\u201cRewards are falling and at the same we see an increase in risk\u2009.\u2009.\u2009.\u2009it shouldn\u2019t surprise the Chinese government that investment is falling,\u201d said Sean Stein, president of USCBC. <\/p>\n
The group said the survey results, released on Wednesday, showed that China\u2019s overcapacity problems have spread from primarily affecting industrial sectors such as steel to broader swaths of the economy, including healthcare and consumer goods.\u00a0<\/p>\n
Eighty-one per cent of affected companies said the overcapacity crisis was driving down prices in their sectors. Companies also reported shrinking profit margins.<\/p>\n
\u201cAs investment and production drive a larger share of China\u2019s economic growth, concerns over overcapacity are intensifying,\u201d the report said.<\/p>\n
Overcapacity remains a sensitive issue for Beijing<\/a>. Chinese officials have vigorously disputed complaints by its trading partners, including the US and EU, that its industrial policies and subsidies were flooding global markets with artificially low-priced goods and outcompeting local enterprises.<\/p>\n More recently, however, China\u2019s leadership has acknowledged the consequences of overcapacity<\/a>, using the term neijuan or \u201cinvolution\u201d to denounce excessive price competition in some sectors. President Xi Jinping and other leading officials have penned a number of articles attacking overproduction and price competition caused by neijuan.<\/p>\n More widely, the USCBC survey found that 88 per cent of respondents were concerned about the state of the Chinese economy, which has been grappling with a prolonged property sector crisis and weak domestic consumption.<\/p>\n Official data this week showed China\u2019s GDP expanded 5.2 per cent<\/a> year on year in the second quarter. In nominal terms, which reflect actual market prices and include the impact of deflation, growth was slower at 3.9 per cent, according to Macquarie. <\/p>\n Geopolitical tensions were also hurting US companies in China. Surveyed American companies said tumultuous US-China relations were a major challenge, with tit-for-tat exchanges of tariffs and US export controls disrupting supply chains, damaging their reputations and causing lost sales.<\/p>\n The US and China are currently in a tariff truce, after the sides signed an agreement<\/a> in May to lower their tariffs from rates as high as 145 per cent while they negotiate a more comprehensive trade accord.<\/p>\n Recommended<\/p>\n
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