In an era where facial recognition technology is increasingly embedded in daily life, from unlocking smartphones to streamlining payments, China has introduced robust regulations to ensure its responsible use. On March 21, 2025, the Cyberspace Administration of China (CAC) and the Ministry of Public Security (MPS) released the Security Management Measures for the Application of Facial Recognition Technology, effective from June 1, 2025. These measures, supplemented by a clarifying notice from the CAC on March 30, 2025, mandate registration for companies processing facial data of over 100,000 individuals and provide a clear framework for compliance. For British businesses operating in or entering the Chinese market, understanding and adhering to these rules is essential to safeguard operations and protect personal data.

The New Regulatory Landscape

China’s facial recognition regulations are part of a broader effort to strengthen data protection under the Personal Information Protection Law (PIPL), enacted in 2021. The Security Management Measures aim to balance innovation with the protection of individual privacy, addressing concerns about the misuse of sensitive biometric data. The rules apply to any organisation, domestic or foreign, processing facial recognition data in China, with a particular focus on those handling large datasets. According to the CAC, companies storing facial data of more than 100,000 individuals must register with their provincial-level cyberspace administration within 30 working days of reaching this threshold.

Recognising the compliance burden, the CAC introduced a grace period for companies that hit this threshold before June 1, 2025, allowing them until July 14, 2025, to complete registration. This transitional measure reflects China’s pragmatic approach to implementation, ensuring businesses have time to adapt without immediate disruption. Additionally, the CAC issued detailed ‘Instructions for Filling in the Facial Recognition Technology Application Filing System (First Edition)’, accessible via the Personal Information Protection Business System or the National Cyberspace Administration Government Affairs Hall on the CAC’s website. These guidelines outline the registration process, required documentation, and compliance expectations, making it easier for companies to navigate the system.

Why Compliance Matters

Facial recognition technology is widely used in China across sectors like retail, finance and security, but its rapid adoption has raised concerns about privacy and data security. China’s facial recognition market is projected to reach £7.2 billion by 2027, driven by applications in smart cities and public safety. However, high-profile cases, such as the 2021 fine imposed on a Hangzhou zoo for collecting facial data without consent, underscore the risks of non-compliance. The zoo was ordered to delete the data and issue a public apology, highlighting China’s growing emphasis on enforcement.

For British businesses, compliance is not just about avoiding penalties; it’s about building trust in a market where data protection is increasingly scrutinised. Robust cybersecurity measures, including compliance with data laws, are critical for protecting investments in China. Failure to register or properly handle facial data could result in fines, operational restrictions, or reputational damage, particularly for companies in sectors like technology, retail, or hospitality that rely on facial recognition for customer engagement.

How to Register: A Step-by-Step Guide

The registration process is designed to be straightforward, with all steps completed online via the Personal Information Protection Business System. Companies must first create an account on the platform before uploading the required documents, which include:

• A Basic Information Form of Personal Information Processor, detailing the company’s operations and data processing activities.
• A Facial Recognition Technology Application Record Form, outlining the scope and purpose of facial data use.
• A Personal Information Protection Impact Assessment (PIPIA), assessing the legality, necessity, and risks of data processing.
• Scanned copies of the Unified Social Credit Code Certificate, legal representative’s ID, agent’s ID, Power of Attorney, and Letter of Commitment, all stamped with the company’s official seal.

The CAC reviews submissions within 15 working days, updating the application status to “Filing Completed,” “Returned for Improvement,” or “Review Failed.” If supplementary materials are required, companies have 10 working days to provide them, or the process is terminated. The CBBC advises seeking professional support, such as from its Information Systems team, to ensure compliance with China’s data laws and to localise global systems effectively.

Conducting a Personal Information Protection Impact Assessment (PIPIA)

A cornerstone of the new regulations is the requirement to conduct a PIPIA, as mandated by the PIPL. This assessment evaluates the legality, legitimacy, and necessity of facial data processing, alongside the potential impact on individual rights and the effectiveness of protective measures. The Filing Instructions provide a tailored template for facial recognition, requiring companies to disclose technical specifications, data collection and storage methods, standard operating procedures, and the ethical basis for data use. For example, companies must clarify whether facial data is used for automated decision-making, such as targeted advertising, and detail the infrastructure and technology providers involved.

The PIPIA process encourages transparency and accountability, aligning with international best practices. The PIPIA requirement has driven companies to adopt more robust data governance frameworks, enhancing trust among consumers and regulators alike.

Easing the Transition

The CAC’s notice reflects a pragmatic approach to regulation, balancing enforcement with flexibility. The grace period for pre-June 2025 data processors and the detailed Filing Instructions demonstrate China’s commitment to supporting businesses during this transition. For British companies, this is an opportunity to align with China’s evolving data protection regime while leveraging tools like the CBBC’s Business Guides, which offer insights into regulatory compliance and market navigation.

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A few days ago, Unitree Robotics captivated audiences with the world’s first robot boxing tournament, a spectacle that showcased the fusion of engineering precision and creative design. This event exemplifies the dynamic innovation landscape in China, where design and technology converge to push boundaries. It also underscores the opportunities available for UK innovators to engage with China’s burgeoning tech ecosystem.

The Design Intelligence Award (DIA), now in its 10th edition, stands as a testament to this spirit of innovation.  As one of the world’s most prestigious award programmes, the DIA offers a platform for designers, entrepreneurs and innovators to gain recognition and access to the Chinese market. This year marks the fifth consecutive partnership between the China-Britain Business Council (CBBC) and the DIA, reflecting our commitment to fostering UK-China collaboration in design and innovation.

The DIA is inviting participants to explore how design can drive sustainable development, technological advancement, and societal well-being. With a total award fund of 5 million RMB (approximately £600,000), the DIA not only recognises outstanding design but also facilitates the commercialisation of innovative ideas.

The significance of engaging with China’s market cannot be overstated. According to the UK Department for Business and Trade’s “Trade and Investment Factsheet” published in May 2025, total trade in goods and services between the UK and China remained close to £100 billion mark in the four quarters to the end of Q4 2024.  China kept its position as the UK’s fifth-largest trading partner, accounting for 5.5% of total UK trade.

Peter Burnett, CEO of CBBC, emphasises the role of design in this context: “Design is a powerful enabler of innovation and a key strength of the UK’s global offer.  As China deepens its focus on high-quality growth, there is clear potential for British businesses to co-create solutions across priority sectors, from sustainable products to next-generation health technologies, and beyond,” he said.

