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Most US firms feel 'targeted' by China: survey

Most US firms in China feel "targeted" by authorities, a survey said Wednesday, as the government embarks on a series of high-profile investigations into foreign businesses.

[BEIJING] Most US firms in China feel "targeted" by authorities, a survey said Wednesday, as the government embarks on a series of high-profile investigations into foreign businesses.

An American Chamber of Commerce survey found 57 per cent of respondents believed foreign firms are being singled out in China's pricing, anti-monopoly and anti-corruption campaigns under President Xi Jinping.

Of those who said foreign firms were being targeted, 65 per cent said they fear such campaigns will have a negative impact on them.

The results were part of the 17th annual business climate survey by the American Chamber of Commerce in the People's Republic of China (AmCham China), which had responses from 477 of the organisation's 1,012 company members.

"All of us are concerned, because we're on the sidelines for the most part watching and monitoring the campaigns by Xi Jinping and the leadership," AmCham China chairman James Zimmerman said at a news conference announcing the results.

"We don't know if it's going to slow down, or who is going to be targeted next," he said. "All we can do is set an example and do the right thing - exercise zero tolerance when it comes to these issues, put in place compliance programmes and cooperate with the government when these things come up." Nearly half of US firms in China - 47 per cent - say they feel "less welcome" in the country than before, up from 44 per cent last year.

The survey's release comes after Chinese authorities stepped up scrutiny of foreign firms, launching sweeping investigations into alleged malpractice in sectors ranging from pharmaceuticals to baby formula over the past two years.

This week US mobile chip titan Qualcomm said it will modify its business practices in China and pay 6.088 billion yuan (around US$975 million) to end a long-running antitrust probe in the country, in perhaps the biggest fine ever levied by Beijing in such a case.

Other businesses such as Apple and Starbucks have sometimes received unfavourable coverage in state media over issues regarding service and pricing.

The moves have prompted fears from investors that overseas companies are being especially targeted. China maintains that its anti-monopoly law does not discriminate between domestic and foreign firms.

The AmCham survey highlighted a number of other areas of growing concern for US companies doing business in China, including the country's choking air pollution, its slowing growth and the ruling party's ever-tighter grip on the Internet.

For the first time, a majority of respondents - 53 per cent - said air quality issues had made it difficult for their organisation to hire senior talent to work in China.

The figure is up from 48 per cent in 2014 and 34 per cent in 2013.

China's cities are often hit by heavy pollution, blamed on coal-burning by power stations and industry, as well as vehicle use, and it has become a major source of discontent with the Communist Party.

Retired senior officials have acknowledged that it may kill as many as half a million people a year.

In addition, China's economic growth is losing steam and more than 30 per cent of companies surveyed said they had no investment expansion planned in 2015, the highest rate since 2009.

As authorities' online control tightens, the vast majority of respondents - 83 per cent - said Internet censorship in China either negatively or somewhat negatively impacts their ability to conduct business in the country.

In recent months, authorities have cracked down on the use of virtual private networks (VPNs) commonly used to scale the vast censorship apparatus known as the Great Firewall.

For the first time since 2010, respondents reported increasing Chinese protectionism as among the top five challenges they face.

The other four were labour costs, inconsistent regulatory interpretation, shortages of qualified employees, and shortage of qualified management.

One bright spot in the survey was the impact of China's much-touted anti-corruption campaign under Xi.

Corruption dropped from the fourth-largest challenge cited by respondents in 2013 to the sixth-largest in 2014. In this year's survey, it had dropped out of the top 10 entirely, falling to 13th place.