More than half of American businesses in China are currently concerned that the condition of interaction between the world’s two largest economies is nowadays on a downward trajectory.
The mentioned information is contained in the results of the annual survey conducted by the American Chamber of Commerce (AmCham) in China. It is worth noting that in this case, there is more concern about the further dynamic of relationships between Washington and Beijing. The corresponding sentiment is typical for 51% of businesses that participated in the mentioned survey. It is worth noting that this indicator is the highest in the last five years.
The relationship between the United States and China is undergoing a kind of downturn. It is worth noting that currently there is geopolitical tension in the world as a whole, demonstrating what can be described as a tendency to escalation. Beijing and Washington already have mutual restrictions directly related to the economy. The United States has already limited the export of advanced chips and equipment for manufacturing microcircuits of the corresponding category to China. As part of the retaliatory measures, the Asian country has banned the shipments of certain minerals to the US. Moreover, the intention of the President of the United States, Donald Trump, to tighten tariff policy, including concerning goods imported from China, is clearly not a favorable factor in the context of the prospects for the further dynamic of relationships between Washington and Beijing.
AmCham China Chair Alvin Liu stated that stable and constructive relationships based on economic and trade ties are crucial not only for the prosperity of the Asian country and the US but also for the stability of the global economy. So far, such a favorable scenario belongs to the category of theoretical probabilities, the materialization of which in the practical plane has not yet become an accomplished fact.
AmCham China stated that currently, the main reasons for concerns of American businesses in the Asian country are geopolitical tensions, policy uncertainty, and trade disputes.
It is worth noting that Donald Trump did not, as previously expected by many, immediately tighten Washington’s tariff policy towards Beijing right after his inauguration on January 20. Against the background of this circumstance, the media published insider information, according to which the administration of Mr. Trump is aimed at trying to conclude the deal with China, and not at the instant imposition of restrictive trade measures. For Beijing, the materialization of the tariff threat from Washington will have very serious consequences. Currently, exports are actually the main driving force behind China’s economic growth. At the same time, many analysts warn that the mentioned measures will also have negative consequences for the United States. Proponents of this point of view argue that the implementation of the tariff threat is highly likely to become a factor in accelerating inflation in the space of the US economic system.
China’s foreign ministry spokesperson Mao Ning at a regular press conference on Thursday, January 23, commenting on the results of the mentioned survey, said that, in her opinion, the relevant data demonstrate the importance of maintaining stable, sustainable, and healthy relationships between Beijing and Washington. She noted that the Asian country hopes that the United States can meet it halfway and promote bilateral relations returning to a path of healthy and stable development.
The survey of 368 AmCham China member companies was conducted from October to November last year, partly after Donald Trump’s victory in the US presidential election on November 5.
It is worth mentioning that during Mr. Trump’s first presidential term, which lasted from 2017 to 2021, there was a trade war between Beijing and Washington. This experience significantly clouds the prospects for a favorable dynamic of interaction between the United States and China in the coming years. It is worth noting that during the administration of former US President Joe Biden from 2021 to 2025, relationships between Washington and Beijing did not improve significantly. Moreover, at that time, the confrontation between the United States and China in the technology sector finally worsened. To a large extent, the corresponding dynamic was facilitated by a leap in the development of artificial intelligence, which demonstrates impressive cognitive abilities and can become a new platform for economic growth. Governments, companies, and investment funds have drawn attention to AI. In the context of the current state of affairs, it is obvious that the high level of development of the domestic artificial intelligence industry will largely determine the global prospects of the countries. The United States and China, as the largest economic systems in the world, cannot but strive to dominate the area of machine intelligence, based on the foundation principles of the logic of existence in the present configuration of the geopolitical environment.
The Donald Trump administration is currently considering imposing a 10% duty on goods from an Asian country. At the level of official rhetoric, the corresponding measure is interpreted as an action related to Beijing’s participation in the global supply chain of fentanyl. The mentioned duty against China may come into force as early as February 1. It is possible that attempts will be made to conclude the deal between Beijing and Washington before the beginning of next month.
Almost half of the participants in the survey conducted by AmCham China still rank the Asian country as one of the three global investment priorities. It is worth noting that the corresponding indicator did not show significant changes over the year. At the same time, the proportion of companies that no longer listed China as their preferred investment destination has increased. The corresponding indicator currently stands at 21%. Last year, this figure was recorded at the 18% mark. Also, the mentioned indicator is more than twice as high as the reading observed before the coronavirus pandemic, which has become a kind of shock factor for the global economy in general and the Chinese economy in particular.
Also, about a third of the businesses that participated in the specified survey reported unfair treatment in China compared to local companies. It was noted that this issue is particularly relevant in the context of market access and public procurement. The corresponding indicator has not changed significantly over the year.
It is worth noting that despite the geopolitical tensions, various sanctions, the prospect of tougher tariffs, and other restrictive measures, companies from Western countries are still interested in continuing to do business in China and their continued presence in the local market. Commercial cooperation with an Asian country generates significant positive financial results. At the same time, the cessation of activities in corresponding international business directions means financial losses for Western companies. There is also a significant interest in alternative centers of presence in Asia. Against the background of growing tensions between Beijing and Washington, the issue of diversifying business processes and production facilities within the mentioned region has become relevant for many companies. In this case, India is seen as an alternative to China. Many companies have already started implementing and scaling up projects in the South Asian country. For example, in 2023, the US firm Applied Materials, specializing in the manufacture of equipment for making microchips, announced plans to expand its operations in India.
Many Western companies also highly assess the economic and technological prospects of Southeast Asia. In this context, it is worth mentioning that in April Microsoft announced its intention to invest $1.7 billion in Indonesia over four years. These funds are intended to build a new cloud and artificial intelligence infrastructure. Also in May, it became known about Microsoft’s plans to open a data center in Thailand. Moreover, at that time, the technology giant pledged $2.2 billion in investments in the evolving of the cloud and artificial intelligence infrastructure in Malaysia.
Microsoft chief executive officer Satya Nadella is enthusiastic about the prospects for Southeast Asia in the context of technological development, which is expected to drive economic growth. He expects artificial intelligence to bring $1 trillion in value to the economy of the mentioned region. In his opinion, the revolution in the machine intelligence industry will have a significant impact on the dynamic of gross domestic product (GDP). For example, he predicts that artificial intelligence will add more than 10% to the growth of the mentioned indicator in Indonesia.
This month, Satya Nadella announced that Microsoft would spend $3 billion to expand its Azure cloud and artificial intelligence capacity in India.
If optimistic forecasts about the economic and technological prospects of Southeast Asia become an objective reality, American businesses may migrate to certain countries in this region. India may become another direction of the corresponding movement. This will happen if the mentioned country can become a full-fledged alternative to China as a production center and a space for implementing upward economic processes.
