Doomsayers are predicting an unpleasant end to China’s three decades of breakneck economic growth, and the most recent survey of American companies would seem to buttress that view. For U.S. firms in China, 2014 was the most challenging year for revenue and profit growth in recent history. More than 30% of companies have no investment expansion planned in 2015—the largest share since the recession in 2009—and more firms than ever have moved capacity outside of China or plan to do so. Almost 60% of those surveyed believe that foreign firms have been singled out in campaigns concerning monopolies, corruption and product safety.
Yet these figures—from the Business Climate Survey of the American Chamber of Commerce in China (AmCham China)—tell only part of the story. And some may have less to do with economic problems than with China’s difficult but necessary transition from one economic model to another.
China’s years of 10% average growth, driven by exports and high levels of investment, had to end at some point. The question was always when and how. As the economy has shifted toward services and consumption, the government has sought to guide growth and expectations down to a more sustainable “new normal.” Our survey data reflect this.
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