Page 54 - 2020 White Paper on the Business Environment in China
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0 White Paper on the Business Environment in China
European Union and the ASEAN member states were healthy, and most American companies
increased considerably. Thanks to the complete seemed to understand that China will remain
supply chain, foreign enterprises have realized one of the primary engines of global growth for
that relocating their production units from China the foreseeable future. Notably, 58 percent of
to another country would not be cost-effective. respondents reported improved IPR protection in
Apart from the measures to further open up its the China market, the highest level in any USCBC
economy, China has also increased investments member survey. The rest 42 percent perceived
abroad; its outbound direct investment was no change, and none reported the protection
US$143 billion in 2018 alone. And China's had worsened. The reason may be that China has
cooperation with other economies has increased continued to take steps aimed at IP protection.
the possibility of the China-EU Investment For example, China has set up a Supreme Court
Agreement being inked in 2020. On the other IP appeals mechanism, made amendments to the
hand, 300,000 jobs have been lost in the US and trademark law, anti-unfair competition law which
0.3 percent of its growth shaved off, according address some of the challenges many foreign
to Moody's Analytics report. Therefore, it is companies have faced in the market (China
likely that the US' economic rebound could take Global Daily).
longer without the trade war. And the possibility
of its economic boom coming to an end cannot The two sides have also made substantial
be ruled out. Both countries want a trade deal. progress in the fields of agriculture, exchange
However, only a mutually beneficial deal is rates, financial services, expanding trade
acceptable to China. More work needs to be done cooperation, technology transfer and additional
to reach a deal (Chen, Goodwill). dispute settlement. Such a wide range of fields
where "substantial progress" has been made has
The US government must understand that pointed to the thorough pre-meeting preparations
the overwhelming majority of US companies are of the two sides and their willingness to
making profits and witnessing unprecedented make compromises at the negotiation table
progress in intellectual property protection in to make the agreement possible. Although a
China, but they also felt the pinch of the trade comprehensive deal is yet to be accomplished,
tensions between the world's two biggest the Phase One agreement made after their
economies, according to a survey released by "frank, efficient and constructive" talks further
the US-China Business Council in May 2019. The ease tensions and uncertainties that have swirled
annual member survey, completed in June on around and rattled the financial markets across
100 US companies — about half of the USCBC the world for over two years. Considering the
membership, found 97 percent of the companies frequent setbacks in the previous rounds of
responded "yes" to the question "Are your talks, such progress has not easily come by, nor
China operations profitable?" The vast majority will it naturally be followed by more progress in
of companies report their China operations the future. Commenting on the agreement in
are profitable – so much so that the number the new round of talks, President Trump said it
of respondents reporting a profit margin rate helps transform the relationship between the two
for their China operations that is higher than countries into a "love fest" from one of friction.
that of their overall operations jumped from 38 But to ensure the "love fest" can continue, which
percent to 46 percent in 2019. But only a slight even Trump admitted is beneficial for the United
majority anticipate that revenue will increase in States, China and the world economy, the US
2020, down 26 percent from the previous year, side needs to take more positive measures to
showing that tariff uncertainty, the trade conflict, "meet China half way". For China, therefore,
and a deteriorating market environment were the red alert will not be automatically removed
negatively affecting the business outlook for despite the temporary agreement reached. Many
American companies. As for a "decoupling" of the potential challenges are still ahead that will put
two economies, the survey did not reveal any real the wisdom and patience of the two countries to
evidence that American companies planned to test (CD).
leave China at all. Rather, investments in China
54
European Union and the ASEAN member states were healthy, and most American companies
increased considerably. Thanks to the complete seemed to understand that China will remain
supply chain, foreign enterprises have realized one of the primary engines of global growth for
that relocating their production units from China the foreseeable future. Notably, 58 percent of
to another country would not be cost-effective. respondents reported improved IPR protection in
Apart from the measures to further open up its the China market, the highest level in any USCBC
economy, China has also increased investments member survey. The rest 42 percent perceived
abroad; its outbound direct investment was no change, and none reported the protection
US$143 billion in 2018 alone. And China's had worsened. The reason may be that China has
cooperation with other economies has increased continued to take steps aimed at IP protection.
the possibility of the China-EU Investment For example, China has set up a Supreme Court
Agreement being inked in 2020. On the other IP appeals mechanism, made amendments to the
hand, 300,000 jobs have been lost in the US and trademark law, anti-unfair competition law which
0.3 percent of its growth shaved off, according address some of the challenges many foreign
to Moody's Analytics report. Therefore, it is companies have faced in the market (China
likely that the US' economic rebound could take Global Daily).
longer without the trade war. And the possibility
of its economic boom coming to an end cannot The two sides have also made substantial
be ruled out. Both countries want a trade deal. progress in the fields of agriculture, exchange
However, only a mutually beneficial deal is rates, financial services, expanding trade
acceptable to China. More work needs to be done cooperation, technology transfer and additional
to reach a deal (Chen, Goodwill). dispute settlement. Such a wide range of fields
where "substantial progress" has been made has
The US government must understand that pointed to the thorough pre-meeting preparations
the overwhelming majority of US companies are of the two sides and their willingness to
making profits and witnessing unprecedented make compromises at the negotiation table
progress in intellectual property protection in to make the agreement possible. Although a
China, but they also felt the pinch of the trade comprehensive deal is yet to be accomplished,
tensions between the world's two biggest the Phase One agreement made after their
economies, according to a survey released by "frank, efficient and constructive" talks further
the US-China Business Council in May 2019. The ease tensions and uncertainties that have swirled
annual member survey, completed in June on around and rattled the financial markets across
100 US companies — about half of the USCBC the world for over two years. Considering the
membership, found 97 percent of the companies frequent setbacks in the previous rounds of
responded "yes" to the question "Are your talks, such progress has not easily come by, nor
China operations profitable?" The vast majority will it naturally be followed by more progress in
of companies report their China operations the future. Commenting on the agreement in
are profitable – so much so that the number the new round of talks, President Trump said it
of respondents reporting a profit margin rate helps transform the relationship between the two
for their China operations that is higher than countries into a "love fest" from one of friction.
that of their overall operations jumped from 38 But to ensure the "love fest" can continue, which
percent to 46 percent in 2019. But only a slight even Trump admitted is beneficial for the United
majority anticipate that revenue will increase in States, China and the world economy, the US
2020, down 26 percent from the previous year, side needs to take more positive measures to
showing that tariff uncertainty, the trade conflict, "meet China half way". For China, therefore,
and a deteriorating market environment were the red alert will not be automatically removed
negatively affecting the business outlook for despite the temporary agreement reached. Many
American companies. As for a "decoupling" of the potential challenges are still ahead that will put
two economies, the survey did not reveal any real the wisdom and patience of the two countries to
evidence that American companies planned to test (CD).
leave China at all. Rather, investments in China
54
