British firms in China ‘wait and see’ on new investment as lack of trust clouds outlook

“A perception of an increasingly unpredictable business environment, coupled with challenges posed by rising geopolitical tensions, a slowing global economy, increased prioritisation of self-sufficiency and shifting investor perceptions, all serve to cloud short- and long-term outlooks,” the report said.

As part of the survey, the chamber also conducted roundtable discussions and interviews with British companies from across China in February and March.

Trade between Britain and China was worth £111 billion (US$138 billion) last year, according to the British National Bureau of Statistics, making China the UK’s fourth-largest trading partner.

The paper also highlighted that Beijing’s strict zero-Covid policy, and its subsequent “abrupt cancellation” late last year, reinforced the view of China being an unpredictable market.

“I think it’s fair to say the way in which the policy changed actually created a level of additional uncertainty,” chamber chair Julian MacCormac said in Beijing on Tuesday.

“There are often unexpected changes to the business environment, which makes companies nervous.”

“Covid controls have been lifted, optimism is returning again. It isn’t translating into action just yet because there is still this pervading uncertainty in the market,” said Alexandra Hirst, the chamber’s manager of policy and advocacy.

“Covid was a huge issue for British businesses, but there are still underlying challenges which need to be addressed for that optimism to translate.”

Overall, though, 76 per cent of the member companies surveyed said they felt more optimistic about the outlook in 2023 amid Beijing’s push to attract more foreign investment, although the recent raids on foreign-funded consultancy firms and a ban on US chip maker Micron on national security grounds have raised concerns.

Following the increasing crackdown on financial institutions and due diligence firms in recent months, the chamber urged Beijing to provide greater clarity for foreign business.