2021CHINA BUSINESS REPORTTHE AMERICAN CHAMBER OF COMMERCE IN SHANGHAI About AmCham ShanghaiThe American Chamber of Commerce in Shanghai (AmCham Shanghai), known as the "Voice of American Business" in China, is one of the largest American Chambers in the Asia Pacific region. Founded in 1915, AmCham Shanghai was the third American Chamber established outside the United States. As a non-profit, non-partisan business organization, AmCham Shanghai is committed to the principles of free trade, open markets, private enterprise and the unrestricted flow of information.Find us online at www.amcham-shanghai.orgAbout PwCAmCham Shanghai and PwC would like to thank all survey participants and business executives who provided input for this report.Report Authors:Contributors: Designer: Mickey Zhou at Snap Printing AcknowledgementsJessie Niu, Jason Wang, Qinly Wu, Lexi QiuIris Fu, Kate Magill, Ian DriscollAt PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 155 countries with more than 284,000 people who are committed to delivering quality in assurance, advisory and tax services. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.PwC Mainland China, Hong Kong SAR and Macau SAR work together on a collab-orative basis, subject to local applicable laws. Collectively, we have over 800 partners and more than 20,000 people in total.We provide organisations with the professional service they need, wherever they may be located. Our highly qualified, experienced professionals listen to different points of view to help organisations solve their business issues and identify and maximise the opportunities they seek. Our industry specialisation allows us to help co-create solutions with our clients for their sector of interest.We are located in these cities: Beijing, Shanghai, Hong Kong, Shenyang, Tianjin, Dalian, Jinan, Qingdao, Zhengzhou, Xi’an, Nanjing, Hefei, Suzhou, Wuxi, Wuhan, Chengdu, Hangzhou, Ningbo, Chongqing, Changsha, Kunming, Xiamen, Guang-zhou, Shenzhen, Macau, Haikou, Zhuhai and Guiyang.Visit us at www.pwccn.comSurvey partners: Jeff Yuan, Annie Han, Alexander Pearlman, Jan Nicholas, Serena ShiAmCham Shanghai’s mission is to enable the success of our members and strengthen US-China commercial ties through our role as a not-for-profit service provider of high-quality business resources and support, policy advocacy and relationship-building opportunities. CHAMBER MESSAGEPublished since 1999, our annual China Business Climate Report is based on one of the longest running surveys of US businesses in China. The report reflects the opinions, insights and experiences of our member companies operating in this important market. We thank our survey partner, PwC, for their support and our many members for contributing their perspec-tives. This year’s survey was conducted between June 15 and July 15, 2021, and 338 companies responded. Questions measured company performance, investment, domestic competition, mobility, offshoring of production and ESG priorities. As always, we also gauged members’ sentiment about the broader operational and regulatory environments.As a result of its rigorous approach to stopping Covid transmission, China’s economy entered the second half of 2020 and the first half of 2021 in better shape than most countries. While growth has remained sluggish in lower-tier cities, economic activity in first-tier cities has returned to near pre-Covid levels. In retrospect, China’s government-led supply-side response to Covid seems well-judged. Exports have also been strong, driven in part by strong overseas demand for goods such as medi-cal products, computers and other electronics. How China’s economy performs through the rest of 2021 and early 2022 will depend partly on external factors, such as con-tainment of the Covid Delta variant. Yet our members are confident about opportunities in the domestic market. Five-year op-timism levels were almost back to their pre-trade war levels, 2020 revenues exceeded expectations and revenue projections for 2021 are even more upbeat. That buoyancy is also reflected in projected China investment. Despite this promising feedback, there are several areas in which our members believe China should create a more welcom-ing business environment. Better enforcement of intellectual property rights is one. Ending government favoritism toward local companies is another. If China continues to unfairly restrict US businesses (such as law firms), calls for reciprocity may become louder. While our members support China’s work to keep Covid at bay, it is also apparent that the costs of pandemic control are ris-ing. One future priority is to develop