The American Chamber of Commerce in Shanghai (AmCham Shanghai) released the “2025 China Business Report” on Thursday, September 10th, highlighting that ongoing trade friction between the US and China and geopolitical tensions continue to weaken the confidence of American companies in China, with their focus on the Chinese market and revenue expectations falling to historic lows.
The report shows that in 2024, 71% of surveyed companies reported profits, higher than the low of 66% in 2023. Among them, the profitability rate in the manufacturing sector reached 80%, retail was at 69%, and services only at 55%. In 2024, 57% of surveyed companies achieved revenue growth, up from 50% in 2023.
However, due to the impact of a new round of tariffs, 64% of companies expect their revenue to be affected in 2025, with only 45% of surveyed companies optimistic about income growth for the year, which would hit a historic low if realized.
The proportion of companies optimistic about their business prospects in China over the next five years also dropped to 41%, hitting a new low for the fourth consecutive year. Among them, the manufacturing sector was the least optimistic at 36%, while retail was the highest at 51%.
Moreover, only 12% of companies consider China as their top investment destination for headquarters, the lowest in years.
The US-China relationship and geopolitical risks remain the biggest challenges for companies. Nearly half of respondents (48%) hope the US will completely lift tariffs and non-tariff barriers on China, with 33% hoping to repeal the new tariffs implemented in April, including the 20% tariff imposed due to the fentanyl issue.
At the same time, 42% of companies hope the Chinese government will eliminate all tariffs and non-tariff barriers on US imports, while another 34% hope for a restoration of the most favored nation tariff rate.
If the US revokes China’s Permanent Normal Trade Relations (PNTR) status, 69% of companies expect to be negatively impacted, with manufacturing companies bearing the brunt.
President Trump announced the “Liberation Day” tariffs in April, imposing new tariffs on Chinese goods, followed by retaliatory measures by China. Although both sides recently agreed to pause some tariffs for 90 days, companies remain concerned about the future direction.
Eric Zheng, President of AmCham Shanghai, told Reuters, “We appreciate the 90-day suspension, but the issues still exist.” He added that the current uncertainty makes it difficult for companies to make long-term plans.
The survey shows that investment in China by companies is becoming more cautious. In 2024, 23% of companies increased investment in China, but a record 26% chose to reduce it. Only 22% of companies plan to expand their investments this year, while 25% plan to decrease them.
In the past year, 47% of companies redirected investments originally planned for China to other regions, the highest percentage since 2017, with Southeast Asia remaining the main recipient.
Some companies are also adjusting their supply chains, shifting production locations for products destined for the US market, or adopting a “dual-track strategy” to cope with global trade uncertainties.
This survey, supported by PwC China, is one of the oldest annual surveys of American companies in China conducted by the chamber. This year, a total of 254 AmCham Shanghai member companies participated, covering industries such as manufacturing, retail, and services.