US-China Tensions Drive Business Confidence in China to New Lows
Business confidence in China during 2025 remains cautious amid several challenges, including ongoing US-China geopolitical tensions, regulatory uncertainties, and slowing domestic economic growth. While China’s economy continues to show steady headline growth fueled by industrial output and exports, consumer demand and private investment are lagging behind. Surveys reveal a mixed outlook among businesses, with some optimism balanced by concerns over trade conflicts, weakened consumption, and a persistently troubled property market. Despite these headwinds, China maintains a key position in global supply chains and continues to attract targeted investment, though the overall business climate is marked by uncertainty and cautious sentiment.
The subdued business confidence in China stems from multiple factors tied to the complex geopolitical and economic landscape. US-China tensions have intensified due to trade disagreements, technology restrictions, and diplomatic frictions, leading to a cautious approach from multinational companies regarding their exposure to the Chinese market. Regulatory tightening by Chinese authorities in key sectors such as technology and finance has further compounded uncertainties, causing some foreign investors to delay or reduce expansion plans.
Economic signals also contribute to the cautious sentiment. Although China’s GDP growth remains steady compared to previous years, it has slowed compared
to the rapid expansion seen in the past decade. Inflation pressures, shifts in consumer behavior, and supply chain disruptions continue to challenge
businesses operating in China. In response, many multinationals are diversifying their supply chains and investment destinations, looking to Southeast
Asia, India, and other emerging markets for growth opportunities.
Surveys show that while profitability has improved slightly for some firms, long-term concerns about political risk, regulatory environment, and trade
policies persist. This cautious environment impacts hiring, capital investments, and strategic collaborations, visibly slowing momentum for business
development in the world’s second-largest economy.
The subdued business confidence in China stems from multiple factors tied to the complex geopolitical and economic landscape. US-China tensions have intensified due to trade disagreements, technology restrictions, and diplomatic frictions, leading to a cautious approach from multinational companies regarding their exposure to the Chinese market. Regulatory tightening by Chinese authorities in key sectors such as technology and finance has further compounded uncertainties, causing some foreign investors to delay or reduce expansion plans.
Economic signals also contribute to the cautious sentiment. Although China’s GDP growth remains steady compared to previous years, it has slowed compared
to the rapid expansion seen in the past decade. Inflation pressures, shifts in consumer behavior, and supply chain disruptions continue to challenge
businesses operating in China. In response, many multinationals are diversifying their supply chains and investment destinations, looking to Southeast
Asia, India, and other emerging markets for growth opportunities.
Surveys show that while profitability has improved slightly for some firms, long-term concerns about political risk, regulatory environment, and trade
policies persist. This cautious environment impacts hiring, capital investments, and strategic collaborations, visibly slowing momentum for business
development in the world’s second-largest economy.