U.S. Firms' Confidence in China Rebounds as Profitability Hits Highest Since 2019
nashnova research
AmCham Shanghai's annual survey shows 78% of US firms in China turned a profit — the highest since 2019. The five-year optimism rate jumped from 41% to 58%, but slowing revenue growth and Chinese rivals pulling ahead in AI point to structural headwinds.
How far did confidence bounce from its historic low?
58% of surveyed firms are optimistic about their China business over the next five years, up 17 percentage points from last year's record low of 41% — the highest since 2021.
The share of pessimists fell from 37% to 16%, also the lowest since 2021.
This means → last year's peak gloom has faded fast; most US firms again see China as a market worth betting on.
What drove the rebound?
The most direct catalyst was the trade truce reached last year — both sides cut some reciprocal tariffs and paused certain export controls.
55% of respondents now see China's business environment as transparent, up 7 percentage points year on year.
AmCham chair Jeffrey Lehman noted that members clearly recognized government efforts to improve the regulatory environment, reinforced this year by stabilizing US-China relations.
Profits are up — so why the concern?
78% of firms reported a profit, the highest since 2019 — yet the share reporting revenue growth dropped to 53%, and only 37% saw operating margins improve.
In plain terms = more companies are making money, but each one is not making it faster; margins are actually narrowing.
This reflects intensifying price competition in the Chinese market, squeezing growth dividends thinner.
Has the AI competitive landscape shifted?
AmCham president Eric Zheng noted that more respondents now believe Chinese rivals lead US firms in AI adoption — not the other way around.
He cited Tesla's competition with Chinese EV makers as an example: Chinese firms hold a clear edge in product-iteration speed.
This means → US firms in China face not just a price war but a technology catch-up — even overtaking — raising the competitive stakes to a new level.
Can this confidence rebound last?
The survey ran from June 1 to 28 with 262 firms participating — a sample window that fell right after the trade truce took effect.
Yet US-China tensions have flared again this month, with renewed friction over tariffs, export controls, and tech restrictions ahead of Washington talks.
In plain terms = the rebound rests on a "truce dividend"; where Washington talks go from here will decide how long this optimism holds.
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