Trade war harming 75% of US firms in China: Survey

Thursday, 23 May 2019, 04:30 Hrs
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Trade war harming 75% of US firms in China: Survey

More than seven out of 10 US companies in China (74.9 per cent) are being adversely affected by the ongoing trade war between China and the US, according to a survey released on Wednesday by the American Chamber of Commerce in China.

"The negative impact of tariffs is clear and hurting the competitiveness of American companies in China," according to the report which includes the findings of the survey of member companies made by AmCham China and AmCham Shanghai.

The survey was carried out from May 16 to 20. About 250 companies participated in it of which 61.6 per cent were manufacturing-related, 25.5 per cent were service-related, 3.8 per cent retail and distribution-related, while 9.6 per cent belonged to other industries.

The survey was carried out after US President Donald Trump issued a tariff increase from 10 per cent to 25 per cent on $200 billion worth of Chinese goods on May 10, escalating the trade war between the two countries.

The survey was carried out after the rise in tensions unleashed by Trump, which in turn triggered a reaction from the Chinese authorities with new tariffs.

The impact of the tariffs has been felt through lower demand for products (52.1 per cent), higher manufacturing costs (42.4 per cent) and higher product sales prices (38.2 per cent), Efe news reported.

To address the impact of tariffs, the survey reported that companies are taking measures such as delaying or cancelling investment decisions (33.2 per cent) or adopting a "China, for China" strategy (35.3 per cent) which seeks to establish manufacturing and sourcing within China to mainly serve the Chinese market.

"Such strategy constitutes a rational choice for many companies to insulate themselves from the effects of tariffs while maintaining their ability to pursue domestic market opportunities," the report added.

Although over half of the respondents (53.1 per cent) have seen no increase in non-tariff retaliatory measures by the Chinese government, about one in five has experienced an increase in inspections (20.1 per cent) and slower customs clearance (19.7 per cent).

They have also felt slower approval for licenses or other applications (14.2 per cent), as well as complications arising from increased bureaucratic oversight or regulatory control (14.2 per cent).

The survey revealed that 40.7 per cent of respondents are considering moving or have moved their manufacturing facilities outside China, with Southeast Asia (24.7 per cent) and Mexico (10.5 per cent) being the primary destinations.

Less than 6 per cent of the member companies said that they have considered or are considering relocating manufacturing to the US.

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Source: IANS
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