US-China tensions push American business confidence in China to a record low, survey shows
TOI World Desk | Sep 15, 2025, 20:23 IST
U.S. companies in China are reporting their lowest confidence levels in over 25 years, according to the American Chamber of Commerce in Shanghai’s latest survey. Only 41 percent of businesses expressed optimism about their five-year outlook, marking a record low. While profitability improved in 2024, with more than 70 percent of firms reporting positive earnings, concerns about U.S.-China trade tensions, tariffs, and rising competition from local firms are driving long-term pessimism. Many companies are shifting investments to Southeast Asia as they adopt a “China plus one” strategy. The report underscores how Washington-Beijing frictions, President Donald Trump’s tariffs, and China’s slowing economy are reshaping corporate strategy.
American companies in China are becoming increasingly negative about their long-term prospects in the country, with confidence dropping to its lowest level since surveys began more than two decades ago. Rising geopolitical tensions, growing competition from local firms, and China’s slowing economy are all weighing heavily on U.S. businesses, according to a new report from the American Chamber of Commerce in Shanghai.
Only 41 percent of US businesses are optimistic about the five-year business outlook in China, according to the survey released on Wednesday by the American Chamber of Commerce in Shanghai. The survey shows that only 41 percent of U.S. businesses remain optimistic about their five-year outlook in China, a decline of six percentage points from last year. This is the weakest level recorded since AmCham began publishing its Annual China Business Report in 1999. The sharp fall in sentiment follows escalating trade friction between Washington and Beijing, including President Donald Trump’s recent “Liberation Day” tariffs, which triggered retaliatory measures from China. Although both governments have since paused tariff hikes under a 90-day truce, the uncertainty has already unsettled companies.
“We welcome the pause, but the issue is not going away,” said Eric Zheng, president of AmCham Shanghai. “The unpredictability makes it extremely difficult for companies to plan ahead.”
The figure, down from 47 percent in 2024, is the lowest since AmCham Shanghai began releasing its annual business report in 1999. Just 45 percent of respondents said they expected revenues to increase in 2025, AmCham Shanghai said, which would be a record low if realised. Only 12 percent ranked China as their headquarters’ top investment destination, also the lowest in the survey’s history, according to the business chamber.
Businesses cited US-China tensions and broader geopolitical pressures as the biggest challenges to operating. Nearly half of respondents called for the removal of all US tariffs on Chinese goods, with 42 percent supporting the scrapping of Chinese tariffs on US products, according to AmCham Shanghai.
Despite the worsening sentiment, businesses also reported positive developments over the past year. More than 70 percent of respondents said they were profitable in 2024, up from a record low of 66 percent in 2023. And nearly half of respondents said the regulatory environment in China was transparent, a 13-percentage point jump from the previous year.
“Government efforts to improve the regulatory environment have been noticed by members, but they are overshadowed by US-China trade tensions,” AmCham Shanghai chair Jeffrey Lehman said in a statement. Businesses in China are less optimistic about conditions in the country than at any point in the last quarter-century, a survey has found. Liu Pengyu, a spokesperson for the Chinese embassy in Washington, DC, said foreign investors had established some 1.24 million enterprises in China, with investments totalling nearly $3 trillion.
“Foreign-invested enterprises have cast a vote of confidence in China’s economic prospects through their actions,” Liu told Al Jazeera. “The Chinese government has also recently introduced new measures to encourage foreign investment, demonstrating its sincerity and determination to promote high-level opening up. We welcome companies from all countries, including the United States, to participate in China’s modernisation and achieve greater success and better development through integration into the process of high-quality development.”
The latest gauge of business sentiment comes as China’s slowing economy is facing various challenges ranging from US President Donald Trump’s trade war to weak consumption and a years-long property downturn. On Wednesday, China’s National Bureau of Statistics said consumer prices fell in August at their fastest rate in six months, the latest sign of anaemic demand in the world’s second-largest economy.
Carsten Holz, an expert on the Chinese economy at the Hong Kong University of Science and Technology, said the survey showed that the uncoupling of the US and Chinese economies was “well under way.” “The results mirror the findings of a May 2025 European Chamber of Commerce in China report that business optimism of European firms in China has never been as low as it currently is,” Holz told Al Jazeera. “These findings are in line with China’s policy of achieving self-sufficiency across all sectors of its economy.”
