January – We started the year chatting with Ning Ken, author of Zhong Guan Village: Tales from the Heart of China’s Silicon Valley, about the birth, development and future of a village on the periphery of China’s capital that has become a major cluster of tech and innovation to rival California’s Silicon Valley.

February – We talk a lot about Big Tech in China, but since the start of the reform and opening up process in 1978, it’s often been local entrepreneurs, many in obscure and remote rural locations, that have driven the economy by using technology to reinvent their businesses and themselves. So we spoke with Lin Zhang, author of Labor of Reinvention, Entrepreneurship in the New Chinese Digital Economy, about everything from co-working spaces to “Taobao Villages”.

March – China’s cities continue to grow, sprawl and burgeon, but they’re also changing in subtle but important ways. Weiping Wu and Qin Gao’s collection China Urbanizing: Impacts and Transitions looks at how everything from demographic shifts to climate change are affecting China’s megalopolises.

April – The relationship between China and Russia remains one that goes through ups and downs – from becoming a potential bloc against the “West” to hard and fast Frenemies. The war in Ukraine and China’s slowing economy are both shaping that relationship. Philip Snow produced a massive history of the relationship this year, entitled China and Russia: Four Centuries of Conflict and Concord, and we talked about the tensions between Moscow and Beijing post-USSR, the era of Xiconomics and Putin’s war in Ukraine.

May – How we approach a post-covid China as it slows down economically, tackles high youth unemployment and forges alliances around the world to offer alternative forms of economic development affects everyone. One major intervention in the debate was associate professor of economics at the London School of Economics Keyu Jin’s The New China Playbook, which argues that what may appear to be contradictions to the Western eye can, if understood better, become opportunities for those on the outside.

June – Let’s be honest, past biographies of Hong Kong have generally been a little dull – often featuring long, boring lists of ex-governors and dreary colonial officials. This year, Vaudine England changed all that with Fortune’s Bazaar, an amazing and highly readable portrait of the city that accentuates the position of women, the energy of migrants from mainland China and the truth that Hong Kong has always been a multicultural place.

July – Unsurprisingly, a number of books in 2023 have tried to decipher the economic policies of Xi Jinping. We talked to Andrew Cainey and Christiane Prange, the authors of Xiconomics: What China’s Dual Circulation Strategy Means for Global Business – the book that will help you know your dual circulation strategy from your “friendshoring”.

August – For those doing business in China, history and analysis is all very well, but we also need case studies and lessons drawn from doing business in China. Businessman and former president of the American Chamber of Commerce in Shanghai, Ker Gibbs, put together a set of essays from many long-term foreign businesspeople in China in Selling to China: Stories of Success, Failure and Constant Change. How can businesses cut through the current tensions, and where might the commercial world of China move in the future?

September – After the severe shock of Covid-19 and the new reality of a long-term slowing of China’s economy, perhaps it is time to rethink ideas of intercultural leadership in China. With this in mind, Gábor Holch has been consulting with a range of foreign businesses in China to help their executives understand where they stand. Holch’s Dragon Suit: The Golden Age of Expatriate Executives in China will help you deal with localised leadership, build your networks, consider decoupling, the culture shock of Chinese business and how to maintain a decent work/life balance.

October – Jeremy Garlick’s Advantage China: Agent of Change in an Era of Global Disruption examines China’s global policies, notably towards the global south, and its emerging financial and influence footprint worldwide. We spoke with Garlick about the seemingly troubled Belt and Road Initiative (BRI), unpacked China’s multitude of new and ongoing ‘global’ initiatives, and asked whether the Xi administration ever admits any policy weaknesses. We also examined whether the current property crisis is going to be the property crisis, or if China will once again deflate the debt bubble.

November – It’s always worth remembering that China’s history contains some of the most amazing stories imaginable, as well as indicators of the future. Kassia St Claire’s wonderful The Race to the Future tells the incredible story of the 1907 Peking to Paris car race. But The Race to the Future is not just about a car race, it’s about a changing world, from one we wouldn’t recognise to one we most certainly do. It also tells the story of China’s introduction to that now ubiquitous invention of the modern age – the combustion engine.

December – And so we reach the end of the year and the festive season. A highlight of the published works on China this year was, without a doubt, Fuchsia Dunlop’s Invitation to a Banquet. It’s a book that’s been reviewed everywhere and praised universally, so we thought we’d take a slightly different tack and ask Fuchsia what to dive into and what to avoid at banquets, how to survive as a vegetarian in China, and what we can do with turkey at Christmas if we prefer our cuisine with Chinese characteristics.

