Chinese firms see less bias in how U.S. enforces rules -survey

By Herbert Lash

The percentage of Chinese companies with U.S. operations that perceive bias in how Washington enforces rules and implements policies has dropped sharply from previous years, according to a survey of the firms released on Thursday.

However, the Committee on Foreign Investment in the United States, an interagency government panel which reviews proposed takeovers of U.S. businesses by foreign entities on national security grounds, remains a concern for Chinese firms, according to the survey by the China General Chamber of Commerce and its affiliated CGCC Foundation.

A quarter of the 213 Chinese companies that responded to a questionnaire consider the CFIUS review to be politicized and opaque, the survey said.

Though CFIUS for most respondents does not appear to be a major investment barrier, its impact falls disproportionately on large covered transactions, those deals in which a foreign entity gains control of a U.S. listed company.

The perception about CFIUS can have long-term implications on bilateral business relations and reflect negatively on the long-standing U.S. policy of an open market, the survey said.

Chinese banks and companies must further their understanding of U.S. law and regulatory compliance, said Chen Xu, president of the U.S. unit of Bank of China and the CGCC chairman.

However, there is much distrust and misunderstanding about Chinese investment and of China in the U.S. market, Xu told reporters on Thursday.

While some Chinese firms perceived a bias in how the U.S. government enforces rules and implements policies, 65 percent did not encounter this, 23 percentage points higher from last year.

The survey found that the new administration of President Donald Trump has put China-U.S. relations, especially bilateral trade and investment, at a crossroads.

For example, 53 percent of respondents believe Washington will increase its regulatory oversight of Chinese investments. Deals involving Chinese companies will be subject to more frequent and stricter scrutiny, 63 percent of respondents said.

Only 25 percent of the surveyed companies expect tensions to rise and U.S.-Chinese relations to deteriorate in 2017 or in the near future. But 48 percent consider the added complexity to be a major challenge to their business, a significant increase – 18 percentage points – from last year.

Despite these views, many Chinese companies are thriving in a competitive U.S. market, the survey said.

More than half of the respondents said their revenues have increased every year since 2013, almost one-quarter said revenue grew more than 20 percent last year and the vast majority either maintained or increased their profit margins.

(Reporting by Herbert Lash; Editing by Leslie Adler)

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