International investment in China to slow, says American business group

Potential investors are more concerned about these issues today than in previous years, said AmCham China in its annual report on the business climate in China, Reuters has reported.

The comments come after the Chinese government announced 7.4% year-on-year growth in the first quarter of this year, which Reuters described as its slowest pace in 18 months.

They also come as the Chinese government announced that private investors would be welcome to bid for 80 planned major public infrastructure projects in sectors traditionally dominated by China's state-owned enterprises, such as energy, oil and gas, transport and new technology infrastructures.

"We refer to market access barriers as one of the primary reasons for lowered investment," said AmCham China chairman Greg Gilligan. "With slower growth, our member companies do not reflect less need for investment, but perhaps less need for investment based on the old economic model that was more reliant on exports and infrastructure spending."

Industrial policies which support Chinese state-owned enterprises were the main cause for complaint among members of the chamber. "State-owned enterprises have increased their control over certain sectors of the economy in recent years, and government support for SOEs was overwhelmingly citied by AmCham China member companies as the most negative industrial policy, being chosen more frequently than all the other options combined," said the report.

However the chamber was optimistic about renewed negotiations on a U.S.-China bilateral investment treaty.

Tim Stratford, a co-chair on the AmCham China legal committee and a former U.S. trade negotiator, said the Chinese government's commitment to return to talks reflected "a lot of study."

"It was not a casual undertaking on their part," he said according to Reuters. "Given all the work that has gone into these negotiations already and given the momentum behind them ... we are feeling optimistic that the negotiations will be successful. It's hard to say how long that will take, but it is not something that will be done in a few months."

In the report members also expressed concerns about fear of retribution should companies defend their interests through the Chinese legal system, said Reuters. The report also noted moderate or low progress on issues including government procurement and intellectual property rights protection.