New for 2025, the DIA introduces two entry routes: the established Product Group and the newly launched Innovation Incubation Group. The latter offers participants the opportunity to co-create solutions to real-world challenges with leading enterprises such as Alibaba, Unitree Robotics, Rokid, Fourier Intelligence, Deep Robotics, and BrainCo, unlocking unparalleled opportunities for collaboration and market entry.  For those eager to chart their own course, the X Track within the same group provides the freedom to develop and showcase independent innovations, making space for bold and original ideas.

It is worth noting that UK institutions have already established partnerships with these companies:

• Alibaba Cloud has collaborated with the University of Reading’s Henley Business School to launch a Skills Centre in the UK, focusing on cloud computing, big data, and AI.
• Fourier Intelligence has signed a Memorandum of Understanding with the UK’s National Robotarium to advance rehabilitation robotics.
• Unitree Robotics has engaged with the UK Atomic Energy Authority’s RACE team, showcasing their humanoid and quadruped robots.

These collaborations highlight the mutual interest and potential for UK innovators to contribute to and benefit from China’s innovation landscape.

As CBBC’s sector lead for tech and innovation, healthcare and life sciences, I encourage UK entrepreneurs, designers, and innovators to seize this opportunity. Participating in the DIA can open doors to new markets, partnerships, and avenues for growth.  With China’s emphasis on high-quality development and the UK’s strengths in design and innovation, the synergy between our nations has never been more promising.

The free submission deadline for this year’s DIA is 20^th June 2025. Late submissions will be accepted until 20^th September 2025, and by quoting the invitation code UK2025-1VCVSKF, applicants can waive the standard late fee. This opportunity for CBBC Focus readers reflects our shared mission to support UK innovators in accessing growth markets like China. If you’re not yet a CBBC member, now is the perfect time to explore our services and join a community committed to helping UK organisations succeed in China.

Click here to start the application process for the 2025 Design Intelligence Award

Elinor Greenhouse is CBBC’s Senior Adviser for Tech and Innovation, Healthcare & Life Sciences.  For inquiries, contact Elinor at Elinor.Greenhouse@cbbc.org.

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Is China’s healthcare market open to foreign investment?

When investing in China’s healthcare market, one of the first considerations should be whether the specific sector they want to enter allows foreign investment.

Despite China’s continuous liberalisation of its healthcare industry to allow foreign participation by removing items from the Special Administrative Measures (Negative List) for Foreign Investment Access (hereafter referred to as the “FI Negative List”) and adding items to the Catalogue of Encouraged Industries for Foreign Investment (hereafter referred to as the “FI Encouraged Catalogue”), there are still certain sectors that remain off-limits or restricted to foreign investment.

Medical institutions

On 8 September 2024, the Ministry of Commerce (MOFCOM) published a circular on its official website announcing the expansion of pilot programs for opening up the medical sector. This circular permits wholly foreign-owned hospitals in selected cities. The Chinese government has emphasised that China will “further relax foreign investment access, completely removing restrictions on foreign investment in the manufacturing sector and accelerating the opening of the telecommunications, education, and healthcare service sectors”.

Following the initial announcement, on 29 November 2024, the National Health Commission (NHC), together with three other government departments, released a detailed work plan for wholly foreign-owned hospitals in nine cities: Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, Shenzhen, and the entire island of Hainan.

In practice, even prior to recent adjustments to the regulations, some foreign investors had managed to break through these restrictions on foreign ownership ratio or even gain complete control over domestic medical institutions through historical investment, domestic reinvestment, VIE arrangement, or custody agreement. However, they may face obstacles when changing or renewing their operational qualifications, such as the Practicing License of Medical Institutions. Furthermore, in the case of subsequent shareholding changes, regulatory authorities may review the actual foreign shareholding ratio based on the “look-through approach” (穿透式审查, meaning tracing to the ultimate shareholder by looking through the multiple layers of shareholding structure based on the current effective law at that time), which may require foreign investors to reduce their ownership. Therefore, foreign investors should exercise caution when planning their investment structure.

Human stem cells and genetic technology

The aforementioned MOFCOM circular from September 2024 also lifted bans on foreign-invested enterprises (FIEs) engaging in cell and gene therapy (CGT) in selected free trade zones (FTZs).

Foreign investors are encouraged to invest in the manufacturing of high-throughput gene sequencing systems, according to the latest FI Encouraged Catalogue. Foreign investors are also generally not restricted from engaging in the import and export, production, sales, and research and development of genetic testing equipment.

On the other hand, in accordance with the Regulations of the People’s Republic of China on the Administration of Human Genetic Resources, foreign investors can cooperate with domestic institutions in scientific research related to stem cell and/or genetic diagnosis and treatment, provided that certain requirements are met, and regulatory approvals are obtained. They can also grant licenses to domestic institutions for the technological development and sale of genetic diagnostics and/or stem cell products owned by them.

Although there are established pathways for foreign investment in the sector, foreign investors may still encounter challenges. For instance, it can be challenging to clearly distinguish between the development of genetic testing equipment and the research and development of genetic testing technology in practice. Consequently, some activities of genetic testing equipment research and development enterprises may be classified as the application of genetic diagnosis and treatment technology, thereby prohibiting foreign investment. To avoid such complications, foreign investors are advised to communicate with relevant authorities in advance.

Traditional Chinese medicine

Foreign investors are prohibited from investing in the application of steaming, frying, moxibustion, calcination, and other processing techniques of traditional Chinese medicine (TCM) decoction pieces, as well as the production of confidential prescription products of proprietary Chinese medicines. However, such restrictions do not exist in China’s 21 free trade zones.

Beyond these three sectors – medical institutions, human stem cell and genetic diagnosis and treatment technology, and TCM – other healthcare sectors are mostly open to foreign investment in China.

In fact, foreign investment is actively encouraged in many healthcare areas, such as the manufacturing of new compound drugs or drugs with active ingredients, researching and developing (R&D) and manufacturing of cell therapy drugs (excluding areas where foreign investment is prohibited), manufacturing of dental implant systems for implant repair in patients with bone loss, postpartum maternal and child services in maternity centres, and rehabilitation institutes for autistic children, to name a few. Foreign investors with expertise and a strong presence in a particular area should confirm whether their business falls within these encouraged sectors to benefit from corresponding investment facilitations and receive preferential land and tax incentives.

Approval and licensing

The healthcare sector has always been subject to stringent regulations as the quality of medical services and healthcare products directly impact the safety and wellbeing of individuals. Recent efforts have been made to simplify and streamline administrative procedures in the healthcare industry, as part of medical reforms aimed at encouraging social capital, including foreign investment, to participate in providing diversified healthcare services. However, relevant market players still need to obtain various qualifications and fulfil registration and approval procedures to demonstrate their technical capabilities and ensure compliance with regulations.

