UK firms pause China investment decisions as growth slows: survey. According to the British Chamber of Commerce in China, sixty percent of British companies believe that a slowing Chinese economy provides a more significant impediment to their operations in the Asian behemoth than the rigorous COVID regulations that were in place until late last year.
British businesses are delaying new investments in China amid a stuttering economic recovery. According to the chamber’s annual sentiment survey released on Tuesday, they are downgrading the importance of the world’s No. 2 economy to their global operations. This is even though the “peak pessimism” recorded during the pandemic is beginning to ease.
Several factors, including a post-pandemic recovery that has been less robust than anticipated, a series of office raids carried out by Chinese authorities, cash-strapped local governments offering fewer investment incentives, and higher investment yields in the United States, have contributed to the fact that foreign investors have been less inclined to invest in China throughout the majority of this year.
According to Julian Fisher, the chamber chair, “in previous years, eighty percent of companies were investing more because of market potential; however, it feels like we are now entering a phase of real clarity.”
“Firms are a lot more pragmatic and there’s a lot less speculation,” said the economist.
Several companies, including AstraZeneca (AZN.L), BP (BP.L), Jaguar Land Rover (TAMOJL.UL), and Shell (SHEL.L), are members of the chamber organization.
The chamber’s findings, which were based on the opinions of members during October and November, found that sixty percent of businesses believed that conducting business in China had gotten more challenging over the previous year, with seventy-eight percent of these businesses blaming economic concerns.
“(British) companies in China are effectively treading water, with many delaying key decisions around investment and market entry,” the conclusion of the research.
More than half of the companies that were polled stated that geopolitical factors also made it more challenging to operate in China. Additionally, 43 percent of the companies had regulatory difficulties, such as the purchase of licenses.
Since the nation abandoned its rigorous COVID-19 limitations late last year, foreign direct investment in China has slowed significantly. As a result, the country recorded its first-ever quarterly deficit in foreign direct investment from July to September, which suggests that there is pressure to outflow money.
The chamber stated that although “British businesses are experiencing a slow return in optimism,” a trend in which companies are downgrading China’s relevance to their worldwide operations “appears to be stabilizing.” Additionally, the chamber stated that this trend is “stabilizing.”
A little less than half of the businesses that were polled said that China was either a “medium priority” or a “low priority,” because just forty percent of the enterprises recorded it as a “high priority.” Compared to this, fifty-nine percent of businesses considered China a “high priority” from 2021 to 2022.
According to the British National Bureau of Statistics, last year’s trade value between the United Kingdom and China was 111 billion pounds, equivalent to 140 billion dollars. This makes China the fourth-largest trading partner for the United Kingdom.
