AI, Not Just Market Size, is Anchoring US Companies’ China Strategy: USCBC President

The U.S.-China Business Council’s (USCBC) 2026 Member Survey, which was conducted online, found that artificial intelligence (AI), research and development (R&D), and competitive intelligence are increasingly important drivers for the continued operations of companies in China.

The results imply that the Chinese operations for many American businesses are becoming a vital component for maintaining their global competitiveness even in the face of ongoing geopolitical uncertainties and barriers to trade.

Based on 175 survey responses from USCBC member companies, 95% of respondents said their China operations were somewhat or very important to staying competitive globally.

Beyond manufacturing and access to the Chinese consumer market, companies cited applying lessons learned in China to other markets, gaining insight into emerging Chinese competitors, and using profits generated in China to support global expansion.

“The results are clear, despite the challenges, competing in China are a prerequisite for many American companies to compete globally; our policies must enable them to succeed there,” USCBC President Sean Stein said in the survey report.

Traditional Advantages Remain, but New Priorities Are Emerging

China’s manufacturing ecosystem and large domestic market remain key advantages for U.S. companies.

According to the survey, 55% of respondents identified economies of scale from the China market as a leading competitive benefit, while 48% cited efficiencies from China’s vertically integrated manufacturing supply chain, which respondents said remains difficult to replicate elsewhere.

However, companies are increasingly looking beyond manufacturing. Thirty-seven percent of respondents said R&D conducted in China contributes to global product development. Many companies said their China-based R&D and engineering centers provide cost advantages while contributing innovations and intellectual property used across global product portfolios.

Competitive intelligence has also become a growing strategic priority. Forty-five percent of respondents said maintaining a presence in China helps them better understand future competitors, as Chinese companies continue to advance rapidly across multiple technology sectors.

AI is a Strategic Focus, but Not Yet a Primary R&D Driver

While China continues to prioritize artificial intelligence deployment across its economy, the survey suggests AI has not yet become a major driver of U.S. companies’ R&D investments in the country. Only 8% of respondents cited AI deployment as a factor influencing their R&D activities in China.

The survey notes, however, that China’s AI ambitions are increasing the importance of data governance. Respondents said evolving data policies could shape future AI adoption during China’s 15th Five-Year Plan period, creating both opportunities and regulatory challenges for multinational companies.

Companies also see Chinese firms making progress in AI-related technologies. Thirty percent of respondents said their Chinese competitors were ahead in deploying AI, industrial technologies and robotics, compared with 18% who said Chinese rivals led in R&D overall.

Geopolitical Tensions Continue to Challenge Business Operations

Despite China’s strategic importance, respondents said geopolitical tensions remain the biggest challenge to doing business in the country. According to the survey, 86% of respondents said U.S.-China relations affected their operations, with 84% of those describing the impact as harmful or severely harmful.

Tariffs remain another major concern. Seventy-two percent of respondents reported being affected by tariffs, the highest level recorded since the first U.S.-China trade war. Among those affected, 39% said U.S. tariffs had reduced sales, while 28% reported losing sales because of Chinese tariffs.

Export controls have also become a growing obstacle. Nearly half of respondents said they were affected by U.S. export controls and sanctions, with 61% of impacted companies reporting lost sales to Chinese competitors and 47% losing sales to international competitors.

Stein said the findings should encourage policymakers in both countries to address broader structural issues affecting bilateral trade.

“This year’s results should be a wake-up call to policymakers in both countries, particularly as they set the agendas for the Board of Trade and the Board of Investment,” Stein said. “We have a real opportunity to make progress on more than tariff reductions, but only if the conversation includes structural issues in China’s economy and industrial policy.”

Investment Plans Remain Evenly Divided

The survey found companies remain split on new investment plans. Fifty-one percent said they intend to invest in China this year, while 49% said they do not plan additional investment, unchanged from last year. Investment intentions were strongest among companies in professional services, financial services and technology.

Stein also said U.S. companies continue to see opportunities for cooperation with Chinese businesses beyond traditional sectors such as agriculture and aviation, highlighting financial services, life sciences, research and manufacturing as potential areas for future collaboration.

The technology sector illustrates the competing pressures companies face. According to the survey, 57% of technology respondents are relocating some operations outside China, yet half still plan to invest in the country.

The survey attributes this to the sector’s continued reliance on China’s R&D capabilities, with 78% of technology respondents saying their China operations contribute to global product development.

Overall, 92% of respondents reported their China operations were profitable in fiscal year 2025, the highest proportion since 2021, underscoring that many U.S. companies continue to view China as an important market despite geopolitical and regulatory challenges.