US Firms in China Regain Confidence Amid Rising Competition

US companies in China reported stronger profitability and renewed confidence, but intensifying competition from domestic rivals has become their biggest business concern, according to the 2026 China Business Report released by the American Chamber of Commerce in Shanghai (AmCham Shanghai) on September 10.

The surveyed 262 member companies' 2025 profitability rate was 78 percent, up 7 percentage points from 2019.

A good 58 percent were optimistic about China's five-year business outlook, up 17 points, and 55 percent said its business environment was transparent, up 7 points. China investment rose 28 percent last year, the most in four years.

AmCham attributed the improvement to stronger financial performance, more stable US-China relations, and a better regulatory environment.

Local competition was the top concern for 68 percent of users, up 5 percent from a year earlier and the first time since 2022. It outperformed bilateral relations, which fell 13 percent to 53 percent.

Three-quarters said Chinese competitors had a speed-to-market advantage, while 43 percent said they were behind in AI.

Companies are also adjusting their strategies. Serving global markets, including the United States, from China was the most common approach, selected by 29 percent, ahead of the 24 percent that focused on serving China's domestic market.

Another 22 percent focused on serving global markets excluding the United States, double the share two years earlier. AmCham Shanghai President Eric Zheng said no other region could replace China, citing its mature industrial ecosystem and strong overall competitiveness.