China remains attractive for US firms

The growth of US investment in China will maintain its sound pace this year, owing to the country's moves to upgrade its industries and huge market demand for goods and services.


Chinese and US flags flutter outside the building of an American company in Beijing, Jan 21, 2021. [Photo/Agencies]

August 31, 2022

BEIJING – Eighty-nine percent of firms say their operations in the nation are strong and profitable

China’s attraction as a huge, lucrative market for US companies has remained unchanged this year, despite the impact of COVID-19 on the global economy and disruptions to trade, analysts and government officials said on Tuesday.

They made the remark after the US-China Business Council released a survey on Monday in which US companies continued to report their strong performance in the country last year, with 89 percent saying their operations were profitable.

The report, compiled by the Washington DC-based organization in June, interviewed 117 member companies on issues related to their business outlook, investment climate and market conditions in the nation.

The study found that most respondents are not moving segments of their supply chains out of China. This speaks to the country’s competitiveness in speed, quantity, quality and cost of manufacturing, despite tariffs and other factors.

“China remains a critical market for the US companies, disproving the notion of economic decoupling,” said Bai Ming, deputy director of the international market research department at the Chinese Academy of International Trade and Economic Cooperation in Beijing.

Even though there have been some investment outflows to Southeast Asia due to lower labor costs, it does not conflict with the investment plans of US firms in China, which are more about collaboration in high-tech and service industries and in line with China’s high quality growth strategy, he said.

The US-China Business Council survey also found that 63 percent of respondents indicated that their profitability increased last year — a level and proportion unseen in more than a decade.

The performance figures show the potential that the China market holds for US companies. If they are not able to participate in the China market and reap these benefits, they are at a global disadvantage compared with competitors who are able to do so, the study said.

The growth of US investment in China will maintain its sound pace this year, thanks to the country’s moves to upgrade its industries and huge market demand for goods and services, said Huo Jianguo, vice-chairman of the China Society for World Trade Organization Studies.

China-US trade grew by 11.8 percent year-on-year to 2.93 trillion yuan ($423.64 billion) in the first seven months of the year, while China’s actual use of the US capital surged 36.3 percent on a yearly basis, according to the Ministry of Commerce.

Together with the implementation of the Regional Comprehensive Economic Partnership agreement coming into force in January, this enhances the expectations of many US companies for freer trade, Huo added.

Guo Tingting, assistant minister of commerce, stressed in a news conference in Beijing that the government will accelerate the pace of introducing the new edition of the industry catalog of sectors encouraging foreign investment, further expanding the scope of foreign investment in advanced manufacturing, scientific and technological innovation and modern services.

US companies continue to see business opportunities in China not only in established fields such as in the domestic consumption and manufacturing sector, but also in new areas like the country’s leading-edge adoption of new digital technologies, said Sun Fuquan, vice-president of the Chinese Academy of Science and Technology for Development in Beijing.

Nakul Duggal, senior vice-president and general manager of automotives for Qualcomm Technologies Inc, the California-based chip manufacturer, said the Chinese market will be a major revenue source for the group’s automotive business, as its massive vehicle sector has a faster adoption of autonomous driving technologies than many others.

Intuitive Surgical Inc, a US-based robotic surgical system manufacturer, announced earlier this month it will invest over 700 million yuan to build a manufacturing and innovation base in Shanghai. The base will help expand access to robot-assisted surgery to more patients in China.

Gary Guthart, the company’s CEO, said the firm’s new facilities are expected to be operational in Shanghai in 2025 and will produce surgery robots for the Chinese market.

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