For the last three years, three-quarters of companies surveyed were making a profit, more than in previous years, according to the survey.

    However, competition-based issues have been the top challenge faced by AmCham members in China. This trend is putting pressure on profit margins.

    In 2005, 70 per cent of respondents reported increased competition from both foreign and local companies.

    On Tuesday, the US Trade Representative Office (USTR) released its first top-to-bottom review of Sino-US trade in five years.

    The review has positive comments on trade growth between the two countries in the past five years, but Washington also blamed China for its large trade deficit.

    AmCham-China President Charles Martin said the chamber mostly agrees with the report's conclusions, noting US-China commercial relations are quite robust.

    As illustrated in the chamber's report, China is opening its markets while US firms as well as the US and China economies are benefiting, he said.

    The US figures released last week showed the US trade deficit with China had risen 24.5 per cent last year to US$201.6 billion. China reported that its surplus with the United States last year was US$114.2 billion because of different statistical standards.

    The USTR report said it would take a tougher stance and set up a taskforce to ensure China abides by trade laws.

    In terms of boosting US business in China, however, the US "must move to a much higher level of trade promotion on behalf of small- and medium-sized companies,?Martin said.

    Federal and state governments and industry and trade associations need to open offices in China to promote their products, he said.

    "There is a large communication gap at present. China's marketplace is hungry, but our SMEs need help to feed it,?he said. "US efforts are modest compared to those of the EU and inadequate given the opportunities available.?

    Martin suggested using the WTO's dispute resolution process only as a last resort.

    "That process is lengthy and difficult and should be used only when other efforts have failed,?he said.

    He noted that bilateral negotiations, such as those used to solve last year's textile dispute, were fast and mutually beneficial.

    Even so, Martin said important problems remain in areas such as IPR enforcement and transparency. "Much more needs to be done in these areas,?he said. "They require commitments of substantial Chinese resources."

    (Source: China Daily)