China talent top worry for US firms

For the second consecutive year, respondents ranked increasing labor costs as the top business challenge, followed by inconsistent regulatory interpretation and unclear laws, and shortages of qualified employees.

More than 80 percent of the companies feel that China is losing its competitive advantages to varying degrees due to rising costs.

But companies remain optimistic about the business climate in China. Forty-eight percent regard the country as a top-three investment priority, while 20 percent regard it as the No 1 investment priority.

However, more firms were scaling back expansion plans in China, and the majority plan to moderately increase investment in the country by 10 percent or less this year, the report said.

More than 80 percent said the quality of China's investment environment is improving or has remained the same, while less than 20 percent said it is deteriorating.

Some 75 percent of the firms surveyed are optimistic or slightly optimistic about their business outlook in China for the next two years, according to the survey report.

Greg Gilligan, chairman of AmCham China, said in the report, "While this year's Business Climate Survey lays bare the difficulties faced by foreign business in China, it also demonstrates optimism that the transition apparent in 2013 is just the beginning of a new era in China's development.

"Many tough decisions remain for the country, but the most difficult decision, to embrace reform, has already been made."

In 2013, China set up the China (Shanghai) Free Trade Pilot Zone. Late last year, the country also unveiled a comprehensive reform plan to transform the economic growth model while pledging to allow the market to play a decisive role in allocating resources.

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