BEIJING, April 28 (Xinhua)-- The majority of U.S.-based companies are positive about business prospects in China, with 89 percent characterizing their five-year outlook as optimistic or cautiously optimistic, according to a survey released here on Monday by the American Chamber of Commerce.

    The findings of the 2008 Business Climate Survey revealed that U.S. companies remained bullish in China as an investment destination, with many planning to expand.

    However, despite the positive outlook and improved operating margins, competitive forces and rising costs are increasingly affecting these companies, according to the survey.

    While China's continued growth is playing an important role in investment decisions and expansion throughout the country, the rapid growth of the domestic economy has also created a fiercely competitive business environment that is driving significant cost increases, according to the survey.

    "Accessing the China market continues to be the primary goal and strategy for U.S. companies operating in China," said the survey.

    According to the survey, more than half of the respondents have already established a presence in a second- or third-tier city.

    The outlook of U.S. businesses in China is tempered by operating challenges, especially shortages of qualified staff and continuing regulatory challenges, such as difficulty in achieving consistency of administration and enforcement.

    With rapid economic development and increasing foreign investment, the demand for Chinese managers of international caliber has also increased significantly. In 2007, difficulty in attracting, developing and retaining managers and technical staff, along with increasing salary and wage expenses, remained the top operating challenges for U.S. companies, the survey shows.

    According to the survey, the companies continue to see China as a strategically important manufacturing base due to its domestic market potential, but more than two-thirds agreed that China was losing some of its competitive advantage in global markets due to rising costs.