U.S. Businesses in China Not Heeding Trump’s Call to Return Home

(Bloomberg) --

President Donald Trump says U.S. companies should leave China and return home. A new survey of U.S. businesses in the country shows most aren’t interested in taking him up on the offer.

Only about 4% of the more than 200 manufacturers surveyed by the American Chamber of Commerce in Shanghai said they will shift any production to the U.S., according to a report released Wednesday. More than 75% said they don’t intend to move production out of China, while 14% said they will shift some operations to other countries and 7% planned on relocating domestically and overseas.

“Southeast Asia is the most common destination,” said AmCham Shanghai President Ker Gibbs in an interview. “Definitely not the U.S.”

Many respondents were more pessimistic about the state of U.S.-China relations, with 26.9% saying trade tensions would last indefinitely, up from 16.9% last year. Another 22.5% expected tensions to last between three to five years, up from 12.7% in 2019.

Trump renewed his threat to U.S. companies on Monday.

“We’ll impose tariffs on companies that desert America to create jobs in China and other countries,” Trump said.

What Bloomberg’s Economists Say

“Decoupling between China and the U.S. -- ending the flow of trade and technology that boosts growth potential -- would lower China’s GDP expansion to 3.5% in 2030, down from a forecast of 4.5% if relations remain broadly unchanged.”

- Chief Economist Tom Orlik and Senior Global Economist Bjorn van Roye

See full report here

AmCham Shanghai found most companies aren’t planning on cutting jobs in China, with more than two-thirds saying they would maintain or increase their staff levels. About 29% planned reductions, largely because of the pandemic, said Gibbs.

The Trump administration has targeted Chinese companies such as Huawei Technologies Co., and in August Trump signed an executive order announcing restrictions on WeChat, the popular app owned by Shenzhen-based Tencent Holdings Ltd. that many Chinese consumers and businesses use for cashless payments.

Trump’s order is due to go into effect Sept. 20 when the U.S. Commerce Department is likely to announce the scope of the curbs. AmCham Shanghai members are worried a broad application of the order may prohibit them from taking payments via WeChat in China, said Gibbs.

That could drive Chinese customers to non-American rivals, he said.

“Twitter, TikTok, those things are toys,” he said. “WeChat is deeply ingrained in the business ecosystem.”

Businesses are hopeful the Commerce Department will apply the restrictions in the U.S. and allow companies to use it in China, said Gibbs.

For now, though, there’s no clarity.

“We are still very concerned,” he said.

The Trump administration is debating the scope and effective date of its bans on WeChat and TikTok and will make its decisions public later this month, Bloomberg reported last week, citing people familiar with the matter.

The Commerce Department is drafting documents to clarify the specific transactions that will be prohibited between the Chinese companies and U.S. businesses -- and when those prohibitions will take effect, the people said.

Almost 350 members of AmCham Shanghai participated in the report.

©2020 Bloomberg L.P.