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US firms in China still positive despite challenges: survey
AFP US firms in China still positive despite challenges: survey

Shanghai (AFP) - US firms in China are largely optimistic about their prospects in the world's second-biggest economy, a survey showed Tuesday, despite a growth slowdown and a government austerity drive.

But while the American Chamber of Commerce in Shanghai said 86 percent of its members were optimistic about the next five years, the figure is down from 91 percent in 2012 owing to tough regulations and government probes.

Some 74 percent of companies said they were profitable last year, up slightly from 73 percent in 2012, it said.

Nearly 400 of the chamber's member companies responded to the poll.

"Despite optimism and growth, challenges in the business and regulatory environment in China continue to hinder business," said the 2013-2014 China Business Report.

"Rising costs, HR (human resources) constraints, competition and an unclear regulatory environment are among the leading challenges that US companies faced in 2013."

Government investigations of pricing in sectors dominated by foreign companies, including infant formula and pharmaceutical products, had hurt sentiment while a crackdown on corruption has hit the luxury sector, analysts say.

Last year, Chinese authorities fined some foreign baby milk producers and launched a campaign against bribery in the pharmaceutical industry which mainly targeted overseas firms, including Britain's GlaxoSmithKline.

More than 18 percent said China's more "aggressive" regulatory enforcement increased their business risk last year, according to the chamber.

A new free-trade zone set up last year in Shanghai, China's commercial hub, had brought optimism for economic reforms but few companies so far plan to establish a presence in it, the survey showed.

Nearly two-thirds of companies said the zone was a positive development though only 15.8 percent of the respondents are considering establishing operations there.

China's gross domestic product expanded 7.7 percent in 2013, matching the level in 2012, as authorities seek to move away from government investment to consumption as a key driver of growth.

However, foreign direct investment in China still rose 5.3 percent to $117.59 billion last year, official figures showed.