China’s industrial overcapacity is a problem that is “here to stay” and foreign companies and trading partners will have to adapt as the world’s second-largest economy seeks to overcome a property sector slowdown to stimulate growth, according to the American Chamber of Commerce in China.

The chamber’s annual survey of US businesses in China, which was released on Thursday, showed some improvement in optimism over the economy in 2023 compared with the previous year, but AmCham said companies were still worried about geopolitical tensions and new data laws.

Overcapacity was also emerging as an issue for some sectors, the business lobby group said, as Chinese policymakers increase state bank lending and industrial subsidies in an attempt to improve lacklustre growth.