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US firms cooling on investing in China

– American companies’ enthusiasm for investing in China has been dampened by a combination of policy uncertainty, an economic slowdown and narrowing profit margins, the head of the U.S.-China Business Council said.

Attacks on Western values and on foreign companies’ business practices this year have also unsettled some U.S. businesses operating in China, while barriers to foreign investment in many sectors of the economy remain substantial, escalating concerns about the extent to which the firms will be allowed to benefit from growth in the world’s second-largest economy.

Cybersecurity has been another significant worry since evidence emerged this year of widespread, and seemingly state-directed, commercial espionage directed against foreign companies.

USCBC President John Frisbie said the Chinese market is worth roughly $300 billion to American companies and that, while growth has moderated, the market is “still showing growth when a lot of other markets around the world aren’t.”

“You have market growth here, you have companies that continue to prioritize China in their investment plans,” he said.

But, he added, “There is more uncertainty about the policy trends, and therefore there is a little more of a tempered optimism than, say, two or three years ago.”

U.S. exports to China have been growing at a rate of about 5 percent this year, Frisbie said, a dip from the double-digit levels seen after China joined the World Trade Organization in 2011.