Business council: China still major focus of US firms

American companies still expect revenue to grow in China, and the country remains a priority market despite the challenges of a slowing economy, according to the US-China Business Council.

The council on Thursday released its annual member survey and a scorecard on economic reform on the mainland ahead of the visit by Chinese President Xi Jinping to the United States at the end of the month.

"We hope that President Xi addresses the uncertainty about economic reform and strategic issues like cybersecurity when he is in the US," said John Frisbie, president of the US-China Business Council (USCBC).

The USCBC is a private group representing more than 200 US companies that do business in China. The organization surveys its members annually on the economic and policy environment that they face in China.

Frisbie said China remains a growth-driver for American companies, despite the impact of a slowdown and stock market gyrations.

"In our survey, 41 percent (of US companies) still saw double-digit revenue growth last year, and 38 percent saw single-digit revenue growth in China," he said.

China represents a $400 billion market for US companies, noted Frisbie. "Growth in China is slowing for American companies. While two-thirds project revenue growth in 2015, 20 percent expect a revenue decline," he added.

The number of companies reporting that their China operations are profitable remains high and unchanged from the previous survey at 85 percent. However, cost increases and rising competition continue to pressure margins.

Frisbie said consumer demand and healthcare remain bright spots in China's economy this year, while infrastructure spending and technology will be pressured by the current economic environment.

Even if China were to have economic growth of 6 percent over the next two years, and that's a full percentage point lower than the estimated 7 percent growth for this year, that would be the equivalent of adding two Germanys, Frisbie said.

Frisbie said that cybersecurity should be a top priority for Xi and Obama when they meet. Cybersecurity may pose the greatest challenge to the relationship between China and the US, he said.

paulwelitzkin@chinadailyusa.com

(China Daily USA 09/11/2015 page1)