Us Firms Cautious About Investing In China Amid Rising Tensions, Amcham Says

American companies are growing increasingly wary of investing in China amid rising tensions between the world’s two largest economies, despite Beijing’s efforts to woo foreign investors, a US business group has warned.

“Our companies are concerned not only about the political risks between the two countries, but also about trade barriers and any uncertainties around investing in China,” said Michael Hart, president of the American Chamber of Commerce in China (AmCham China), at a launch event for the group’s 2025 white paper on Friday.

The annual report, which assesses the operating environment for US businesses in China, found that strained US-China relations remained the top concern of AmCham China’s members for the fifth consecutive year, with 63 per cent of respondents naming it as their biggest operational challenge.

Relations have only grown more fraught since AmCham China conducted the survey of more than 350 US firms in late 2024, with the two powers locked in an escalating trade war that has seen both sides raise tariffs on each other’s goods by more than 120 per cent.

Hart said both Chinese and US commerce authorities had been collecting feedback from companies to assess the impact of the current tariffs, as he urged both governments to prioritise creating a stable policy environment for US-China economic relations going forward.

“It does look like both governments are looking carefully and don’t want to stop trade overall,” he said.

“Anecdotally, companies are reporting that they’re able to bring in some items without tariffs,” he added. “We haven’t seen an official announcement. We’ll wait for that.”

The white paper underscores the difficulty Beijing faces as it strives to continue attracting foreign investment amid the trade war.

Last year, China’s foreign direct investment plunged 27.1 per cent year on year in yuan terms, the sharpest decline the country had recorded since the 2008 global financial crisis.

In February, Beijing unveiled a 20-point action plan to stabilise foreign investment, which vowed to allow more participation by foreign companies in sectors including telecommunications, healthcare and education.

According to AmCham, 33 per cent of its member companies said that the investment environment in China had improved, up 5 percentage points from a year earlier. The share of firms reporting a deterioration fell by 7 points to 28 per cent.

Yet, American multinationals are still becoming less inclined to invest in China. The white paper found that 21 per cent of AmCham China’s members no longer viewed the Chinese market as a priority – double the level seen before the Covid-19 pandemic.

“From our member companies’ point of view, the policy measures need to be better communicated to foreign enterprises and carried out more consistently at all levels of the government,” the white paper said.

AmCham added that its member companies also hoped for “open and candid communication channels” to provide timely feedback on the business environment for foreign-invested enterprises.

According to Hart, other areas of concern for American firms include data security and the impact of decoupling in key sectors such as technology and finance.