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2024 will be a “pivotal year” for the British business community in China, the British Chambers of Commerce said on Tuesday, as the Chinese government grapples with growing concerns about the weak economy and investment environment.
The Chamber of Commerce’s survey of British businesses found that while sentiment had improved from last year’s record levels of pessimism, 60% of respondents remained concerned about the spread of Covid-19. It has been shown that they believe business will be tougher than in 2022, when strict regulations caused by the pandemic devastated the economy.
As foreign direct investment comes under pressure, the Chinese government has released a 24-point policy document to address investors’ concerns, but the Chamber of Commerce and Industry says it considers growing “promise fatigue” among businesses. The Chinese government then said it needed to move forward with implementation.
Next year “is going to be a pivotal year,” said chamber president Julian Fisher. “It is not just a matter of words. Ultimately, action will be required in 2024 or there could be serious problems for the economy.”
Foreign companies in China have been hit double-handed by China’s struggling economic recovery, which has made it a less attractive market, and by Beijing’s increasingly hawkish attitude toward foreign companies.
China has tightened data controls and cracked down on activities important to foreign investors, such as due diligence.
Some businesses and individuals in the UK have been hit by certain policies, such as a crackdown on online tutoring that has reduced opportunities for English teachers.
The drop in foreign investment is also making it harder for British businesses in sectors such as professional services, which is one of the industries reporting significant declines in employee numbers this year.
Mr Fisher said he had heard that the number of British expatriates in China had fallen to 16,000 from 35,000 pre-pandemic, although there were no official figures. The trend is towards ‘localisation’, with many companies replacing all levels of management with domestic hires.
He said there are signs that the Chinese government is becoming more open to foreign concerns and has expanded access to officials.
Last month, the government also highlighted issues hindering foreign business, such as local laws that impose longer licensing procedures on foreign companies compared to domestic companies.
“Things have really changed. We’ve seen a lot more movement this year,” Fisher said. He said an example was China’s recent acceptance of some British vocational education qualifications at the UK’s specific request.
However, he said it will take further measures and time to see if the overall situation is improving.
Relations between the UK and China have been on a seesaw with the change of British government, leading to next year’s election, which is “difficult”, Chamber of Commerce officials said.