The challenges for U.S. companies extend beyond tariffs. Geopolitical tensions were cited as the biggest concern by two-thirds of the 254 firms surveyed, while rising competition from fast-growing Chinese companies ranked as the second-largest issue. Concerns about China’s broader economic slowdown, once the top worry, have now been overtaken. Even though profitability improved this year, with 71 percent of businesses reporting profits and 57 percent posting revenue growth, the overall outlook remains fragile. Only 45 percent of firms expect revenue to grow in 2025, which would mark a historic low if it occurs, and nearly two-thirds of respondents anticipate that tariffs will negatively affect their earnings this year.
For many businesses, the problem is not just short-term tariffs or limited market access but the longer-term strategy of operating in China. Almost half of the companies surveyed said they have already redirected investments previously intended for China to other countries, with Southeast Asia emerging as the most popular alternative. Vietnam, Thailand, and Indonesia in particular have benefited as U.S. firms diversify their supply chains and hedge against risks.
The survey also revealed that only 12 percent of companies now view China as their top global investment destination, another record low. At the same time, there have been modest improvements in China’s regulatory climate. Nearly half of the respondents described regulations as more transparent than before, representing a 13-point increase from last year, while optimism about future regulatory openings nearly doubled to 41 percent. Still, these developments have not been enough to counterbalance the broader challenges of politics, costs, and local competition.
For U.S. businesses, the central question is whether Washington and Beijing can resolve their differences on trade, tariffs, and security before more firms accelerate their exit strategies. “Hopefully the two governments will work together to sort out their differences and reach a sustainable deal,” Zheng said, warning that confidence could continue to erode if tensions persist.
Analysts note that the findings reflect a larger shift in global supply chains. While China remains an important production base and consumer market, many American companies are now pursuing a “China plus one” strategy, maintaining operations in China while also building capacity elsewhere in Asia. This shift highlights the need for flexibility in the face of uncertainty and underscores the reality that China is no longer the singular destination for U.S. corporate growth.
The decline in confidence among U.S. firms illustrates the deeper strains in the U.S.-China relationship. Tariffs may have been the initial trigger, but issues such as technology restrictions, cybersecurity risks, and political rhetoric have created an increasingly unpredictable environment. For American companies that once considered China the centerpiece of their global expansion plans, the equation is changing. Many remain profitable, but the balance of risk and reward is being recalculated. As one executive who participated in the survey put it, “China is still important, but it’s no longer the only game in town.”
Only 41 percent of US businesses are optimistic about the five-year business outlook in China, according to the survey released on Wednesday by the American Chamber of Commerce in Shanghai. The survey shows that only 41 percent of U.S. businesses remain optimistic about their five-year outlook in China, a decline of six percentage points from last year. This is the weakest level recorded since AmCham began publishing its Annual China Business Report in 1999. The sharp fall in sentiment follows escalating trade friction between Washington and Beijing, including President Donald Trump’s recent “Liberation Day” tariffs, which triggered retaliatory measures from China. Although both governments have since paused tariff hikes under a 90-day truce, the uncertainty has already unsettled companies.
“We welcome the pause, but the issue is not going away,” said Eric Zheng, president of AmCham Shanghai. “The unpredictability makes it extremely difficult for companies to plan ahead.”
The figure, down from 47 percent in 2024, is the lowest since AmCham Shanghai began releasing its annual business report in 1999. Just 45 percent of respondents said they expected revenues to increase in 2025, AmCham Shanghai said, which would be a record low if realised. Only 12 percent ranked China as their headquarters’ top investment destination, also the lowest in the survey’s history, according to the business chamber.
Businesses cited US-China tensions and broader geopolitical pressures as the biggest challenges to operating. Nearly half of respondents called for the removal of all US tariffs on Chinese goods, with 42 percent supporting the scrapping of Chinese tariffs on US products, according to AmCham Shanghai.
