Date
22 November 2017
Almost three-quarters of US companies in Shanghai believe its free trade zone offers no tangible benefits for their business. Photyo: WSJ
Almost three-quarters of US companies in Shanghai believe its free trade zone offers no tangible benefits for their business. Photyo: WSJ

US firms skeptical about Shanghai FTZ

Shanghai’s free trade zone continues to draw skepticism from United States companies which doubt its business benefits.

The sentiment reflects concern by American companies in China about a growing anti-foreign mood, the Wall Street Journal reported Thursday.

An annual survey of more than 370 members of the American Chamber of Commerce in Shanghai found that almost three-quarters of respondents believe the Shanghai free trade zone offers no tangible benefits for their business.

About half said they have not noticed any change for their business since the zone opened in September 2013.

The government has said the special economic area is an experiment in which constraints on some industries are loosened and red tape is cut.

It was modeled on the special economic zone in the southern Chinese city of Shenzhen in the 1980s, which transformed southern China into an export machine.

About 45 percent of the respondents said there is a lack of information to help them understand how the zone works.

The survey results mirrored those of a similar report released earlier this month by the American Chamber of Commerce in China, in which respondents voiced increased concern over what they see as rising anti-foreign sentiment and a more challenging business environment.

According to the new survey, companies are increasingly uncertain about how China’s economic reform program will affect their business.

More than half of the respondents cited that as their biggest business risk, up from 45 percent in 2013 and 25 percent in 2012.

Slower growth in China’s economy is also weighing on the minds of foreign business leaders, with 53 percent citing it as a business risk, up from 35 percent the year before.

“There is a general expectation of further market slowdowns,” the AmCham report said.

Meanwhile, more than half of the respondents said they believe China’s regulatory environment favors Chinese companies.

“This high response rate has held steady for the past three years, indicating a persistent issue with little improvement,” the report said.

About 63 percent of the companies surveyed said laws and regulations that favor local companies hinder their business, up from 58 percent in 2013.

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