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U.S. companies hold on to China despite mounting tensions and pressure from Trump

Around 92% of respondents in a poll released Wednesday by the American Chamber of Commerce in Shanghai said they are obliged to stay in the country even if ties between the US and China continue to crumble.

According to the results, more than a quarter of US companies surveyed said US-China trade tensions would persist “indefinitely,” compared with around 17% a year ago. Around a fifth of those surveyed now said that the tensions would last for three to five years. That is an increase of 10% compared to 2019.

Only around 14% of companies said the problem would be resolved within a year.

“What probably underpins this sense of negativity is concerns about the broader US-China relationship,”

; AmCham Shanghai said in a report that set out responses from more than 340 companies. The group said it conducted its survey between June and July, just months after countries announced an initial trade deal but when “a major cold” began.

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In recent months, U.S.-China relations have sunk to historic lows as countries tackle a growing number of problems, from the origins of the coronavirus pandemic to human rights issues in Hong Kong and Xinjiang to control over technology.
In July, US President Donald Trump ended the United States’ special trade relations with Hong Kong, which had exempted the city from certain tariffs in the past. That month, both countries also ordered that each of their consulates in Houston and Chengdu be closed.
Last month, Washington sanctioned government officials accused of undermining Hong Kong’s autonomy, including city guide Carrie Lam. Meanwhile, Trump issued Executive Orders threatening to ban two popular Chinese apps, TikTok and WeChat, from operating in the U.S.

Around 32% of respondents said the poor relationship between the US and China is affecting their ability to keep employees in China. Some companies also said they would cut investments in China due to uncertainty over trade issues.

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But leaving the country is still largely out of the question – despite Trump ordering them last year and this week considering “decoupling” the world’s two largest economies.
China still offers many advantages to companies that stay there. Some firms focus on tapping into the country’s growing middle class while others still rely on the country to manufacture. In this year’s AmCham survey, the proportion of companies that said China provided a significant source of their global profits rose 9.4% to 32%.

Almost 79% of the companies that responded to the survey said they had no plans to move their investments elsewhere. The few who named Southeast Asia as their first choice.

Less than 5% of respondents said they intend to bring their operations back to the US, making them the “fourth choice” location, according to AmCham.

“American companies still see a great opportunity in China’s consumer market,” Ker Gibbs, president of the American Chamber of Commerce in Shanghai, said in a statement on the data. He added that the country recently opened some industries to foreign firms, including insurance and wealth management.

“US companies in China want the two countries to resolve outstanding issues and ease tension quickly,” added Gibbs. “A workable collaborative framework for the next decade would be a good place to focus the discussions.”

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