Pharmaceuticals

In the pharmaceutical area, depending on their specific business scope and business type, different certifications and qualifications are required:

For businesses engaging in pharmaceutical R&D, they will need to obtain a Good Laboratory Practices for Nonclinical Drug Research (GLP) certificate issued by the National Medical Products Administration (NMPA) for doing preclinical trial; a record-filing with local health bureau for the use of pathogenic microbiology and an approval from local department of science and technology for use of experimental animals in laboratories; a Radiation Safety Permit from local environmental protection bureau if the drug R&D process involving radiative materials; and import-export related licensing and approvals if the drug R&D involves in imported raw materials.

For businesses engaging in pharmaceutical manufacturing, they will need to apply for a Drug Manufacturing License from provincial NMPA and then comply with the Good Manufacturing Practices (GMP) standards. They also need to obtain a Work Safety License for the production activities, and relevant import-export licenses if needed.

For businesses engaging in drug supplying and trading, they will need to apply for a Drug Trading License and comply with the pharmaceutical Good Supply Practice (GSP) standards.

Medical devices

Medical devices in China are subject to classified management: medical devices are divided into three classes based on the level of risk they present to patients or users. Class I is the lowest risk class and is subject to record-filing management, which is comparatively easier, and Class II and Class III are the higher risk classes and are subject to product registration management, which involves a longer and more rigorous process.

Upon registration, the business will obtain a Medical Device Registration Certificate for relevant Class II and Class III medical devices. Also, businesses will need to file a record with local NMPAs for trading Class II medical devices while they need to obtain an approval for trading Class III medical devices.

Medical institutions

As for setting up medical institutions, foreign investors will need to obtain an Approval for the Establishment of Medical Institutions and a Practicing License of Medical Institutions from local health authorities.

Medical institutions will additionally need to obtain multiple licenses based on their business scope, such as the license for radiological diagnosis and treatment, license for maternal and infant health technical service institutions, license for occupational health examination and diagnosis institutions, and license for purchase and use of narcotic drugs and category I psychotropic drugs.

However, under the “many-in-one” reform, most of these post-establishment licenses, except the Large Medical Equipment Configuration License, have been integrated into the Practicing License of Medical Institutions. That is to say, upon getting approval for relevant applications, the authority in charge will affix relevant information on the Practicing License of Medical Institutions, rather than issuing separate licenses.

Crackdown on corruption in the healthcare sector

Businesses operating in the healthcare industry should also pay attention to anti-corruption management, as China sees corruption in the medical fields as one of the main factors that undermine the reliability and efficiency of the country’s medical system. The government has taken a strong stance against anti-competitive behaviours and corruption in the medical field, leading to increased scrutiny and low tolerance for such actions.

In August 2020, the Central Supervision Commission (CSC) issued a notice emphasizing the importance of strict anti-corruption investigations in the medical field. In October of the same year, the CSC issued another statement calling for the investigation of power-money transactions, the establishment of a list of dishonest individuals, and the cutting off of the benefit chain of medical bribery.

Companies in the healthcare sector are thus at a higher risk of being implicated in commercial bribery and subject to administrative or even criminal penalties. Therefore, it is crucial for relevant enterprises to include anti-corruption measures as an essential part of their overall compliance system. They should also continuously monitor the authenticity, rationality, and verifiability of their employees’ behaviour in subsequent marketing processes.

Key takeaways

China’s healthcare sector is highly regulated and competitive and is among the most promising markets in the global healthcare sector. To succeed in this market, foreign investors must be proactive and agile, planning strategically, acting quickly, and working diligently.

In addition to the considerations mentioned above, foreign investors should stay abreast of the latest policies, not only those related to the administration and compliance of the healthcare sector, but also those outlining the government’s industry priorities. They should adjust their strategy and operations accordingly.

Furthermore, innovation is a key advantage for foreign investors, especially those with expertise in a particular area, but smaller in size. It is wise to capitalise on their creativity by customising their products to meet the needs of the Chinese market and addressing existing challenges. They should also develop a comprehensive intellectual property strategy early on to maintain their competitive edge.

Finally, foreign investors who are unfamiliar with the Chinese market are advised to partner with local companies and hire professional agencies to facilitate market entry and compliance management. However, they should conduct due diligence to verify the reliability and qualifications of potential local partners and professional agencies.

This article was originally published by China Briefing from Dezan Shira and Associates with the title ‘Key Considerations for Entering China’s Healthcare Market’

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At the conclusion of the Third Plenum in Beijing this week, innovation and the balancing of development and security were set out as some of China’s core strategic priorities. Meanwhile, in Westminster, there has been much speculation over the omission of a dedicated AI bill at the state opening of parliament, despite indications that the draft bill is largely complete. It seems China and the UK are on the same page in this regard as, while the EU AI Act is set to come into force at the start of August, China’s Draft Artificial Intelligence Law has also been pushed further back.

Delivering the keynote speech at the China Internet Rule of Law conference last week, Wang Hongyu, Director of China’s Legislative Affairs Committee (LAC), made this clear in confirming that China’s plans for implementing AI regulation are still under development. Comparing the legislative approaches of China, the US and the EU, he contended that, although there are undoubted risks in the early stages of development of AI, an over-emphasis on security hinders development and can lead to a loss of competitive advantage, adding that “not developing is the greatest risk”.

This phrase may be familiar to followers of Chinese politics, as it forms an integral part of the logic underpinning tech policy and reform. After what has become known domestically as the “century of humiliation”, during which China was subject to foreign intervention, annexation and subjugation by a host of industrialised nations, technology and innovation are seen as a cornerstone of national security in modern China. Symbolic of strength, competence and prosperity, they are a key policy priority throughout China’s five-year plans. Innovation is as much a matter of national pride as it is security.

Against the backdrop of a difficult economy – with slower than expected growth in the second quarter of this year, cooling consumer demand and a faltering property market – Wang’s comments come as part of a broader trend toward relaxation of regulations around innovation in support of “high-quality development”. At the end of March, we saw the Cybersecurity Administration of China (CAC) announce relaxations to cross-border data transfer, creating exemptions where it is necessary for the performance of a contract, e.g. in cross-border e-commerce, international payments and tourism, and also in the transfer of HR data (for more details, see CBBC member Bird & Birds’s take on the changes here.)

