British Chambers of Commerce in China caution against protectionism as they call for further opening up of Chinese market

Published on 2019-05-08

The British chambers publish their inaugural Position Paper, outlining the key market access issues inhibiting their ability to operate in China, as well as opportunities for UK businesses to further support the development of the Chinese economy.

PP Beijing, 7th May 2019 -- The British chambers of commerce in China release their Position Paper 2019, representing the views of British businesses operating across the China market. With the chambers accounting for over 850 members, this paper is the first public document to advocate on behalf of British businesses in China across a variety of industries and regions. The paper presents both the key challenges that British businesses face in China while also highlighting the ways in which UK businesses can contribute to the further development of the Chinese economy.

In the face of rising protectionism and the prevailing challenges to the global trading environment, the chambers remain committed to our founding principles, based on an underlying belief in free market ideals. Our position supports reciprocity of markets, achieved through a constructive process of opening up. As such, we call for equal access and treatment for all companies, regardless of origin, in both the UK and China. It is within this context that we welcome the positive steps that China has taken to improve the business environment for foreign companies operating in-market and address a number of long-standing issues for business. However there remains a need for China to continue its progress in reforming and opening up its markets to foreign investment. 

The Position Paper produces an in-depth analysis of 10 key sectors for the UK: accountancy, automotive, built environment services, education, food and beverage, financial services, healthcare, legal services, marketing and communications, and retail. While the concerns of businesses vary, the Paper identifies six overarching recommendations raised across the sectors that, if alleviated, would significantly improve British businesses’ ability to operate in China:

  1. Although the chambers welcome the principle behind the Foreign Investment Law, more concrete details relating to implementation and enforcement mechanisms are needed.
  2. Continue to reduce the number of sectors on the ‘Negative List’.
  3. Ensure that the final iteration of the Cybersecurity Law gives firms reasonable scope to share crucial information overseas, as long as it does not impact national security.
  4. Sustain efforts to improve the IP landscape in China and strengthen enforcement to alleviate concerns foreign investors have towards the security of their IP.
  5. Grant foreign businesses access to a wider range of licences and continue to make the application process for licences more streamlined and transparent.
  6. Ensure transparency and consistency of regulatory enforcement across China.

Supporting growth, partnering in innovation and promoting economic sustainability

As the Chinese economy slows and moves towards a ‘new normal’ of lower but more stable growth, the continuing transition to a more consumer-driven economy presents both challenges and opportunities. The UK is well-placed to support the Chinese government in further improving its citizens’ quality of life by offering experience, knowledge and quality products and services to support the demands of the Chinese economy as it undergoes this transition. Specific examples include:

  • Provision of sophisticated healthcare products and services; R&D services; public policy experience; and professional training schemes as China develops social and healthcare systems that resemble those of the UK.
  • Building on initiatives such as the London-Shanghai Stock Connect, British financial institutions can help China develop more sophisticated capital markets in order to meet the changing demands of business and consumers.
  • Both the UK and China lead innovation in areas such as artificial intelligence (AI), data analytics and the Internet of Things, technologies can benefit both economies through increased interconnectivity and the provision of remote services.
  • Experienced financial, built environment and legal services can be particularly valuable in outbound projects, such as those along the Belt and Road Initiative (BRI).

As challenges are met, bilateral trade can grow

Nicholas Holt, Chairman of the British Chamber of Commerce in China, commented that “we believe that sustained growth in the Chinese economy will depend on China’s ability to foster an environment where the best and brightest come to invest, live and work; where companies compete and succeed on equal terms; and where resources flow to support the best talent and ideas to flourish, regardless of origin.”

China is the UK’s fifth largest trading partner -- the second largest non-EU partner after the US -- and despite the economic slowdown, British exports to the country remain robust. In order to ensure that bilateral trade and cooperation can continue to grow along this trajectory, we believe further reform is still needed to create a fully level playing field for British firms to operate on. This necessitates the continued removal of restrictions that inhibit UK companies from providing a complete range of goods and services to Chinese consumers. The constructive recommendations of the British chambers of commerce contained in this paper would contribute the sustained growth of both UK companies and the Chinese economy as a whole.

Please download the Position Paper here. 

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