Despite the worsening sentiment, businesses also reported positive developments over the past year. More than 70 percent of respondents said they were profitable in 2024, up from a record low of 66 percent in 2023. And nearly half of respondents said the regulatory environment in China was transparent, a 13-percentage point jump from the previous year.
“Government efforts to improve the regulatory environment have been noticed by members, but they are overshadowed by US-China trade tensions,” AmCham Shanghai chair Jeffrey Lehman said in a statement. Businesses in China are less optimistic about conditions in the country than at any point in the last quarter-century, a survey has found. Liu Pengyu, a spokesperson for the Chinese embassy in Washington, DC, said foreign investors had established some 1.24 million enterprises in China, with investments totalling nearly $3 trillion.
“Foreign-invested enterprises have cast a vote of confidence in China’s economic prospects through their actions,” Liu told Al Jazeera. “The Chinese government has also recently introduced new measures to encourage foreign investment, demonstrating its sincerity and determination to promote high-level opening up. We welcome companies from all countries, including the United States, to participate in China’s modernisation and achieve greater success and better development through integration into the process of high-quality development.”
The latest gauge of business sentiment comes as China’s slowing economy is facing various challenges ranging from US President Donald Trump’s trade war to weak consumption and a years-long property downturn. On Wednesday, China’s National Bureau of Statistics said consumer prices fell in August at their fastest rate in six months, the latest sign of anaemic demand in the world’s second-largest economy.
Carsten Holz, an expert on the Chinese economy at the Hong Kong University of Science and Technology, said the survey showed that the uncoupling of the US and Chinese economies was “well under way.” “The results mirror the findings of a May 2025 European Chamber of Commerce in China report that business optimism of European firms in China has never been as low as it currently is,” Holz told Al Jazeera. “These findings are in line with China’s policy of achieving self-sufficiency across all sectors of its economy.”
The challenges for U.S. companies extend beyond tariffs. Geopolitical tensions were cited as the biggest concern by two-thirds of the 254 firms surveyed, while rising competition from fast-growing Chinese companies ranked as the second-largest issue. Concerns about China’s broader economic slowdown, once the top worry, have now been overtaken. Even though profitability improved this year, with 71 percent of businesses reporting profits and 57 percent posting revenue growth, the overall outlook remains fragile. Only 45 percent of firms expect revenue to grow in 2025, which would mark a historic low if it occurs, and nearly two-thirds of respondents anticipate that tariffs will negatively affect their earnings this year.
For many businesses, the problem is not just short-term tariffs or limited market access but the longer-term strategy of operating in China. Almost half of the companies surveyed said they have already redirected investments previously intended for China to other countries, with Southeast Asia emerging as the most popular alternative. Vietnam, Thailand, and Indonesia in particular have benefited as U.S. firms diversify their supply chains and hedge against risks.
The survey also revealed that only 12 percent of companies now view China as their top global investment destination, another record low. At the same time, there have been modest improvements in China’s regulatory climate. Nearly half of the respondents described regulations as more transparent than before, representing a 13-point increase from last year, while optimism about future regulatory openings nearly doubled to 41 percent. Still, these developments have not been enough to counterbalance the broader challenges of politics, costs, and local competition.
For U.S. businesses, the central question is whether Washington and Beijing can resolve their differences on trade, tariffs, and security before more firms accelerate their exit strategies. “Hopefully the two governments will work together to sort out their differences and reach a sustainable deal,” Zheng said, warning that confidence could continue to erode if tensions persist.
Analysts note that the findings reflect a larger shift in global supply chains. While China remains an important production base and consumer market, many American companies are now pursuing a “China plus one” strategy, maintaining operations in China while also building capacity elsewhere in Asia. This shift highlights the need for flexibility in the face of uncertainty and underscores the reality that China is no longer the singular destination for U.S. corporate growth.
The decline in confidence among U.S. firms illustrates the deeper strains in the U.S.-China relationship. Tariffs may have been the initial trigger, but issues such as technology restrictions, cybersecurity risks, and political rhetoric have created an increasingly unpredictable environment. For American companies that once considered China the centerpiece of their global expansion plans, the equation is changing. Many remain profitable, but the balance of risk and reward is being recalculated. As one executive who participated in the survey put it, “China is still important, but it’s no longer the only game in town.”