At the same time, pilot programmes lifting foreign investment restrictions in telecommunications services kicked off in Beijing, Shanghai, Hainan and Shenzhen earlier this year. Moreover, reports indicate that China’s National Health Commission is set to revise stringent regulations on the use and management of human genetic resources in a bid to boost R&D in China’s biotech sector.

These measures mark a change in the tide for regulation in innovative industries after the crackdowns seen on tech giants in 2021 as China moves to place innovation front and centre in its plans to stimulate growth, striking a balance between safety and innovation. On the ground at CBBC, we are seeing significant opportunities for grant funding for companies in innovative industries looking to China for manufacturing and R&D. While there are still clear red lines for engagement in sensitive sectors, taken together, these changes present a host of new opportunities for companies in the tech and healthcare space to capitalise on, and we expect to see further easing of regulations in these industries.

Elinor Greenhouse is CBBC’s sector lead for tech & innovation, healthcare & life sciences. For more information and to discuss your strategy in China’s knowledge economy contact Elinor at Elinor.Greenhouse@cbbc.org.

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Protecting your trade mark and the distinctive signs and external appearance of your products in China should be one of the first and most crucial steps taken by any company aiming to develop its business or sell its products in China.

Unfortunately, the protection and registration of those assets are often overlooked by foreign companies when facing the Chinese market, who proceed unaware of how a lack of proper legal protection of their distinctive signs may define the success or failure of their business.

A strong trade mark can be instrumental in winning new customers when establishing a brand in China. You invest time and money into building the reputation of your company, so it would be very damaging to your business if someone else began using your name and/or brand to sell their own products or services.

How to register your trademark or other intellectual property rights in China

In China, a trademark can be registered through the ‘national’ or ‘international’ system and can only be effectively protected in China once it has been registered. Due to the particularities of the Chinese intellectual property system, it is advised to register a trademark in China following the national system, i.e., filing an application to register your trademark in China directly before the China Intellectual Property Administration (CNIPA).

Many entities, including CBBC, offer information about protecting and registering your IPR in China. However, when it comes to registering your trademark in China, it is highly advised to obtain professional assistance. There are certain technical details and particularities for which a comprehensive understanding of the Chinese intellectual property system is required, so professional advice from a law firm or intellectual property agency is essential to protect your assets and rights.

Bad-faith trademark registrations can limit a foreign company’s freedom to operate by restricting its ability to enter the Chinese market

Nevertheless, in certain scenarios, trademark registration may not be enough to protect the features that characterise your product or services. It may be the case that certain technical details of your product are unique and represent its main value, or perhaps your product has gained some of its reputation and recognition in the market due to certain specific details of its external appearance.

All those aspects need to be taken into account and can also be protected by means of intellectual property protection tools, such as patents, designs or trade secrets. For that reason, a case-by-case preliminary analysis is essential to define a comprehensive protection strategy for the main aspects of your product or service.

Common obstacles and potential scenarios when protecting your IPR in China

Once you have decided to start the process of registering a trademark in China, it is common to come across similar or identical trademarks already registered by other companies.

As China uses a first-to-file system, many SMEs are caught out because they fail to register their trademark in China, and then when they want to do business here, they find that their trademark has already been granted to a Chinese company. Very often, the Chinese company, in these cases, registers the mark with the intention of selling it back to the foreign company at an inflated price. These tactical trademark registrations are commonly called bad-faith registrations. They can limit a foreign company’s freedom to operate by restricting its ability to enter the Chinese market, or even to source goods from China because the Chinese trademark holder is able to intercept goods bearing the trademark at Chinese customs.

The only tried and tested way to prevent this from happening is to anticipate bad faith applications by protecting (registering) your trademark in China as soon as possible. Nevertheless, if your company is confronted with a situation in which somebody else has already registered your desired trademark in China, there may still be ways to contend it. In that case, it may be necessary to initiate additional specific actions with the China Intellectual Property Office with the aim of either cancelling or invalidating the preemptive registration or negotiating with the registrant.

How to defend and enforce your IPR once registered in China

Finally, once your trademark or other IPR are successfully registered in China and you are using them in the market to promote your products or services, there may also be third companies who, in an attempt to take advantage of the popularity or recognition of the trademark, copy it or use it to commercialise the same or similar products.

These behaviours may cause confusion in the market, casting doubt on the origin and authenticity of both your goods and the third party’s goods. This situation usually represents an infringement of the rights of the trademark holder, harming its interests. Consequently, it is important to tackle infringing activities as soon as possible and enforce the trademark holder’s rights by means of the legal tools provided by intellectual property regulations.

This potential scenario of the infringement of trademark rights is usually mistakenly perceived by foreign companies as one in which you cannot do anything to protect your products and your rights in the market. This myth is enshrined in the expression, “in China, you cannot do anything if someone copies you”, which is still very present in many foreign companies’ mindsets while, in fact, that perception is far away from reality and the actual actions that can be taken to tackle those infringing activities and the infringers itself are numerous.

The professional advice is to analyse and define a strategy on how to act against IPR infringers. However, in previous cases, if you are solid and persistent in enforcing your rights and defending the authenticity of your products, market opportunities can also grow proportionally, and that often comes accompanied by increased recognition and popularity of the brand and products among the consumers.

This article is part of a series on exporting to China. See all the articles in the series below.

Part 1: How to conduct market research
Part 2: Protecting your trade mark

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The electric vehicle (EV) sector in China, as elsewhere, has benefitted from government support in its early phase as an up-and-coming green industry. The government has been subsidising producers of EVs for public transport, taxis and the consumer market since 2009. Moreover, EV consumers in China have received purchase subsidies from the government for a number of years.

More than 200 billion RMB (US$28 billion) was spent on EV subsidies and tax breaks in China over the 2009-2022 period. In 2022, the country sold more than 6 million EVs, accounting for half of all sales globally.

As the market has matured, government support and subsidies have declined. Purchase subsidies for EV consumers were phased out at the end of 2022. And, according to information gleaned by China Dialogue from an internal industry meeting, it is likely that other subsidies for EV producers, such as tax breaks, will also be phased out.

Can China maintain its frenetic pace of transport electrification as subsidies disappear? And will the rate of carbon reduction in the sector be affected?

Subsidies have accelerated transport towards carbon peaking

As of the end of 2022, carbon emissions from transport accounted for about 10% of China’s total carbon emissions, making it the third largest source after the power sector and manufacturing. The major share of those transport emissions came from road traffic. Electrification has a significant part to play in reducing road transport emissions and enabling peak carbon to come as soon as possible.

