An American Chamber of Commerce survey reports that companies doing business in China are more concerned about the regulatory and legal environment than they are about the economic slowdown. LA Times:
Despite the slowing economy and rising labor costs, a significant amount of confidence in the Chinese market remains. More than 50% of respondents still rank China as one of the top three investment destinations, and most indicated they are still optimistic about China’s domestic growth potential.
“Business will continue to invest in China,” said James Zimmerman, chairman of the chamber, “but with more calculation and caution.”
The report cited regulatory challenges as the top concern of American businesses in China, with labor costs a close second.
As the Financial Times reports, participants complained about “inconsistent regulatory interpretation and unclear laws” which they said make it difficult to conduct business in China, and they expressed concerns about national security laws and perceived restrictions on civil society.
International organizations have been sounding the alarm after a Swedish activist confessed to various political crimes on Chinese television in a statement many observers believe he was pressured to make. The incident has raised concerns that China is becoming tougher on foreigns who criticize the regime. Apparently, according to the Chamber of Commerce study, those fears are raising hairs in corporate boardrooms as well.
This is only one study, of course, but it is telling that, even amidst a Chinese economic crisis, many businesses are more concerned about regulations and political uncertainty than they are about economic volatility. It’s a reminder of the tough road ahead for President Xi Jinping, who has been trying to strengthen the economy while simultaneously consolidating power both in and for the Communist Party. In many ways, tightening political control is at odds with boosting the economy.