US corporations in China more and more concern that unhealthy relationships will final for years: survey

© Reuters. FILE PHOTO: Chinese and US flags flutter near the Bund in Shanghai

From Brenda Goh

SHANGHAI (Reuters) – U.S. companies in China are increasingly concerned that trade tensions between the world's two largest economies will drag on for years, with nearly a third saying their ability to retain employees has been compromised, like a survey revealed.

According to an annual business sentiment survey conducted by the American Chamber of Commerce in Shanghai and consulting firm PWC China, half of the companies expect acid bonds to last at least three years, a sharp increase of 30% in 2019.

Of these, 27% said tensions will persist indefinitely, compared to just 13% last year.

"US companies in China want the two countries to quickly resolve their open questions and ease tension. A workable collaborative framework for the next decade would be a good place to focus discussions," Ker Gibbs, president of the Chamber of Commerce, said in a statement .

Tensions between the US and China, already high after last year's trade war, have intensified this year due to the COVID-19 outbreak as Washington blacklisted or threatens Chinese tech companies for national security reasons to blacklist them.

With the upcoming US election this week, President Donald Trump re-launched the idea of ​​separating the US and Chinese economies, also known as decoupling, and suggested that the US would not lose money if the countries did would no longer do business.

Only 29% of companies, highlighting concerns about bilateral tensions and economic uncertainty caused by the coronavirus pandemic, plan to increase their investments in China this year, up from 47% in 2019.

However, the proportion of companies with a pessimistic five-year outlook fell slightly to 18.5% from 21.1% in 2019.

The improvement could be due to the phase one trade deal, the report said, although pessimism remained historically high. By 2019, companies with a pessimistic five-year outlook were around 7% for several years.

This year's survey was conducted from June 16 to July 16 and received responses from 346 companies in industries such as industrial manufacturing, automotive and pharmaceuticals.

More than 90% of respondents said they would stay in China, while 71% of companies that own or outsource production in China said they do not intend to move production to other countries.

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