Tracking People’s Daily — Dec. 10, 2020

  • In 2016, for the first time, it was emphasized that “the general tone of the work of seeking progress while maintaining stability is an important principle for governing the country.”
  • In 2017, it was clearly stated that “my country’s economic development has also entered a new era. The basic feature is that my country’s economy has shifted from a stage of rapid growth to a stage of high-quality development”
  • In 2018, once again stated that “my country’s development is still and will be in a period of important strategic opportunities for a long time”
  • In 2019, it firmly pointed out that “the basic trend of my country’s economy being stable and improving in the long term has not changed.”
  • For 32% of all companies and for 51% of large multinationals, revenue from China accounts for less than 10% of their total global business earnings before interest and tax. At the same time, more than one quarter of companies derive more than 50% of their total revenue from the Chinese market, of which 93% are SMEs.
  • Despite the uncertainties and challenges of the past year, British businesses in China remain broadly optimistic. Nevertheless, business sentiment has declined over the past three years, with 49% reporting an optimistic outlook for 2021, down from 54% last year for 2020. Instead, companies are becoming increasingly neutral in their outlook, while pessimism remains low.
  • British businesses will by and large either increase or maintain their current level of investment in China for the next year…only 7% of businesses will decrease investment next year… these are largely SMEs.
  • 45% British businesses in China find that their operations are impeded by market access barriers. This is down somewhat from last year, when 54% of companies faced such barriers. Healthcare, IT and telecommunications, and energy are the most restrictive sectors
  • One quarter of companies believe that FIEs in their industry receive unfavourable treatment compared to Chinese private companies. This perception significantly worsens when concerning competition with SOEs.
  • Previous surveys had shown that 22% of companies anticipated that the Foreign Investment Law would have a positive impact on their operations in China, but, since its implementation, only 16% have actually seen a material benefit to their operations.
  • Roughly half of British businesses are taking some form of action as a result of geopolitical tensions involving China. However, these actions seem to vary significantly, with an equal number of companies (14%) accelerating investment decisions and delaying or cancelling investment decisions. Only 3% are considering leaving the China market completely as a result of geopolitical tensions. 44% of companies are not taking any action at all.
  • The question of supply chain relocation is largely irrelevant to just over half of British businesses in China, which report that they do not source from or manufacture in the Chinese mainland. Of those companies that do source or manufacture in China, 88% report that they are not considering changing their current supply chains. Only 3% of companies have actively started relocating manufacturing or sourcing to an area outside of the Chinese mainland, despite growing political pressures to decouple from China and initial expectations that the pandemic would lead to a significant reordering of global supply chains away from China.

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Manoj Kewalramani

Manoj Kewalramani

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