AmCham sees more corporate commitments in nation

More than 76 percent of polled foreign companies in the Chinese mainland say they plan to continue investing in the country this year, demonstrating their confidence in China's future economic development and vast market, a recent report shows.

According to the 2025 Special Report on the State of Business in South China, a sizeable number of the polled companies in the report have each budgeted under $10 million for reinvestment in China in 2025, accounting for 77 percent of the total, while 6 percent have allocated more than $250 million for their reinvestment plans this year.

The report was released by the American Chamber of Commerce in South China (AmCham South China) in Guangzhou on Wednesday.

It is estimated that member companies have set aside a total of $14.59 billion from profits in China to reinvest over the next three to five years, expanding existing operations with the aim of capturing additional market share, a surge of 33.18 percent compared to the previous reinvestment figure, said Harley Seyedin, chairman and president of AmCham South China.

"This year, 316 companies participated in the study in total," said Seyedin, adding that the 208-page report which is researched and produced independently by AmCham South China is objective and fair, as AmCham South China does not receive any funds from any government in the production of the report.

"Businesses are increasing their commitments in China to secure a stronger foothold in this critical market," Seyedin said.

The companies studied in the report included one-third from the United States, one-third from China with the remaining third from Europe, Asia and the rest of the world.

"The reinvestment surge signals confidence in China's future and their hope for increased US-China cooperation," Seyedin added. "Since nearly 75 percent of US companies in China are primarily focused on importing components from the US to produce goods and services in China for China, they believe that continued reinvestment in China is essential for their long-term success."

China achieved a GDP growth rate of 5 percent to hit 134.91 trillion yuan ($18.59 trillion) last year.

"This robust economic performance continues to attract investors, with 39 percent of the companies studied ranking China as their top investment destination and 58 percent of foreign companies placing it among their top three global investment priorities," said Seyedin.

The report further highlights strong investor confidence, as 73 percent of the participating companies report a positive or very positive overall return on investment in China in 2024, while 39 percent enjoy a higher return on investment in China than in other global markets, he said.

According to the report, the proportion of companies that gained more than 60 percent of their global revenue from China rose by 5 percentage points to 31 percent in 2024 when compared to the figure recorded in 2023.

A total of 47 percent of the companies studied experienced a significant or slight increase in revenue in China, with a larger share of US companies and manufacturing companies experiencing revenue growth in China.

Three percent of the companies studied had each budgeted to reinvest $250 million or more in China in 2024, while this year's findings reveal that 7 percent had actually followed through with reinvestments of this magnitude.

Not a single company indicated a complete withdrawal from the Chinese market, with 91 percent of the companies studied asserting that they will not decouple from the Chinese market due to US-China trade tensions, a 5-percentage-point increase from 2023.

Guangzhou ranks as the most popular destination for foreign investment on the Chinese mainland, with the Guangdong provincial capital followed by Shenzhen also in Guangdong, Shanghai and Beijing, the report stated.

Seyedin said the negative effects of both US and Chinese tariffs on the companies studied have been somewhat alleviated, as many companies have found ways to mitigate the impact through supply chain adjustments, strategic sourcing or absorbing some of the tariff costs.

"US companies have long recognized the importance of the strong economic relationship between the two countries and they remain committed to the mutual benefits of innovation, job creation and cultural exchange that this partnership fosters," he said.

"It is essential both governments work together to create a more predictable and supportive trade environment where US businesses can continue to thrive and contribute to the long-term economic growth of both countries," he added.

Tim Wen, president of the American Wine Import Association, said the depreciation of the Chinese yuan can actually help offset the trade tariffs between China and the US.

He anticipates the United States will persist in imposing restrictions and high tariffs on high-tech products, but will relax tariffs on other products, particularly agricultural products.

"Agricultural products from the US rely heavily on the Chinese market," he added.