SHANGHAI (Reuters) – The China-U.S. trade war is souring the profit and investment outlook for U.S. companies operating in the world’s second-biggest economy, a survey by a prominent American business association showed.
FILE PHOTO: A woman walks past a bench painted in the colours of the U.S. flag outside a clothing store in Beijing, China January 7, 2019. REUTERS/Thomas Peter/File Photo
The annual poll by the American Chamber of Commerce in Shanghai found that while most of its member companies remained profitable in 2018, the number reporting revenue growth fell. Projections for future revenue also dropped, highlighting the corrosive impact of the escalating tit-for-tat tariffs.
Five-year optimism sunk for the first time since 2015, when China’s stock markets nosedived and the authorities fumbled their response.
“Revenue growth projections have lowered, optimism about the future has waned, and many companies are redirecting investment originally planned for China,” AmCham said in a report on the survey published on Wednesday.
The downbeat results come as U.S. and Chinese negotiators prepare to meet in Washington in October in stop-start efforts to de-escalate the year-long trade row. With little progress to show so far, market expectations for a breakthrough in the discussions are low.
“With no sign of a trade agreement, 2019 will be a difficult year; without a trade deal, 2020 may be worse,” the AmCham report said.
Most AmCham member companies were against the use of tariffs to handle trade disputes, with three-quarters of respondents saying they were opposed.
The survey was conducted between June 27 and July 25 – before the latest round