On the cover of its latest paper on doing business in the world’s second largest economy, the British Chamber of Commerce in China this year deliberately chose red.
When the color is auspicious in Chinain the west it can mean ignoring the barrier, as in stop signs and traffic lights.
That ambiguity means that they understand the situation in China today. As the outlook grew from 2022, when Beijing’s zero-Covid policy crushed the economy, mixed messages and unclear controls in critical areas such as data protection are hindering foreign businesses.
The latest surprise came this week when China banned US chipmaker Micron’s products from the most important issues, following the G7 summit in Hiroshima at the weekend, where the group criticized Beijing for its economic pressures and military actions in the South China Sea.
Micron’s ban comes out on top attacking China in foreign affairs in recent weeks, which included the arrest and disappearance of five employees at the US company Mintz, and the suspension of Deloitte.
Uncertainty is increasing though Communist Party starting the year with an encouraging message. At the annual “two-session” meeting of China’s parliament in March, the new Premier, Li Qiang, was anxious to make sure the country was still interested in doing business.
Li said he has been in contact with various countries, including US companies. “They all told me they had hope for the future” in China, he said. He followed this up with speeches and discussions at the country’s biggest business forums, where he assured senior management that the negative effects of zero-Covid were over.
But the conflict with the US, which is one source of Beijing’s ambivalence towards foreign business, continues to grow. It increased by February spy balloon debate.
Both parties accuse the other of obstructing efforts to improve communications. “We are getting a very mixed message,” said Zou Zhibo, deputy director of the Institute of World Economics and Politics at CASS, a think tank closely aligned with the Chinese government. He also said that efforts to repair relations during a November meeting between US President Joe Biden and Chinese leader Xi Jinping had fizzled out after the US imposed restrictions on high-tech exports. “There is no trust because we don’t know who we can trust.”
For investors, the reduction in guidance has been alarming. Government targets have ranged from blue-chip firms such as Bain and high-profile groups such as Mintz to professional firms that maintain a Rolodex of experts that businesses can call on when researching purchases or arranging acquisitions from suppliers. .
The attack, which has been described as little more than an alleged sharing of what it considers a national security concern, has worried foreign advisers working in China.
An expert from a European company said that the government has always been trying to improve the way things are going. But now it was classifying more sensitive data under the label of “national security”. He adds that increasing the security of the country has led to accidents for the advisory staff. “I am . . . ready for anything if it’s going to be difficult to do business,” he says. What I always worry about is the individual workers.
For UK businesses, these challenges include the uncertainty caused by sudden changes, such as when the government cracked down on internet platforms in 2021 – and the end of the zero-Covid policy that surprised businesses.
The British organization said that although its members were pessimistic – this year 76 percent were optimistic about doing business in China compared to 42 percent who were pessimistic at the end of last year – 70 percent said they were waiting. -and-see method.
All of this is making the Chinese economy less efficient and less efficient. As one consultant of the United States company says, everyone who has clients in China today advises them about risk, from the danger of conflicts in the Taiwan Strait to how to make their data to adapt to changes in Beijing.
“Governments are concerned about this. They are not sure how to take the line: ‘Maybe I should continue in China, or have less money there, or be more cautious’,” he says.
joseph.leahy@ft.com