UK business in China sees 2024 as ‘pivotal’ for investment

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China’s UK business community sees 2024 as a “pivotal year” for Beijing to address growing concerns over its flagging economy and investment environment, the British Chamber of Commerce said on Tuesday. 

The chamber’s survey of British companies showed that while sentiment had improved from record levels of pessimism last year, 60 per cent of respondents still believed business was more challenging than in 2022, when harsh Covid-19 restrictions decimated the economy. 

With foreign direct investment under pressure, Beijing has unveiled a 24-point policy document to address investor concerns but the chamber said Beijing needed to push forward with implementation given increasing “promise fatigue” among businesses.  

The next year “is going to be a pivotal year”, said Julian Fisher, chair of the chamber. “It’s not just about words; ultimately 2024 is going to need action otherwise there could be serious problems in the economy.”

Foreign businesses in China have taken a double hit from China’s struggling economic recovery, which has reduced its attractiveness as a market, and Beijing’s increasingly hawkish tone on foreign enterprises. 

China has tightened control over data and cracked down on activities crucial for foreign investors, such as due diligence. 

Some British businesses and individuals have been hit by specific policies, such as a crackdown on online tutoring that has reduced opportunities for English teachers. 

Lower foreign investment has also made it more difficult for UK businesses in sectors such as professional services, which were among the industries reporting bigger declines in headcount this year. 

Fisher said that although there were no official figures, he had heard the number of British expatriates in China had declined from 35,000 pre-Covid to 16,000. The trend was towards “localisation”, with many companies replacing all levels of management with domestic recruits. 

He said there were signs China’s government was becoming more open to foreign concerns, providing greater access to officials.

The government also last month highlighted issues impeding foreign business, such as regional laws that impose longer licensing procedures on foreign businesses compared with domestic companies. 

“That really has shifted, this year has seen a lot more action,” Fisher said. He said one example was China’s recent acceptance of some UK vocational education qualifications after a specific British request.

But it would take more measures and time to see if the overall situation was improving, he said.

The UK’s relationship with China had seesawed with changes in the British government and was “treading water” until elections next year, chamber officials said.