Nearly half of U.S. companies surveyed by the U.S.-China Business Council (USCBC) do not plan to invest in China this year, even though most respondents said their operations there were profitable.
The council’s 2026 Member Survey found that 49 percent of respondents had no China investment plans for the year, while 51 percent stated that they planned to invest.
The near-even split came despite 92 percent of respondents reporting that their China operations were profitable last year, up from 82 percent a year earlier and the highest share since 2021.
The USCBC stated that disciplined cost control, targeted marketing, and more selective use of promotions to offset falling prices may help explain the profit rebound.
But the rebound did not translate into broad investment appetite.
The findings point to a gap between current earnings and future confidence. Respondents cited tariffs, export controls, weak demand, Chinese industrial policy, local competition, and procurement barriers among the pressures weighing on expansion decisions.
The USCBC stated that the contrast with near-universal profitability indicates that investment decisions are being driven by more than current financial performance.
For many companies, the question is no longer whether China operations are earning money; it is whether new capital should be committed in a market shaped by political risk, price pressure, and competition from Chinese firms backed by state industrial priorities.
The survey states that companies were “almost evenly split” on near-term investment, unchanged from last year. Investment intent was strongest among professional services, financial services, and technology companies and weaker among consumer-product and life-science firms.
Tariffs and Export Controls
The USCBC stated that U.S.–China relations remain companies’ top challenge in the China market, while China’s macroeconomy returned as the second-biggest challenge.Tariffs ranked third. The survey states that 72 percent of respondents were affected by tariffs on U.S.–China trade.
Among affected companies, 39 percent reported lost sales because of U.S. tariffs, while 28 percent reported lost sales because of Chinese tariffs.
The findings come as Washington continues to review tariffs imposed under Section 301 of the Trade Act. The Office of the U.S. Trade Representative opened a second statutory four-year review in May covering actions originally taken in 2018 over China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation.
Export controls are also weighing on business decisions.
The USCBC stated that about 40 percent of companies reported negative effects from U.S. export-control policies. The council stated that many affected firms reported lost sales, severed customer relationships, or reputational damage in China as Chinese customers turned to non-U.S. suppliers.
Chinese Competition Rises
Competition from domestic Chinese companies has become the top restraint on profitability for U.S. firms surveyed, cited by 65 percent of respondents.That competition is no longer limited to low-cost manufacturing.
The survey states that respondents considered Chinese competitors more advanced in using local business networks, speed to market, tailoring products to local preferences, sales and marketing, and deployment of artificial intelligence, industrial technologies, or robotics.
The USCBC stated that 63 percent of respondents expect Chinese competitors to capture a significant amount of their market share in China within five years. A smaller but still substantial share—56 percent—said they expect Chinese competitors to capture significant market share globally beyond five years.
The competitive pressure is tied in part to Beijing’s industrial policy and procurement system.
The USCBC stated that 44 percent of respondents reported facing nonpublic directives or secret policy documents requiring the use of Chinese products, up by 14 percentage points from last year. The survey also states that respondents reported unequal treatment of imported products and indirect effects that reduce the competitiveness of foreign products.
Those findings point to one of the core concerns in the survey: Formal market openings do not necessarily translate into equal treatment if procurement rules, localization pressure, and industrial policy continue to favor Chinese firms.
The survey does not suggest a wholesale U.S. business exit from China. However, it does describe a more cautious footprint.
The USCBC stated that 29 percent of respondents had moved or planned to move at least some operations outside China, a record high in the survey and up from 27 percent last year.
The council stated that relocation is being driven by external pressures as well as business conditions. Among companies moving operations, more cited political pressure from the United States and compliance with U.S. regulations as factors, along with tariff mitigation and supply-chain resilience.
Sean Stein, USCBC president, said in a statement that the survey results should be “a wake-up call to policymakers in both countries,” noting that progress would require discussion of “structural issues in China’s economy and industrial policy.”
