U.S. companies report lowest level of confidence in China.

• In China, American Chamber of Commerce members are experiencing record low levels of profitability and business confidence, according to a recent survey.
• The report mirrors the results of a recent US-China Business Council survey, which identifies U.S.-China tensions and a sluggish economy as the leading factors.

Historically low business confidence and poor profits are being experienced by American companies in China due to U.S.-China tensions and a slowing Chinese economy.

The American Chamber of Commerce in Shanghai reported that only 66% of its 306 member companies were profitable in 2023, which is the lowest level on record.

The survey revealed that key confidence metrics were at their lowest point ever, with only 47% of respondents expressing optimism about their five-year business outlook in China. Additionally, a record high of 25% of investors cut their investments in the country last year.

The slowing Chinese economy was cited as the primary reason for decreased investment among members, while the strained relationship between Washington and Beijing, as well as geopolitical tensions, were viewed as the biggest challenges to both business operations and the Chinese economy overall.

The U.S. election, escalating trade tensions, and China's economic slowdown are causing geopolitical pressures that are prompting firms to intensify risk management and adjust their investment strategies, according to the chamber.

Western businesses are losing interest in China, which is the world's second-largest economy, as indicated by a report.

The struggling economy of the country has become a major concern for these firms, in addition to geopolitical tensions, tough regulations, and censorship.

The second biggest concern for American companies this summer, as per a survey by the U.S.-China Business Council, was China's macroeconomic issues, surpassed only by U.S.-China relations.

The council discovered that a growing number of companies are pessimistic about their medium-term business prospects in China, with factors such as "weak domestic demand" and "overcapacity" limiting profitability.

The U.S.-China Business Council stated that firms have lost market share to Chinese competitors who have received more government support.

The struggles faced by EU businesses in China have been reported in an EU Chamber of Commerce in China report released on Wednesday.

The group warned that its companies were at a "tipping point" on whether to invest more in China due to low-profit margins and a poor outlook, and urged Beijing to take action if it wants the companies to invest further.

Recent attempts by Beijing to enhance conditions for foreign businesses and draw in more foreign investment have been unsuccessful, according to a multitude of negative reports from Western business organizations.

While many positive policies have been announced, they have not yet fully restored confidence among private businesses or consumers in general, according to Chair Allan Gabor of AmCham Shanghai.

Despite a higher rate of AmCham members reporting improvements in government policies and regulations, only 22% of respondents expressed confidence in Beijing's short-term commitment to further opening up their industry.

Despite the growing economic challenges and intense competition, remaining in China is vital for foreign companies to maintain their global competitiveness, according to Jeff Yuan, Tax Markets Leader at PwC China, as stated in the release.

Nearly half of AmCham respondents recommended that the U.S. government reduce tariffs on Chinese goods in order to support their firms in China.

During the January to July period, there was a 29.6% decrease in foreign direct investment into China compared to the previous year, as stated by China's Ministry of Commerce.

- CNBC's Evelyn Cheng contributed to this report