The post The best books about China from 2023 appeared first on Focus - China Britain Business Council.

Over the past year, we have seen a gradual rapprochement of Western relations with China, including the UK, after a few years of tense relations and largely constructive introspection. This was particularly the case over the last four months with James Cleverly’s visit to Beijing and the Biden-Xi meeting in San Francisco. And March’s Integrated Review refresh helped to provide some much-needed structure to the UK government’s approach to relations with China.

The volume and seniority of inward visits coming to China has been high and sustained throughout the year, with global executives, state leaders and the trade delegations making their way here. The last quarter of 2023 felt much like 2019 in terms of business programming and traffic flow in China.

Meanwhile, the landscape remains mixed for British businesses operating in China, with three distinct investor profiles emerging:

1. Confident and investing: This group consists primarily of the largest UK investors in China as well as those with significant market share or revenue exposure. In most cases, this group operates local business units that have grown over multiple decades. A sizable number of SMEs with strong market fit also fall into this category. Larger investments by this group that CBBC has supported in 2023 range from $100 million (£78.4 million) to upwards of $1 billion (£784 million) and more announcements are anticipated for 2024.

2. Hesitant but growing: The largest of the three groups and consisting of a wide body of sectors and company sizes. The hesitancy tends to be concentrated at the HQ level rather than local and is due to a combination of geopolitics, sluggish domestic and international economic outlook, or commercial considerations (competition, pressure on margins, regulation, etc.). Add also the fact that British companies tend to lean more conservative than our comparators, such as those from the US.

3. Recovering revenue or struggling for growth: Companies in this group are often facing strong headwinds from competition and regulatory barriers, economic challenges such as the real estate crisis and/or weak demand, or are still working to recover revenues from the impact of Covid restrictions. This group is generally not considering leaving China and is instead reorienting its strategic approach to return to a growth trajectory. In a very small number of cases, companies have decided to exit – although this is not uncommon in any given year due to mostly commercial failure. However, in one case, a company (Graphcore) did opt to exit China this year due to US semiconductor controls in a rare case of a UK company getting caught directly in the crossfire of geopolitics.

As we head into 2024, talk will continue to focus on the performance of the Chinese economy and potential risks (real estate, local Government debt levels, domestic demand, oversupply) in addition to recovering investor confidence among both domestic and foreign investors. This was also the focus at the beginning of 2023, when I wrote an article reflecting on the long-term challenges the current mix of headwinds present for China.

The Chinese Government will continue to take steps to reassure investors of their commitment to supporting the economy and, in particular, the private sector. This will have a positive effect; however, any shift in sentiment is likely to be gradual due to continued uncertainty around geopolitics and the macroeconomy.

Regardless, foreign MNCs with significant traction in China will continue to invest into their operations in the pursuit of growth. R&D and M&A will be a major focus as a way to counter the increasing fronts of competition with domestic companies. Localisation will remain a major theme. MNCs will also turn to more creative ways of financing investments in China, including through local banks (see BASF’s recent RMB 40 billion syndicated bank loan as a leading example) motivated by comparatively cheaper rates and the need to commit cash to other key markets.

China will remain a critical front for the future of many MNCs as a focal point for facing up to competition, innovating technology and services, and maintaining or growing global market share.

I also expect we will see an uptick in investment activity into the UK from China, both by State-owned and private investors. This investment will be aimed towards renewables, batteries and EVs — all areas the UK Government is actively promoting — but also consumer and niche segments of healthcare, manufacturing and technology. This is despite continued concerns among Chinese investors regarding the degree to which their investment is still welcome. More work is required to shift this perception, and CBBC will continue to play a central role on this front.

Meanwhile, trade between the UK and China will continue to perform strongly in 2024 and likely set new records, both in terms of exports and imports. UK exports to China had a bumper 12 months up to the end of September, growing by +10.6% to £138.6 billion (inc HK) — the highest 12 months on record. UK exports grew a staggering 71% to £44.4 billion in this period.

Nevertheless, despite the overall positive outlook for growth of UK-China trade, export controls will remain a challenge for many UK exporters. Clearly, more work needs to be done to improve the process. Again, this will form a core focus for CBBC’s work to support our members next year.

It’s been a productive year for CBBC across China and the UK. As a bilateral trade and investment organisation, we thrive on engagement, so 2023 was like taking a big dose of medicine. I look forward to continuing to build upon this momentum into 2024, my seventeenth year in China, and beyond.

The post The Year in UK-China Relations appeared first on Focus - China Britain Business Council.