China needs to meet domestic demand for new cars with EVs, making sure they capture the new market, while also accelerating the EV substitution of conventional combustion vehicles on the existing market. To this end, a comprehensive set of financial support policies have been rolled out.

At a national level, China uses exemptions on consumption tax to help lower production costs for EVs and fuel cell vehicles. (In China, consumption tax is payable by producers of luxury and environmentally unfriendly goods, including cigarettes and cars). At the same time, consumers have been spurred with purchase subsidies and relief from vehicle purchase tax. China also exempts car owners from vehicle and vessel tax, while providing infrastructural support to optimise conditions for EV usage.

Meanwhile, regional administrations can offer localised subsidies and other incentives to businesses and consumers, complementing central government support and making EV ownership even more attractive. The municipal government in Chengdu, for example, which wants 800,000 EVs on the road by 2025, awards up to 50 million RMB (£5.5 million) to any carmaker that develops and brings a new EV model to market, and also gives individual consumers 8,000 RMB (£890) for acquiring an EV.

How are subsidies being phased out?

The EV industry and market have grown rapidly in China, with policy backing, and for eight years now the country has ranked number one in the world for both production and sales. EV ownership in China at the end of 2022 reached 13.1 million units, accounting for more than half of the global total.

As the market has developed, there has been a winding down of incentives.

One of the best-known was the vehicle-purchase subsidy for EVs, particularly for private buyers. Funded by the state, the policy gave consumers a 4,800 RMB (£530) discount on the cost of a PHEV and a maximum 12,600 RMB (£1,400) on a BEV, enabling them to afford EVs that met the policy criteria.

In 2015, the Ministry of Finance announced that subsidies for models other than fuel-cell vehicles would be reduced year by year, and in 2019 the end was declared on subsidies for BEV passenger vehicles with a range of less than 250km. A further announcement in 2020 specified another reduction, and the subsidy was fully withdrawn at the end of 2022, after 13 years.

Support in the form of purchase-tax exemptions has also tailed off, having been extended three times since launching on 1 September 2014. Under the terms of the most recent of those extensions, the tax-free allowance for an electric passenger car purchased between 1 January 2024 and 31 December 2025 is a maximum of 30,000 RMB (£3,320). For a vehicle bought between 1 January 2026 and 31 December 2027, purchase tax will be levied at 50%, with a maximum allowance of 15,000 RMB (£1,660).

The withdrawal of vehicle-purchase subsidies and phasing out of purchase-tax incentives raises costs for buyers, which could result in higher prices for EVs coming onto the market, deterring consumers.

In fact, some car companies were facing losses even before subsidies were withdrawn. Corporate earnings reports show that most Chinese EV brands have failed to achieve profitability, having relied on the major technology companies and traditional auto manufacturing to establish themselves. Among Chinese carmakers solely selling EVs into the domestic market, BYD is the only one making an annual profit.

Investment in R&D and fixed assets is the main reason for car company losses. As one report points out, EVs require much higher technology R&D investment than conventional vehicles. At a scale of 400,000 vehicles, for example, EV makers invest more than twice as much as producers of conventional cars. Fluctuating prices for battery materials, the rising price of traction batteries and the tight supply of chips also add to the pressure on EV makers.

What determines the phasing out of subsidies?

EV firms may not be profitable as yet, but this is not the key criterion for deciding on the timing for phasing out incentives. A recent article by the lead specialist at China Automotive Technology & Research Center (CATARC), Liu Bin, lists eight key factors affecting the timing for withdrawing vehicle-purchase tax incentives: the scale of the EV market as a share of new car sales; the reaching of price parity between EVs and conventional vehicles; the degree of consumer acceptance; the industry’s stage of development; the government’s financial situation; requirements for environmental protection; the withdrawal of support policies abroad; and the need for domestic economic stimulus.

According to data from the Ministry of Commerce, the share of EVs as a fraction of new car sales increased from one-eighth in 2021 to one-quarter in 2022. Addressing the 2022-2023 annual conference of the China Clean Transportation Partnership (CCTP), Liu Bin said: “It is generally forecast to be over 30% this year and around 40% in 2025. Looked at this way, the gradual withdrawal of vehicle-purchase-tax incentives should be considered without delay.”

In terms of full life-cycle cost of ownership, the gap between EVs and conventional vehicles is shrinking. A report from the International Council on Clean Transportation (ICCT), released in 2021, analysed eight EVs compared with conventional vehicles. It found that lifetime costs for only one of the EVs were on par with those of conventional vehicles in 2019. For the model with the largest gap, the cost of ownership was around £4,700 higher. However, by 2030 lifetime costs for the four BEVs among the eight were predicted to be £4,700-£6,200 lower than that for conventional vehicles. While costs for the other four, which were PHEVs, essentially matched those of conventional vehicles.

Regarding market development, the scale of the EV market will gradually stabilise, with technology and products becoming basically mature and market competition being relatively intense, predicted Liu Bin in his article. Firms will focus more on improving efficiency, reducing costs and seeking competitive differentiation. Liu Bin believes that policy should give more ground to the market at the current stage, allowing incentives to be steadily withdrawn.

However, he also suggested that compared with the scenario of restoring a 10% levy, maintaining vehicle purchase tax incentives beyond 2023 will benefit EV sales to the tune of around 1.3-2.6 million units per year. Continuing to offer EV purchase-tax incentives will significantly accelerate electrification of the transport sector, he wrote. It will also bring forward, from 2030 to 2025, achievement of the 40% target for sales of new-energy-based and clean-energy-powered transportation affirmed in China’s “Action plan for carbon peaking by 2030”, he noted.

What comes next?

“China is still providing support for EVs in terms of policy, but the policy is shifting from carrot to stick”, ICCT researcher Chu Yidan told China Dialogue.

Since 2018, China has operated a “dual-credit” scheme for makers of passenger cars. This involves parallel sets of credits determined by “average fuel consumption” levels and output of “new energy vehicles” (NEVs). Firms that meet the benchmarks are awarded positive credits, while those that fail to receive negative credits. One way for firms to offset negative scores and reach zero is by buying NEV credits from other companies. Those that fail to get to zero have to submit their offset plans to the Ministry of Industry and Information within a specified period, and realise those plans. Otherwise, the offending company is subject to penalties, including suspension from producing and selling high-fuel-consumption products, and from expanding production capacity. To meet benchmarks, carmakers have to produce more, cleaner, and better (having a greater range, for example) EVs. By tightening its policies in this way, China is accelerating its transition towards electrification.

