A recent survey conducted by the American Chamber of Commerce in Shanghai has revealed that US businesses operating in China are less optimistic about the country’s business outlook than at any point in the last quarter-century.

The survey found that only 41% of US businesses are optimistic about the five-year business outlook in China, down from 47% in 2024. This significant decline in optimism reflects the growing unease among US companies regarding the increasingly complex business environment in China.

The survey highlighted that US-China tensions and broader geopolitical pressures are the biggest challenges to operating in China.

Businesses are struggling to navigate the complex landscape, with many citing the need for a stable and transparent framework to facilitate cross-border trade and investment.

“Government efforts to improve the regulatory environment have been noticed by members, but they are overshadowed by US-China trade tensions,” said Jeffrey Lehman, AmCham Shanghai chair. “We urge both governments to create a stable and transparent framework that is conducive to cross-border trade and investment.”

The survey also found that only 45% of respondents expect revenues to increase in 2025, which would be a record low if realized. Furthermore, just 12% of respondents ranked China as their headquarters’ top investment destination, also a record low.

This decline in investment is attributed to the escalating trade tensions between the US and China, as well as China’s economic slowdown.

Carsten Holz, an expert on the Chinese economy at the Hong Kong University of Science and Technology, noted that the survey’s results show that the uncoupling of the US and Chinese economies is “well under way.”

Regulatory Environment and Profitability
Despite the challenges, the survey found that more than 70% of respondents reported being profitable in 2024, up from a record low of 66% in 2023.

Additionally, nearly half of respondents said the regulatory environment in China was transparent, a 13-percentage point jump from the previous year.

This improvement in transparency is a positive development, but it remains to be seen whether it will translate into increased optimism among US businesses.

Implications for US-China Relations
The survey’s findings have significant implications for US-China relations.

The decline in optimism among US businesses reflects the growing tensions between the two countries, which could have far-reaching consequences for the global economy.

As Holz pointed out, the results mirror the findings of a May 2025 European Chamber of Commerce in China report that business optimism of European firms in China has never been as low as it currently is. “These findings are in line with China’s policy of achieving self-sufficiency across all sectors of its economy,” Holz said.

The survey’s results highlight the growing challenges facing US businesses in China. The decline in optimism reflects the increasingly complex business environment, driven by US-China tensions and China’s economic slowdown.

To address these challenges, both governments must work towards creating a stable and transparent framework that facilitates cross-border trade and investment. Only through sustained dialogue and cooperation can the US and China hope to resolve their differences and promote a more stable and prosperous future for both nations.