British firms expect doing business in China to become harder over the next five years, a British business lobby group said on Wednesday, as Beijing strives to halt a retreat in foreign funds from a market once seen as the engine of global growth.
The British Chamber of Commerce in China said in its position paper that the 48 measures Beijing has introduced since August to restore investor confidence fell short of “meaningful opening up” and that geopolitical tensions weighed heavy on the minds of British investors.
While foreign direct investment represents only 3 per cent of total investment in China, it has been falling for two consecutive years and had been seen as a signal of confidence in the world’s second-largest economy and a way to sharpen the competitiveness of Chinese firms.
“British companies are yet to see government measures translate into ‘meaningful opening up’, with an anticipation that regulatory obstacles will increase rather than decrease in the next five years,” the chamber said.
“British business confidence is further constrained by growing risk of increased trade tensions due to a complex geopolitical environment,” it added.
AstraZeneca, BP, Jaguar Land Rover, Standard Chartered, and Rolls-Royce are among the members of the chamber.
Foreign firms are finding themselves less welcome in China than before the pandemic, with President Xi Jinping urging self-reliance and for officials to push on with a production-focused, debt driven development model despite pushback from the West.
“China is evidently charting a new course in its relationship with businesses, but clarity regarding the role of businesses is essential,” said Julian Fisher, the chamber’s chair. “The current ambiguity is frustrating.” The chamber said it was calling on authorities to improve the “perception of China as a predictable market for business” and to engage with British firms more, particularly over its plans to fire up new growth engines and suspected over capacity.
Data from China’s commerce ministry showed a decline of 8 per cent in foreign direct investment last year. A wider gauge from the currency exchange regulator including flows of retained earnings showed a decline of about 80 per cent in 2023 to $33 billion. It was the steepest drop since records began in 1980.
“If the government can introduce greater predictability, clarity and transparency when implementing policy, it will go a long way to restoring business confidence in the market,” the chamber said.
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First Published: May 22 2024 | 9:41 AM IST