From the corporate perspective, Liu Bin spoke at the CCTP conference about how reducing the green premium on the price of EVs is the key to achieving the transition to zero-emissions vehicles. Only by speeding up cost reductions can stakeholders in the market be lastingly incentivised to drive the transition to clean transportation.

Cost reduction begins with technology upgrading and product differentiation. “Apple phones replaced Nokias because they added new features that won favour with consumers”, says Liu Bin. “New features brought in with EVs include functions for assisted driving and smart cockpits, which also encourage consumers to buy them. If added features do not attract buyer support, however, then the increased costs become a drag on sales instead.” Internal management and strategy also become key factors for a company in reducing costs. Carmakers should consider key nodes in policy development and the changing costs for different models, and determine their targets for profit, production and sales accordingly.

Municipalities may also manage to continue supporting new EV development by providing subsidies and tax incentives in lieu of central government. According to He Hui, project director at ICCT China, there are a range of financial and non-financial incentives that cities can exploit. These include exclusive parking spaces and ultra-low- or zero-emission zones; privileged right-of-way or road use; convenient charging facilities; and reduced or exempted service fees for parking and charging. These can strongly incentivise development of EVs and spur consumer interest in buying the vehicles, He added.

This article was originally published on China Dialogue with the title “Life After Subsidies for China’s EVs” and has been reproduced under the Creative Commons BY NC ND licence.

The post Can China’s EV market thrive without subsidies? appeared first on Focus - China Britain Business Council.

China’s youth unemployment rate rose to a record high of 20.8% in May 2023, breaking the previous record high of 20.4% recorded in April. Over 11.5 million students are set to graduate in June, and many are likely to find themselves struggling to secure stable and fulfilling employment, leading to a growing sense of disillusionment.

China’s slower-than-expected post-Covid economic recovery has created a challenging environment for job seekers. Industries like education and real estate, which were once reliable sources of employment, have been curbed by government regulation, while emerging sectors like AI have yet to reach their full potential. This has left many graduates with limited options and a mismatch between their skills and the demands of the job market.

The Chinese government has responded to the problem by announcing subsidies for companies that hire unemployed graduates and by setting targets for state-owned enterprises to hire trainees. However, it has also criticised recent graduates as “self-indulgent” and emphasised the need to occasionally seek jobs that are below their expectations.

Economic factors aside, rising university enrolment rates are also thought to be contributing to high rates of youth unemployment by lowering the value of a degree. According to the Ministry of Education, the higher education enrolment rate hit 57.8% in 2021, compared to 30% in 2012.

Some have also criticised the universities themselves, arguing that they have failed to adapt curricula to meet the evolving needs of the job market. This disconnect between educational institutions and the demands of employers has resulted in graduates possessing skills that are not in high demand, further widening the gap between education and employment.

Chinese universities will need to follow in the footsteps of universities in the West – which have faced a similar problem with oversupply in recent years – by shifting the focus to practical, hands-on courses and bolstering career services. This could represent an opportunity for UK universities engaging in transnational education in China if they can create industry partnerships and tailor programmes that meet the needs of employers.

As a result, Chinese graduates are being forced to recalibrate their expectations. Chinese social media platforms like Weibo and Xiaohongshu are full of stories of graduates who have taken jobs below their skill level after months of failed job applications, for example, delivering for one of China’s many food delivery platforms. Others have resorted to “knowledge street vending,” setting up street stalls hawking services like copywriting, legal advice and psychological counselling, Sixth Tone recently reported.

Some have welcomed the reduced pressure that comes with more practical roles, viewing it as a chance to escape China’s notoriously punishing office hours. In recent years, many young Chinese people have been rejecting the high expectations placed on them by society, instead choosing to ‘lie flat’, i.e., not overworking, being content with more attainable achievements and taking time for themselves.

Nevertheless, the pressure is on to fix the youth unemployment situation, as the consequences extend beyond the individual and have broader implications for Chinese society. This cohort contributes heavily to consumer spending, a key driver of China’s post-Covid economic recovery.

However, perhaps more importantly for the Chinese government, unemployment among graduates can lead to reduced social mobility, increased social inequalities, and potential social unrest. The frustration and disillusionment experienced by unemployed graduates have already been evident through viral images and stories shared on social media platforms. The Chinese government must address these concerns to ensure stability and progress for the country’s future.

The post Why are so many Chinese graduates struggling to find jobs? appeared first on Focus - China Britain Business Council.

It is no secret that China’s games industry is colossal, but there’s also a specific market within the games industry that is becoming too big to be ignored: e-sports. E-sports is the competitive element of video gaming, with amateur and professional competitions played in various games and genres. Since e-sports requires a player vs player (PVP) element, certain genres of game, mainly those with competitive multiplayer elements, are far more suited to having thriving e-sports scenes.

Some of the most popular e-sports games in China include the famous PC multiplayer online battle arena (MOBA) League of Legends (LoL), mobile-based Honour of Kings, and the mobile battle royale Game for Peace, which is the official Chinese version of PlayerUnknown’s Battlegrounds (PUBG). Tencent now operates all three of these games (Riot Games, which developed and published LoL in 2009, has been fully owned by Tencent since 2015), so they have a clear incentive to invest in the growth of the e-sports industry in China.

To give a little context on these game genres, MOBA games tend to pit two teams of five players against each other in matches that last an average of around 30 minutes. Battle royales, on the other hand, include up to 100 players in direct combat, and teams of four fight to eliminate one another until only one team remains. If you’ve heard of Fortnite, then you’ve heard of a battle royale game, with Apex Legends and Call of Duty: Warzone being other popular options.

For an idea of how popular Honour of Kings is in China, data taken from China’s five largest live streaming websites showed that in 2021, a monthly average of 781,000 people streamed Honour of Kings gameplay, while an average of 1.8 million daily comments were made on the game’s broadcasts.

The development of e-sports in China

It is clear that the Chinese e-sports market is making waves, accounting for over a third of the global market. E-sports was first recognised by the Chinese government as an official competitive sport in 2003. However, this policy marked the start of a long and bumpy road for e-sports in the 2000s, with multiple policy u-turns and a lack of serious investment. That all changed in 2011 when Wang Sicong, son of the billionaire chairman of Wanda Group, took an interest. His investment in e-sports shifted perceptions of the industry in China, and soon investors were flooding in after him, sensing there was money to be made. It was in this period that many of the prominent e-sports teams in China were founded, including Edward Gaming (EDG) – winners of the League of Legends World Championships in 2021 – back in 2013.

