• Alexander Liu-Middleton

American businesses pessimistic about 2019 in China despite Trump tariff hike delay

American companies in China are expecting a gloomy 2019 with the majority expecting a decline in bilateral trade ties and delayed investments.

A survey of 314 American companies (by the ACCC- American Chamber of Commerce in China) provided a full account of trials American companies face after Beijing and Washington exchanged reciprocal tariffs on more than US$300 billion in shared trade.

This report was released 2 days after American President Donald Trump declared that he would delay a planned hike in tariffs on Chinese products after both he and Beijing reported "substantial progress" in trade discussions.

The survey discovered that 89% of companies reported a negative view of the world's most significant bilateral trade relationship.

The tariffs directly hit American companies, accumulating costs and lowering demand from Chinese customers with some businesses even forced to lay off employees.

The America-China trade squabble was among the top apprehensions for companies across trade divisions. Three-quarters think that the relationship will further decline or remain the same in 2019.

Approximately two-thirds believed that the strains affected their strategies for the market, and caused nearly 25% to postpone further investment in China.

These trade pressures have increased inspections, reduced customs clearance and increased regulatory inspection for many companies.

About 20% of firms have relocated or are considering moving manufacture outside of mainland China, with the tariffs and increasing costs the main reasons.

Market access is a long-time worry for US, European and other overseas businesses and is at the top of the Trump administration's list of gripes and remains a problem for about 70% of businesses leading one commentator to state "China has made doing our type of business, which involves importing agricultural products into China, more difficult every year since I have been coming to China"

Another topic under discussion between the world's top two trade and industry powers is the security of American intellectual property, with Washington accusing Beijing of encouraging the theft of US conceptions.

35% of companies said it had triggered them to limit investment in China, rising to about 50% in tech and industrial sectors. Despite this, 59% of firms said there has been progress in IP protection in the past five years.

Mainland China remains a critically essential market for many American businesses, and the bilateral economic connection is too significant to not get right.

Slackening growth is also a major apprehension after the Chinese economy posted its slowest expansion in nearly three decades last year (see other articles in the blog section)

More than 50% of Chinese companies estimate market growth this year of 5% or less -- below the 6% growth objective Beijing is projected to announce in March.

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