half years and want to see a more long-term strategy."
To make matters worse, nearly a third of respondents said souring tensions have made it more challenging over the last several years to retain staff in the country, as Chinese workers shun U.S. firms.
The survey was conducted in June and July of this year and didn't cover the latest spikes in tension between both countries. For instance, the push to decouple by Trump, and China, indicating it may cut some of its holdings of U.S. Treasury bonds and notes, serves as a warning that relations will only deteriorate from here.
If readers want more color on, the already decoupling, well, check out the chart below:
In terms of trade flows between both countries, decoupling started during the trade war.