Naturally, since e-sports needs video games to exist, the huge growth in the Chinese gaming industry during this period was also vital in fuelling the fires of e-sports and increasing its popularity. More major breakthroughs came in the late 2010s, largely in the form of further government support to match the substantial financial growth the sector was seeing, with e-sports becoming a university major available for study at over 50 Chinese universities in 2017, and e-sports operators and players both being listed as official professions in China in 2019.

A gamer playing League of Legends

Sizing up China’s e-sports market

Today, the most recent figures value China’s e-sports industry at over £17 billion in 2022. This figure represents a 14% drop from last year, but this doesn’t worry those familiar with the industry. Elaine, a professional e-sports broadcast host and a lecturer at Communication University of China Nanjing’s School of E-sports, puts this down to the pandemic-fuelled artificial, unsustainable growth that esports saw in 2020 and 2021. “People spent extra time at home, and gaming is incredibly accessible, especially mobile games, so more time and money invested on esports-related activities was completely normal. The decline last year also coincided with when the financial cost of two years living with the pandemic really began to hurt people, so consumption was down everywhere, regardless of sector,” she explains.

Despite this momentary dip, it’s clear to those in the industry that the growth in consumption in games, and therefore e-sports too, is only going to go one way: up. Many people point to the 2022 Asian Games, now scheduled to take place in Hangzhou in September 2023, as evidence of how much progress e-sports has made in recent years. For the first time on record, e-sports will feature as a medal event at the Asian Games, and China hosting such a historic event will not go unnoticed. Combine this with the return of other offline e-sports competitions and events now Covid measures have been relaxed, and 2023 is set to be a great year for e-sports in China.

Opportunities for international collaboration

The success of e-sports has not gone unnoticed by international businesses, and there are already huge levels of engagement with Chinese e-sports from companies outside of China. One well-known example of a British institution that’s seen success in China is Wolves. Primarily known in the UK for being a Premier League football team – aka the Wolverhampton Wanderers – Wolves have become associated with a different game in China. The club’s affiliated e-sports teams compete in some of the biggest leagues in the country. And they’re not alone: Paris Saint-Germain (PSG) sponsored Chinese e-sports team LGD Gaming in a move that saw the Chinese team rebranding to PSG.LGD.

Fan acquisition is a key driver of these moves – a fantastic way for brands and IPs to introduce themselves to an entirely new user base. This seems to have paid off so far for Wolves. On Weibo, one of China’s most widely used social media channels, Wolves’ football club account boasts nearly 650,000 followers, only less than the Premier League Big Six teams, Everton, and Leicester. However, their Honor of Kings account has over 3.3 million followers, so the football club’s profile in China is sure to continue growing.

E-sports is a natural area to expand into for football clubs or other similar IPs, for whom building the brand and gaining fans to boost their profile and viewership figures without necessarily making direct purchases is a valuable operation.

Still, for commercial brands, jumping blindly into e-sports isn’t necessarily a quick route to success, and thinking smart rather than being wooed by the numbers is key to finding a successful partnership in the e-sports sector.

Many of the most popular UK brands in China fit into the ‘premium’ category, including Burberry, Rolls Royce and Ted Baker. Yet the majority of e-sports fans in China are Gen Z students, meaning that they’re simply not the customer base that many British brands are targeting. This is where knowledge of the market is vital, as Elaine points out: “brands that focus on cheap mass consumption have the most to gain from traditional partnerships with the largest e-sports events, with KFC being a good example. Students who see a KFC advert during a broadcast of their favourite team may suddenly be inspired to get a takeaway, but what will they do if they see adverts for a car? It’s not relevant to them and they aren’t as likely to remember it, so you have to pick your market carefully”.

However, this is not to say that there are no opportunities for more upmarket brands. A potentially niche but smart partnership from Ferrari saw them sponsor an e-sports event for the NetEase game Fantasy Westward Journey. Interestingly, the game hasn’t garnered much attention outside of China – or even domestically – since it’s a massive multiplayer online role playing game (MMORPG), which means there is more focus on the game’s world and story than the competitive PVP aspect.

Ferrari’s partnership with NetEase game Fantasy Westward Journey

So why did Ferrari partner with a game like this? The answer lies entirely in the user base. Fantasy Westward Journey has been live since 2001, and in the 22 years since, has gathered an incredibly loyal fan base, with the key being that this is an age group that started playing games as early as the 2000s. The average user age of this game is much older than more recent e-sports-orientated games, and vitally, they are much more affluent. The players competing in e-sports events for this game aren’t young professionals looking for a cash reward, but those with already established careers who are looking for a feeling of victory and success that money can’t buy. A light show above the Chengdu skyline orchestrated by hundreds of airborne drones and an illuminated message around Guangzhou’s famous Canton Tower are examples of recent methods used to congratulate the winners, and it is through these kinds of events that premium brands can reach their target market.

The outlook for British brands in China’s e-sports market

Sponsoring e-sports events, teams and players, or directly purchasing advertisements during e-sports broadcasts, aren’t the only opportunity available for British brands looking to gain from this huge market. It’s important to note that e-sports is a large industry with a highly complex ecosystem, so there are multiple avenues that British institutions can go down. For example, the growth of e-sports-related majors within universities in China could provide opportunities for British educational institutions with similar offerings. Whether it be attracting Chinese students to these e-sports-related courses in the UK or directly partnering with Chinese universities to offer joint courses, there are many areas where partnerships can be forged outside of the more traditional sponsorships and advertisements.

Another entirely different example comes from ILOVEDUST, a top-class British digital design studio that has worked on multiple projects providing design services to Chinese organisations in the e-sports industry. John McCulloch from the studio stated, “When you look at the scale of the esports industry now in China, it’s amazing to see. With viewing figures comparable with the Premier League and the NBA, it’s natural that such a big industry brings opportunities to us as designers”. There is little doubt that as this industry continues to grow so will the opportunities for British organizations.

The key takeaway is that, first and foremost, the e-sports industry is here to stay. Despite a slight blip in 2022, the predicted growth of the industry is massive, and those involved are all hopeful about the future. An industry of this size naturally creates opportunities for British organisations, but it is important to focus on quality over quantity. A targeted, focused partnership with clear goals is vital to achieving success in what is already a competitive market, so whilst organisations should definitely be considering where opportunities may lie, they should also manage expectations and make sure their research is as thorough as possible, as only then can they leverage this hugely complex market to their advantage.

Call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out how CBBC’s market research and analysis services can provide you with the information you need to succeed in China.

