US Firms in China Report Best Sentiment Since 2021 as Trade Truce Nears Expiration Date

American companies operating in China are feeling better about their prospects than at any point since 2021. That's according to the American Chamber of Commerce in Shanghai's annual China Business Report, released Thursday, September 10.

The numbers are real. 58% of the 262 companies surveyed said they're optimistic about their five-year outlook in China, up 17 percentage points from last year. Only 16% described themselves as pessimistic, the lowest share in five years. And 78% of respondents said their China operations turned a profit last year, the highest level since 2019, according to AmCham Shanghai.

The survey was conducted in June. Nearly 90% of respondent companies have operated in China for more than a decade, and 63% have been there for over 20 years, per the chamber's report.

Jeffrey Lehman, chair of AmCham Shanghai, credits the political climate. Last year's survey was fielded at the height of a renewed trade war. This year's followed a May summit in Beijing between Xi Jinping and Donald Trump.

"After the leadership of the two countries agreed that they were going to be working on a constructive relationship of strategic stability on the basis of fairness and reciprocity, that was very reassuring to all of our members, and I think that really drives so many of the positive results," Lehman said.

Domestic Competition, Not Washington, Is the Bigger Worry Now

For the first time since 2022, US-China tensions are NOT the top concern for American firms in China. Competition from Chinese companies took that spot, cited by 68% of respondents as a top-three challenge, up 5 points from last year. US-China tensions dropped to 53%, down 13 points.

This represents a real shift in what's keeping US executives up at night. Chinese firms have moved past competing on price alone. They're now beating American companies on speed to market, product development, and product quality, according to the AmCham report.

Regulatory transparency perceptions also improved, up 7 points to 55%. But only 39% of firms expect the regulatory environment to keep opening up, down 2 points from last year. Investment intentions were mixed but leaning positive: 28% of firms increased investment in China in 2025, the highest share in four years, and 31% plan to increase further in 2026, versus 14% planning cuts.

The Truce Has an Expiration Date

The current US-China trade truce has a clock on it.

According to The Epoch Times, the truce was reached in October 2025 following a Trump-Xi summit in South Korea, has lasted only about a year, and is set to expire shortly after Xi's expected visit to Washington later this month unless both leaders agree to renew it.

Meanwhile China's export machine is running hot in ways that could reignite friction. China's General Administration of Customs data, released September 8 and reported by The Epoch Times, show August exports up 25% year-over-year, pushing China's trade surplus to $805.5 billion for the year so far, a 2.6% increase over the same period last year. Shipments to the US alone jumped 34.4% in August, nearly double July's pace.

Not every trading partner is on board. Exports to the European Union rose just 6.6% in August, down sharply from nearly 16% in July, and EU leaders have threatened, in the Epoch Times' words, "harsh measures if negotiations fail to deliver concrete results." Lynn Song, chief economist for Greater China at ING, said the widening surplus "could intensify pressure from trading partners to rebalance terms of trade."

There is reason to question how much weight to put on the AmCham numbers themselves. Nearly nine in ten respondents have operated in China for over a decade and nearly two-thirds for over 20 years. Companies that have stuck around that long have sunk costs and institutional relationships that make them more likely to talk up their long-term outlook regardless of the political weather. A one-year confidence bounce from companies already committed to the market isn't the same as fresh capital deciding China is newly attractive. AmCham's own numbers partly support that skepticism: only 28% of firms actually increased investment in 2025, meaning most held steady even as sentiment improved.

Still, the profitability number is harder to dismiss. Seventy-eight percent of firms turning a profit, the best rate since 2019, reflects actual balance sheets, not just vibes.

What happens next depends on a meeting that hasn't occurred yet. Xi Jinping's visit to Washington is expected later this month, according to reporting cited by The Business Times, and it will determine whether the truce that's driving this optimism gets renewed or lapses. Until that meeting happens, every number in the AmCham survey is a snapshot of a truce with a deadline attached.