US firms' confidence in China has plummeted as a record number of investment cuts

American firms in China appear to be weighing on the business climate and prospects, according to an annual survey by a leading business chamber. But potential investments appear to be “waiting at China's door” despite the country's complicated economic recovery due to geopolitical turmoil in a US presidential election year.

The China Business Climate Report on Thursday, based on the opinions of 306 members in Shanghai and elsewhere in eastern China, compiled by the American Chamber of Commerce in Shanghai showed that their confidence continues to decline.

It is characterized by all-time-low metrics on performance and perception compared to previous years' results: 66 percent of respondents were profitable in 2023, down from 68 percent in 2022; Whereas only 47 percent were optimistic about China's five-year outlook in 2023, down from 52 percent a year ago.

Only 13 percent of them still ranked China as their top investment choice, compared to 17 percent in 2022, while a record-high 25 percent of respondents cut back on investing in the country last year.

According to the report, American businesses see strained relations or broader geostrategic tensions between the two countries as the biggest challenges to both their China operations and potential growth in China, on top of concerns about China's economic slowdown.