Page 8 - 2019 White Paper on the Business Environment in China
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9 White Paper on the Business Environment in China
President’s Message
In the 2018 White Paper on the Business Environment true that China’s economy has slowed down slightly, it is
in China and the 2018 Special Report on the State of still growing at a rate of over six percent. Companies which
Business in South China, as we analyzed the US – China trade postponed their reinvestments in 2018 have increased
status, we used terms such as “trade conflict” and “trade their budgets for reinvestments in China in 2019 in order to
differences”. That changed in the 2019 editions. Shortly keep up with the customer demand - a need intensified by
after last year’s publication, the Trump administration the postponement of their reinvestments in 2018. However,
demanded fundamental changes to China’s economic while the reinvestments in China related to the production
model so that US companies could compete on a more for the Chinese market have increased substantially, a few
level playing field after years of steadily rising US trade companies have also shifted some export-manufacturing-
deficits with China, and the US claims regarding intellectual related reinvestments to other Asian countries.
property and trade secrets.
At the time of this writing, President Donald Trump was
The 2019 American Chamber of Commerce in South not only hailing the progress of the ongoing trade talks
China White Paper on the Business Environment in China with China, but was also contemplating postponing the
was difficult to compile in a year filled with rapid changes, March 1 deadline for continued negotiations. We believe
escalating tariffs, and a lack of progress on both sides. Many that the US and China will eventually reach a full agreement
of the responding businesses in our Special Report annual and the waves of tariffs that truly do not help anyone will
survey have similar problems. Our economic partnership soon subside. That, coupled with the softening of FDI rules
deserves better. and regulations in China, should ease the current question
marks over the long-term viability of China-based export
China’s January export and import data January 2019 manufacturing firms, and buy them some time to adapt
dollar-denominated exports rose 9.1 percent from a to the alternative supply chains. We are both proud and
year ago, healthily beating a forecast of a 3.2 percent happy for this as our Chamber together with the US
contraction. China’s imports fell 1.5 percent over the same Chamber of Commerce in Washington, DC and other
period proving far better than the ten-percent predicted business associations have worked hard through diligent
decline. China’s overall trade surplus of US$39.16 billion in lobbying to bring about a resolution. It is, however, my
January also outperform the estimates. opinion that any agreement now would simply represent
a temporary respite, and the potential for another flare-up
The January figures can easily confirm the findings will continue unless China’s central government takes the
of the 2019 Special Report, as many companies take necessary steps to resolve the problems permanently.
advantage of the 90-day truce between the US and China,
completing orders for rush delivery from the US and China. Foreign investment in China has contributed immensely
Those orders or deals account for 20 to 30 percent of the to the growth and advancement of China’s economy. A
companies’ annual numbers. 16-month Hinrich Foundation study of China’s Ministry of
Commerce data conducted by Professor Michael Enright of
It is because by the time we began our study for the Enright, Scott & Associates shows that on average 33 percent
2019 Special Report on the State of Business in South China of China’s entire GDP and 27 percent of the country’s entire
some of the dust related to the US-China trade had settled employment are created by foreign-invested enterprises
and business executives were better able to predict the (FIEs). The impact is however much higher on the east and
future of their businesses. This is clearly reflected in results southern coasts of China. For example, the study shows
of the 2019 Special Report. in Shanghai 67 percent of trade and industrial output, 33
percent of employment and tax revenue, and 90 percent
Among many findings, the 2019 Special Report suggests of high-tech output are created by FIEs. The study also
most business executives have sufficient time to assess the shows that investment by FIEs took the computer industry
present and possible future impact of the trade dispute in Chongqing from making zero to a third of the world’s
on their businesses and expanded their 2019 plans for laptop PCs in six years. It is of significance to note that the US
reinvestments in the US and China accordingly. While it is companies contribute to China’s GDP each year more than
180 times the USFDI inflow.
8
President’s Message
In the 2018 White Paper on the Business Environment true that China’s economy has slowed down slightly, it is
in China and the 2018 Special Report on the State of still growing at a rate of over six percent. Companies which
Business in South China, as we analyzed the US – China trade postponed their reinvestments in 2018 have increased
status, we used terms such as “trade conflict” and “trade their budgets for reinvestments in China in 2019 in order to
differences”. That changed in the 2019 editions. Shortly keep up with the customer demand - a need intensified by
after last year’s publication, the Trump administration the postponement of their reinvestments in 2018. However,
demanded fundamental changes to China’s economic while the reinvestments in China related to the production
model so that US companies could compete on a more for the Chinese market have increased substantially, a few
level playing field after years of steadily rising US trade companies have also shifted some export-manufacturing-
deficits with China, and the US claims regarding intellectual related reinvestments to other Asian countries.
property and trade secrets.
At the time of this writing, President Donald Trump was
The 2019 American Chamber of Commerce in South not only hailing the progress of the ongoing trade talks
China White Paper on the Business Environment in China with China, but was also contemplating postponing the
was difficult to compile in a year filled with rapid changes, March 1 deadline for continued negotiations. We believe
escalating tariffs, and a lack of progress on both sides. Many that the US and China will eventually reach a full agreement
of the responding businesses in our Special Report annual and the waves of tariffs that truly do not help anyone will
survey have similar problems. Our economic partnership soon subside. That, coupled with the softening of FDI rules
deserves better. and regulations in China, should ease the current question
marks over the long-term viability of China-based export
China’s January export and import data January 2019 manufacturing firms, and buy them some time to adapt
dollar-denominated exports rose 9.1 percent from a to the alternative supply chains. We are both proud and
year ago, healthily beating a forecast of a 3.2 percent happy for this as our Chamber together with the US
contraction. China’s imports fell 1.5 percent over the same Chamber of Commerce in Washington, DC and other
period proving far better than the ten-percent predicted business associations have worked hard through diligent
decline. China’s overall trade surplus of US$39.16 billion in lobbying to bring about a resolution. It is, however, my
January also outperform the estimates. opinion that any agreement now would simply represent
a temporary respite, and the potential for another flare-up
The January figures can easily confirm the findings will continue unless China’s central government takes the
of the 2019 Special Report, as many companies take necessary steps to resolve the problems permanently.
advantage of the 90-day truce between the US and China,
completing orders for rush delivery from the US and China. Foreign investment in China has contributed immensely
Those orders or deals account for 20 to 30 percent of the to the growth and advancement of China’s economy. A
companies’ annual numbers. 16-month Hinrich Foundation study of China’s Ministry of
Commerce data conducted by Professor Michael Enright of
It is because by the time we began our study for the Enright, Scott & Associates shows that on average 33 percent
2019 Special Report on the State of Business in South China of China’s entire GDP and 27 percent of the country’s entire
some of the dust related to the US-China trade had settled employment are created by foreign-invested enterprises
and business executives were better able to predict the (FIEs). The impact is however much higher on the east and
future of their businesses. This is clearly reflected in results southern coasts of China. For example, the study shows
of the 2019 Special Report. in Shanghai 67 percent of trade and industrial output, 33
percent of employment and tax revenue, and 90 percent
Among many findings, the 2019 Special Report suggests of high-tech output are created by FIEs. The study also
most business executives have sufficient time to assess the shows that investment by FIEs took the computer industry
present and possible future impact of the trade dispute in Chongqing from making zero to a third of the world’s
on their businesses and expanded their 2019 plans for laptop PCs in six years. It is of significance to note that the US
reinvestments in the US and China accordingly. While it is companies contribute to China’s GDP each year more than
180 times the USFDI inflow.
8
