U.S. Firms Grow Wary of China

U.S. companies are increasingly worried about difficult business conditions in China, according to a new survey, as fears build about slower economic growth, wage inflation and government regulation.

The American Chamber of Commerce survey of 365 U.S. companies operating in China found that 50 percent cite slower growth as among the biggest risks in China, up from 47 percent in last year’s survey. The Chinese economy slowed to 7.7 percent growth last year compared with 14 percent in 2007.

The companies in the survey also cited rising labor costs and the difficulty in finding skilled labor among their biggest challenges in the world’s second-largest economy, as well as an apparently arbitrary government regulatory system. Four out of 10 companies said they are less welcome than in the past, and one in 10 said they are more welcome, the Wall Street Journal reports.

China’s Commerce Ministry said business conditions are improving. “Without denying that individual companies have problems of this sort or that sort and have complaints about the investment environment in China, in general, China’s investment environment is constantly improving,” a spokesman said at a news conference.

Amid predictions that China could be heading for a steeper slowdown as borrowing costs rise and a weaker real-estate market drags down property sales, some stock traders began shorting Chinese developers, Bloomberg reports, as Chinese stocks and the yuan approached 11-month lows.

[WSJ]