(Yicai) Sept. 10 -- The confidence of US firms in China sharply rebounded from a record low last year to end a four-year downward trend, lifted by the improved bilateral relations between the world’s two largest economies and companies’ strong local performance over the past year, according to the findings of a survey by the American Chamber of Commerce in Shanghai.

The survey, which included 262 US firms doing business in China, found that 58 percent of respondents are optimistic about the country’s five-year outlook, up from 41 percent the previous year, according to the China Business Report released by AmCham Shanghai today. The share of those with a pessimistic stance dropped to 16 percent from 37 percent, while the rest held a neutral perspective.

A profit bounce-back boosted US firms’ confidence, with 78 percent indicating they were profitable last year, up from 71 percent in 2024 and reaching the highest level since 2019. Their revenue, however, lost some momentum, with respondents logging year-on-year income growth down to 53 percent from 57 percent, but still above the 45 percent expectation in last year’s survey.

Recent months have brought encouraging signs of renewed engagement between Washington and Beijing, said Eric Zheng, president of AmCham Shanghai. The meeting of US and Chinese leaders in Beijing in May established a new framing of bilateral relations for “constructive strategic stability” and signaled a shared commitment to managing differences responsibly, he pointed out.

The two countries have also agreed to new mechanisms to support bilateral commerce, including a Board of Trade to initially reduce tariffs on USD30 billion worth of non-sensitive products on each side, as well as a Board of Investment to discuss investment-related issues at a government-to-government level, he noted.

The auto industry remained resilient with over 90 percent of surveyed firms reporting profitability after China’s vast market and growing export momentum offset pressure on pricing and margins. Over 80 percent of chemical companies, industrial manufacturers, and tech, hardware, software, and services providers also reported profits.

China’s regulatory environment is improving, making it more attractive to US firms, with 55 percent of respondents reporting that the business environment in the country is transparent, up from 48 percent last year and 35 percent in 2024, the report said.

Around 28 percent of US companies increased investment in China last year, compared with 23 percent the previous year, reaching the highest level in four years. The figure is expected to keep climbing after 31 percent of firms said they plan to boost investment this year.

Regarding challenges, about 68 percent of respondents named domestic competition as one of the top three hurdles faced in China, up from 63 percent a year ago and making it their top concern for the first time since 2022. Second were US-China tensions, cited by 53 percent of firms, followed by worries about a Chinese economic slowdown at 48 percent.

Founded in 1915, AmCham Shanghai is a non-profit business organization focused on establishing commercial ties between US firms and the Chinese market. It has 3,000 members from 1,000 companies and has published the annual China Business Survey since 1999.

Editor: Martin Kadiev