China conducted a survey to gauge on American businesses optimism in doing business in the Middle Kingdom since Trumps trade war kicked-off, the result is rather expected, close to 78 percent surveyed said they were optimistic and were unperturbed by the policies set out by the former President.
“Five-year optimism levels were almost back to their pre-trade war levels, 2020 revenues exceeded expectations and revenue projections for 2021 are even more upbeat,” said the American Chamber of Commerce in Shanghai who conducted the report
This was further reinforced with two political scientists publishing their views in The Washington Post, which concluded that “U.S. tariffs on Chinese goods didn’t bring companies back to the United States.”
Though “the architects of the trade war” believed that faced with high costs, U.S. and allied businesses would leave China, tariffs backfired on individual customers and small businesses in the United States, said the authors.
A total of 77.9 percent of the 338 surveyed companies considered the five-year business outlook “optimistic” or “slightly optimistic,” near the 80 percent figure from 2015 to 2018, supposedly an all time.
More than 82 percent of the respondents anticipated higher revenues in 2021 than in 2020, with the most confident industries being pharmaceuticals, medical devices and life sciences, auto-motive, non-consumer electronics and industrial manufacturers.
This bump in optimism reflects the fact that in most industries, COVID no longer weighs as heavily on minds — or operations — as it did a year ago, the report listed.
The aviation industry sees great potential in the Chinese market. On Thursday, Boeing said in its latest market forecast released in Beijing that over 20 years, China’s aviation market would create new commercial aircraft demand valued at 1.47 trillion U.S. dollars and a commercial aviation services market valued at around 1.8 trillion U.S. dollars.
“The rapid recovery of Chinese domestic air travel highlights the country’s economic vitality and resilience. Notably, the underlying demand from international long-haul travel and air freight transport will boost the widebody deliveries,” said Richard Wynne, managing director of China Marketing at Boeing Commercial Airplanes.
Despite negative expectations in early 2020 due to the pandemic, the AmCham Shanghai report said business performance did not decline with over 77 percent of respondents reporting profits in 2020, which is in line with the past several years and deemed “surprisingly strong.”
Companies also intend to hire more, as 63.7 percent in the report planned to increase their headcount in China this year after a decrease during the pandemic.
If relocation or bringing American business back was the plan, the AmCham Shanghai report found that no companies were relocating their production from China to the United States, and 72 percent of manufacturers producing in China “had no plans to move any production out of China in the next three years.”
“The degree of decoupling, measured by foreign direct investment, has been greater in the minds of politicians and pundits than the reality of firms in China,” was the conclusion by Washington Posts editorial.
Alternatively, the whole exercise backfired on the American people, as firms raised prices to cover increasing costs rather than “leaving China or finding alternative suppliers.
As raw materials from China became more expensive because of the tariffs, small businesses in the United States struggled finding alternatives or affording expensive lobbyists, and “lacked the leverage to pass these costs on to customers or the resources to mitigate them,” they said.
“Economic coercion can be a double-edged sword: These tools tend to inflict collateral damage on one’s economy while hurting that of the target, but tariffs are the bluntest tool of all,”- the authors.
Xinhua news
