On March 9, 2021, Greg Gilligan, Chairman of AmCham China, spoke to Bloomberg TV about the company’s Annual Business Climate Survey and the outlook for U.S. firms operating in China.
What were the chief findings from your annual business climate survey?
The chief findings of our member companies was certainly COVID impact to 2020 business operations, but significant optimism about the future business environment here and their investment plans.
Could you tell us a bit more about the investment plans in order to inform us as to how they’re really feeling?
Well, naturally, we all expected that COVID-19 would impact business tremendously. However, if we compare a survey we did last May with this survey that was conducted in October and November, you see a very significant swing as to the 2020 revenue outlook picture, which moderated what people were thinking about in terms of investment. We break down our survey results into four main categories in order to see trends in different sectors. Some sectors, such as Services, plan to increase investment fairly significantly. There’s other sectors that were more impacted, by COVID such as the Consumer sector in particular, and as a result, will less with forward investment, because they have a very cautious attitude towards 2021.
I’ve always been calling it a trade war between Beijing and Washington with technological characteristics . How are technology companies operating within China feeling because it is certainly a very sensitive industry to be in at the moment.
The Tech sector actually had the lowest projection for flat or negative industry growth. Many of them benefited from this shift to online and the increase in the use of technology during the pandemic. Many companies also believe that the future is not as pessimistic as we might have thought, and these results that they shared with us back that up.
How do your findings really sit when you look at the war of words quite often between the US and China? How does that impact business overall? Is there a sense you’re getting of a bit of pessimism? Or is that something that is just happening on the sidelines, and for these companies, is essentially business as usual?
There’s an absolute sense of caution. I won’t use the word pessimism, because we see some things that you could call optimism in other areas. However, one of the main concerns of the business community is the tension in the US-China relationship that was overwhelmingly reflected across all four sectors as their top concern. The idea that things could go south on us relative to the bilateral relationship is first and foremost in the mind of decision makers in business. And that could, in fact, lead to conservatism in their investment plans.
Is there anywhere where it’s been felt worse than in any other sectors? Do your respondents look at what’s happening from purely a financial perspective?
The Technology sector is certainly an area of sensitivity, because both countries want to dominate the heights of the future economy, and tech clearly is in that space. Along with this, any sector that involves significant research and development. What we are trying to do for our member companies is to insert ourselves in the process. We refer to them as the four C’s. You often hear both governments talking about cooperation or competition, and we going to try to help define those things more clearly, such that we can broaden those lanes for commercial activity. We want to diminish or reduce appropriately the other two C’s which could be confrontation and/or conflict. We want to ask each country to use as narrowly as is appropriate the ideas of national security and law enforcement so that we can broaden commercial opportunity.
What we were expecting with the Biden administration would be one which was markedly different in style, but not in substance. Is that something that you are also perceiving?
No, I would say that people are decidedly optimistic. Coincidentally, the survey that we just did straddled Election Day. If you look at the results prior to Election Day, and the results after you see a big swing in optimism. On the lower end of the chart that reflected pessimism, there was a drop of almost 20 points. At the top end of the chart, there was an increase of about 15 points in optimism that the Biden administration would approach things differently, and to the better. I think that business is hopeful for what we see going forward. We do not project things to all of a sudden get easy or rosy. We think the issues remain the same, but stylistically things should improve with a more traditional measure of diplomacy, including multilateralism, and, frankly, getting a seat back at the table.
To watch the original Bloomberg TV interview, please click here.