Foreign business sentiment in China hits ‘tipping point’ as zero-Covid undermines trust and erodes attraction

China’s foreign business climate has reached “a tipping point” with uncertainty undermining confidence and eroding the appeal of foreign talent and investment, the British Chamber of Commerce in China said on Tuesday.

The chamber, in its latest position paper, called for the application of “predictable and proportionate” measures China’s Zero Covid Policy to mitigate disruptions to mobility and manufacturing activities.

“Recent sporadic outbreaks of Covid-19 across the country and corresponding instantaneous lockdowns have taken away one of the things most businesses could count on: a stable and relatively predictable business environment,” the newspaper said.

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“A growing sense of detachment and isolation within the foreign affairs community in China is now tangible.

“British business sentiment around China has reached a tipping point.”

Lack of clarity and communication regarding various policies, objectives and processes is perhaps the most significant cause for concern

British Chamber of Commerce in China

This is the latest call for China to change its highly restrictive virus controls to mitigate disruptions to the economy and stabilize foreign capital.

Uncertainties “reach a crescendo”, which are affecting operations and forcing foreign talent out of China, with “considerable obstacles” to bringing in replacements, the chamber added.

“The lack of clarity and communication regarding various policies, objectives and processes is perhaps the most significant cause for concern.”

Chairman Julian MacCormac welcomed recent steps taken by Beijing to address business concerns, but added that the chamber was still waiting to see actual results on the ground while seeking long-term certainty.

There remains a big question about what the current policies and control measures will mean for businesses in the coming months in China.

Julien Mac Cormac

“It is still too early to determine what this means in practice on the ground. We only see the reopening of Shanghai and the resumption of business activities in Beijing,” he said.

“There remains a big question about what the current policies and control measures will mean for businesses in the coming months in China…how can we become confident if we face continued disruption?” This question is still there. This is of course very closely linked to business confidence.

The document singled out the uncertain outlook for virus control, ambiguous cybersecurity regulations and a crackdown on the tutoring industry as the main concerns for UK businesses.

He also called for the resumption of direct flights between the two countries in a bid to stabilize China’s international talent pool.

‘Significant outflow’ of international talent and ‘brain drain’ across industries has taken place, according to the newspaper, due to China’s strict border controls, including an estimated 40-60% outflow rate international teachers for the upcoming school year. .

“Most people are now deprived of the opportunity to experience China first-hand and form their own perspectives that are so important to understanding and building trust,” the newspaper added.

UK businesses also continue to struggle with the lack of clarity in regulatory updates, while they are also concerned about compliance issues due to the lack of a clear framework or timeline for implementation. .

Foreign companies should have a better chance of consulting governments when developing industrial policies and standards and should be given greater market access, especially in government procurement, to ensure that competition is based on equal footing, he said.

Chinese coronavirus controls ‘strangulation of American business confidence’

The chamber, which has long advocated for more clarity on cyberregulation, called for key concepts to be defined and a mechanism for cross-border data transfer to be in place.

“Measures must be taken to remedy the management of [coronavirus] pandemic, the resumption of international travel, greater market reform, and continued increased engagement with overseas businesses, to restore balance and revitalize the optimism businesses once had in China,” the newspaper said.

The chamber, however, pointed to long-term optimism due to the potential of the Chinese market, including financial services, retail and consumer goods and decarbonization.

“We also strongly believe that if the pandemic situation improves, optimism will be restored even further,” the document concludes.

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