US business lobby in China complains of more hurdles

BEIJING • A top US business lobby in China has said that nearly half of its members are seeing non-tariff-barrier retaliation in China as a result of the bitter trade war between Beijing and Washington.

The American Chamber of Commerce of China and its sister body in Shanghai, citing a May 16-20 survey of members on the impact of tariffs, also said yesterday that 40.7 per cent of respondents were considering or had relocated manufacturing facilities outside China.

Of the 239 respondents to the survey, which was conducted after China and the US both raised tariffs on each other’s imports earlier this month, almost three-quarters said the impact of tariffs was hurting their competitiveness.

To cope, around one-third of firms said they were increasingly focusing their China operations on producing for Chinese customers and not for export, while another one-third said they were delaying and cancelling investment decisions.

Members said they face increased obstacles such as government inspections, slower Customs clearance and slower approval for licensing and other applications.

Overall, companies were experiencing decreased demand, rising costs and falling profits and revenues because of the trade dispute, respondents said.

The chamber said in February that a majority of its members reported in an earlier annual survey that they favoured the US retaining tariffs on Chinese goods while Washington and Beijing tried to hammer out a deal to end the months-long trade war.

At the time, which was well before the latest tariff hikes, the chamber said that 19 per cent of its member companies were adjusting supply chains or seeking to source components and assembly outside of China as a result of tariffs, while 28 per cent were delaying or cancelling investment decisions in China.

Long considered the ballast in a relationship fraught with geopolitical frictions, the US business community in China in recent years has advocated a harder line on what it sees as discriminatory Chinese trade policies.

Trade negotiations between the US and China have soured dramatically since early May, when Chinese officials sought major changes to the text of a proposed deal that the Trump administration says had been largely agreed.

A subsequent round of talks ended with no movement as US President Donald Trump increased tariffs to 25 per cent from 10 per cent on US$200 billion (S$276 billion) worth of Chinese imports and threatened to impose duties on all remaining Chinese goods sold in the US.

China imposed a retaliatory tariff increase, and the Trump administration followed up last Thursday by adding telecom equipment giant Huawei to a trade blacklist that restricts its ability to purchase US components and software and do business with other US companies.

China’s Foreign Ministry said on Tuesday that foreign investors remained enthusiastic about China, following Mr Trump’s claim that his tariffs were causing companies to move production away from the world’s second-largest economy.

US firms reported greater damage from the trade war than their counterparts in the European Union.

Another issue touched upon by the American chamber survey was that whether China forces foreign companies to transfer technology and intellectual property to Chinese firms to gain market access.

China denies that this happens, but it has been one of the main sticking points in the negotiations.

At least for the firms surveyed for the report, it does not seem to be such an issue, with only one saying that this was the most important outcome in any trade deal.

About 42 per cent said a return to the status quo before the tariffs was most important for them.

The report on European firms doing business in China showed that forced technology transfer was a growing concern, with 20 per cent of respondents saying they had to hand over know-how in order to maintain market access.

That compares with only 10 per cent in 2017.

Of the firms which have moved or are considering relocating manufacturing facilities outside China, the most popular destination was not the US but rather emerging markets such as South-east Asia and Mexico.



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