China has ‘opportunity to work with British services firms to go global’
British firms operating in China see the country’s excess manufacturing capacity as an opportunity to develop partnerships as the Asian country looks to venture overseas, according to a leading business organisation.
“There might be an opportunity for the UK to carve out a path that is a little different to other countries and regions in the world we’ve seen with overcapacity,” said Julian Fisher, chair of the British Chamber of Commerce in China, speaking at the release of the chamber’s sixth annual position paper.
Fisher said that, unlike the US and EU, the UK is no longer an industrial powerhouse, creating a complementary relationship between Chinese and British businesses. “We are a service-led economy, and I think that might be an area where there are mutual benefits,” he said. “As Chinese businesses start to go global, they need the support of British insurance companies and law firms on market entry, and accounting firms.”
The business environment has improved for British companies in China over the past year despite a “generally pessimistic” outlook, the chamber.
Amid ‘mixed signals’ from the Chinese government, the chamber said British firms believe Beijing needs to take more action on long-standing market access issues and implement ‘meaningful’ regulatory reforms to boost confidence.
“For British businesses, who have long championed open global trade with China, the current ambiguity is frustrating.”
“Despite this, we recognise the remarkable progress in areas such as intellectual property rights and legal support for international businesses,” he said.
“China today is a far more positive place to do business than it was in the recent past.”
Engagement between the Chinese government and British businesses has reached “unprecedented levels” over the past year, according to the position paper.
“China is evidently charting a new course in its relationship with businesses, but clarity regarding the role of businesses is essential,” Fisher said.
China unveiled two separate plans, in August 2023 and March 2024, to help attract more capital from overseas after foreign investment fell to record lows last year.
They plans included expanding the number and scope of sectors in which foreign businesses can invest, smoothing the process of cross-border data flows, strengthening intellectual property protections and loosening visa rules.
British firms have welcomed these steps, the chamber said, but it added that investment has been “stymied by several instances of restrictive policies emerging without warning”.
The chamber said: “Now, [the firms] call for similar decisive actions across the business landscape, firmly translating policy proposals into tangible outcomes for international businesses.”
Despite a comparatively muted stance from British firms on overcapacity, more dialogue with the Chinese government is needed to address the issue, said the chamber, as concerns around profit margins and potential for increased trade barriers have stopped British businesses from reaching their full potential in supporting China’s green transition.
SMEs report upturn in April
China’s small and medium-sized enterprises (SMEs) reported improved business performance in April, an industry index showed.
The Small and Medium Enterprises Development Index, based on a survey of 3,000 SMEs from eight major industries, came in at 89.4 in April, up 0.1 points from the previous month, the China Association of Small and Medium Enterprises said.
The figure, although still lower than the boom-and-bust line of 100, was higher than the same period in 2022 and 2023, the association said in a report.
The sub-index for construction, transportation, post and storage industries, retail and wholesale industry, social services as well as information transmission, computer services and software sectors all expanded compared with the previous month, while that for accommodation and catering remained flat.
The data also showed that the financing and workforce sub-indexes were above 100 in April.
