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Al Arabiya
7 hours ago
- Al Arabiya
Faced with geopolitics and trade war, US companies in China report record-low new investment plans
American companies in China are reporting record-low new investment plans for this year and declining confidence in profits, while uncertainty in US-China relations and President Donald Trump's tariffs have become their top concerns, according to a business survey released Wednesday. The companies are also challenged by China's slowing economy, where weak domestic demand and overcapacity in local industries are eroding profitability for the Americans. Businesses in China are less profitable now than they were years ago, but risks, including reputational risk, regulatory risk, and political risk, are increasing, said Sean Stein, the president of the US-China Business Council, a Washington-based group that represents American companies doing business in China, including major multinationals. The survey, conducted between March and May and drawing from 130 member companies, came after the two countries clashed over tariffs and non-tariff measures, including export controls on critical products such as rare-earth magnets and advanced computer chips. Following high-level talks in Geneva and London, US and Chinese officials agreed to pull back from sky-high tariffs and restrictions on exports, but uncertainty persists as the two sides are yet to hammer out a more permanent trade deal. Kyle Sullivan, vice president of business advisory services at the USCBC, said more than half of the companies in the survey indicated they do not have new investment plans in China at all this year. That's a record high, Sullivan said, noting that it is a new development that we have not observed in previous surveys. Around 40 percent of companies reported negative effects from US export control measures, with many experiencing lost sales, severed customer relationships, and reputational damage from being unreliable suppliers, according to the survey. Citing national security, the US government has banned exports to China of high-tech products such as the most advanced chips, which could help boost China's military capabilities. Stein argued that export controls must be very carefully targeted because businesses from Europe or Japan or local businesses in China would immediately fill the void left by American companies. Silicon Valley chipmaker Nvidia won approval from the Trump administration to resume sales to China of its advanced H20 chips used to develop artificial intelligence, its CEO Jensen Huang announced on Monday, though the company's most powerful chips remain under US export control rules. While 82 percent of US companies reported profits in 2024, fewer than half are optimistic about the future in China, reflecting concerns over tariffs, deflation, and policy uncertainty, according to the survey. Also, a record high number of American businesses plan to relocate their business operations outside of China, Sullivan said, as 27 percent of the members indicated so, up from 19 percent the year before. In a departure from past surveys, concerns over China's regulatory environment, including risks of intellectual property misuse and lack of market access, didn't make it to the top five concerns this year. That's likely a first, and not for a good reason, Stein said. It is not because things got dramatically better on the Chinese side, but the new challenges often coming from the US are now posing as much of a challenge, Stein said. Almost all the American companies said they cannot remain globally competitive without their Chinese operations. A survey from the European Union Chamber of Commerce in China in May found that European companies were cutting costs and scaling back investment plans in China as its economy slows and fierce competition drives down prices.
Arab News
7 hours ago
- Arab News
Pakistan to close national chain of subsidized retail stores amid privatization push
ISLAMABAD: Pakistan will shut down the state-owned Utility Stores Corporation (USC) by July 31 as part of a broader government effort to restructure and privatize loss-making public sector entities, according to a statement from the finance ministry carried by state broadcaster Radio Pakistan on Wednesday. The decision follows years of declining performance, mismanagement allegations, and heavy financial losses at the USC, a nationwide retail chain originally established in 1971 to provide essential commodities at subsidized prices to low-income households. The stores were once a key instrument in the government's food security and price control policies but have faced mounting criticism over inefficiency, politicized staffing and weak oversight. A high-level committee formed by Prime Minister Shehbaz Sharif to oversee the closure and privatization of the USC met on Wednesday in Islamabad, with Finance Minister Muhammad Aurangzeb chairing the session. The committee is responsible for ensuring a transparent shutdown process, designing a fair Voluntary Separation Scheme (VSS) for USC employees and recommending a timeline for privatization or asset disposal. 'All operations of Utility Stores Corporation will be closed by 31st of this month in accordance with the government's directives,' the Radio Pakistan report said. The committee 'discussed at length the formulation of a fair and financially viable Voluntary Separation Scheme for the Utility Stores employees' and examined various aspects including its potential size, fiscal impact, and legal implications. To support the analysis, a sub-committee led by the secretary of the Establishment Division has been formed and will submit recommendations on the structure and feasibility of the VSS by the end of the week. The committee also advised that the government's Privatization Commission be consulted on whether the USC's assets should be sold off or restructured for privatization. The closure of the USC marks a significant step in Pakistan's ongoing efforts to reduce the burden of state-owned enterprises on the national budget in line with reforms encouraged by the International Monetary Fund. Over the years, several audits and parliamentary reviews have pointed to chronic inefficiencies at the USC, including procurement irregularities and an inability to meet its mandate effectively in remote and underserved areas.
Arab News
8 hours ago
- Arab News
EU refusal to suspend Israel agreement a ‘cruel and unlawful betrayal': Amnesty chief
LONDON: The EU's refusal to suspend its association agreement with Israel is a 'cruel and unlawful betrayal' of European values, the head of Amnesty International has said. Agnes Callamard's statement came after the bloc decided against suspending the agreement, dashing hopes that the EU would take a unified stand against Israel's war in Gaza and its illegal occupation of the Palestinian territories. 'The EU's refusal to suspend its agreement with Israel is a cruel and unlawful betrayal — of the European project and vision, predicated on upholding international law and fighting authoritarian practices, of the European Union's own rules and of the human rights of Palestinians,' she said. 'European leaders had the opportunity to take a principled stand against Israel's crimes, but instead gave it a greenlight to continue its genocide in Gaza, its unlawful occupation of the whole Occupied Palestinian Territory and its system of apartheid against Palestinians.' EU foreign ministers met in Brussels on Tuesday to review 10 options for potentially suspending the agreement, in full or in part. These included a full suspension, a pause on preferential trade and research, a weapons embargo, sanctions on Israeli ministers, and ending visa-free travel for Israeli citizens to Europe. However, ministers opted against taking any of the options. Callamard said: 'The EU's own review has clearly found that Israel is violating its human rights obligations under the terms of the association agreement. 'Yet, instead of taking measures to stop it and prevent their own complicity, member states chose to maintain a preferential trade deal over respecting their international obligations and saving Palestinian lives. 'This is more than political cowardice. Every time the EU fails to act, the risk of complicity in Israel's actions grows. 'This sends an extremely dangerous message to perpetrators of atrocity crimes that they will not only go unpunished but be rewarded.' Amnesty International, in a statement after the EU decision, highlighted the precedence of international law over EU and national law. Last July, the International Court of Justice described Israel's occupation of the Palestinian territories as illegal. EU members must take measures to act based on that opinion under international law, Amnesty said. 'Victims are entitled to far more than empty words,' Callamard said. 'Member states must now take matters into their own hands and unilaterally suspend all forms of cooperation with Israel that may contribute to its grave violations of international law, including a comprehensive embargo on the export of arms and surveillance equipment and related technology, and a total ban on trade with and investment in Israel's illegal settlements in the Occupied Palestinian Territories.'