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Over the last decade, laws governing the collection, storage, transfer and usage of data have become a cornerstone of the regulatory environment in many markets, including China. Indeed, with China as one of the chief sources of data created worldwide – by 2025, data from China is predicted to account for 27.8% of the total global data created that year – such laws have been among the most high-profile passed there in recent years, attracting attention and commentary from business, legal and administrative communities alike.

Data protection laws are applicable in a wide range of sectors, from e-commerce and the creative industries, to life sciences and healthcare. They are of particular relevance to the education sector though, where those providing services rely upon the accurate and timely collection of various types of data to ensure the quality, suitability, and safety of their offerings. For higher education institutions from the UK, the European Union’s General Data Protection Regulation (GDPR) is likely to be the most familiar. And while an understanding of the GDPR is, by itself, not sufficient to effectively operate within the China market, it remains a useful starting point due to certain similarities between its goals and practices and those of China’s own data protection laws. Succeeding in China generally requires a deeper comprehension of local requirements, however.

The evolution of China’s data protection regime

At the most fundamental level, there are three key laws covering data protection in Mainland China: the Cybersecurity Law (CSL), the Personal Information Protection Law (PIPL), and the Data Security Law (DSL) – all of which were passed in the years since 2017. Together, and alongside various other measures issued by the authorities, they lay out the demands on those handling different types of data. For higher education institutions, meeting these demands involves knowing the differences between Network Operators and Critical Infrastructure Information Operators; the importance of roles such as that of the Personal Information Handler, as well as how these roles can fit into existing institutional infrastructures; and the classification framework that splits data into three categories.

Cybersecurity Law

In China, the first major law regulating data was the Cybersecurity Law (CSL) in 2017, which, at the time, had a strong emphasis on national security. Since then, the focus has shifted towards data privacy and personal information. While this is partly due to the vagueness of the initial law – which included only superficial provisions regarding private data – growing consumer concerns over data theft and insufficient privacy protection have added pressure on Chinese policymakers to create a more coherent and comprehensive data protection regime.

The CSL created strong incentives for the Chinese government to establish clear standards for data collection and transfer. Thus, shortly after the CSL came into force, China published its first Personal Information Security Specification, which defined personal data as including biometric information, personal addresses and bank records. The specification was updated in 2020, adding further safeguards against the unauthorised collection of private data: for example by allowing users to opt-out from specific online functions.

Personal Informational Protection Law

Despite the regulatory activism sparked by the CSL in 2017, the legal foundations for individual data protection remained shaky and scattered across several laws. One particular problem was the lack of a uniform definition of the individual’s right to his or her own data, which was compounded by the fact that the exact nature of what constitutes a violation of privacy rules was stipulated in four different laws: the Criminal Law, the General Principles of Civil Law, the CSL, and the new Civil Code.

The passage of the Personal Information Protection Law (PIPL) in August 2021 marked an important milestone as it provided a single, systematic framework for individual data protection. The many similarities between the GDPR and the PIPL have earned the latter the moniker ‘China’s GDPR’, which, despite differences between the two, has brought China’s data protection regime more in line with international standards.

More importantly, the PIPL has shifted the legal focus of China’s data rules away from security and instead in a more consumer– and commercial-orientated direction. This shift has not only allowed for a more open and pragmatic discussion about the challenges any new data regime faces in a continually evolving technological environment, but also raised the possibility for foreign organisations – such as UK higher education institutions – to participate more actively in future legislative processes; an input which was mostly ignored during the early stages of China’s cyber-related rule-making.

Data Security Law

Nonetheless, national security remains important. The Data Security Law (DSL), which came into effect in June 2021, is a strong reminder of this. The DSL affirms that the Chinese Administration for Cyberspace (CAC), a government agency, remains in charge of all data-related regulations. The law also highlights the importance of the two areas which particularly affect foreign institutions: how to manage sensitive personal information and how to conduct cross-border data transfers of such information.

Both above-mentioned issues are subject to evolving regulatory frameworks which have sprung up following the implementation of the CSL in 2017. Sensitive personal information – including biometrical, health, and financial data – is defined by the Personal Information Security Specification. Data which falls into this category is subject to specific rules governing data storage, requirements in case of breaches and leaks, and data transfers

The CBBC View

Success in China is often best rooted in the knowledge that its data protection laws, while complex and at times fragmented, and while perhaps somewhat unfamiliar in comparison with the legal regimes in place in other markets, continue to be refined, deepened and expanded upon. Crucially, there are solutions to the challenges that China’s data protection laws present, and they are solutions that start with a thorough and up-to-date understanding of the history, development, and application of the laws themselves.

Looking ahead to 2023 and beyond, the China opportunity remains vast. More than ever for UK higher education institutions, it an opportunity that they are well placed to grasp as the country continues to build and modernise its data protection infrastructure, while at the same time continuing to refine and adapt their services alongside these changes.

The information in this article is extracted from “China’s Data Protection Laws and What They Mean for The UK’s Higher Education Sector”, and is the first in a series of reports available exclusively to subscribers of CBBC’s Comprehensive Higher Education Strategy Service (CHESS).

Click here to read more about the benefits of CHESS and how to sign up

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The UK is home to some of the world’s leading and most widely respected educational institutions, and this soft power advantage has led the country to become a top study destination for students from all over the world.

With as many as 144,000 Chinese students currently pursuing higher education in the UK (32% of the total number of international students), they have become one of the country’s largest international student cohorts, making significant contributions to the higher education sector and regional economies. Speaking to Times Higher Education, Chris Skidmore MP, who is leading an International Education Commission to draw up goals and strategies for the sector, said that international students are “vital to the social and economic success of the UK and ensuring we remain an outwardly focused and engaging nation that remains relevant to the modern international world”.

The importance of Chinese students to the UK’s education sector is unlikely to change any time soon, but a number of new challenges – from the rising quality of Chinese universities to the tense geopolitical environment – mean that educational institutions need to consider how to make sure that their strategies are sustainable.

The current outlook for UK-China education partnerships

Thomas Clayburn, CBBC’s Education Sector Lead, defines sustainable UK-China education strategies as long-term partnerships that produce mutually beneficial outcomes. The goal of these partnerships should be to benefit students whether they are studying in the UK or China (notably in terms of employability), to produce research that is globally beneficial and to strengthen the overall environment of UK-China collaboration.

In recent years, UK universities have been looking for ways to diversify their transnational education (TNE) efforts in China. In the past, many universities pursued ‘2+2’ or ‘2+1’ style partnerships with Chinese universities, where the students study for a couple of years in China before moving to the UK to complete their degree. Today, many universities have moved to fully in-country programmes, a model that has been further entrenched by the Covid-19 pandemic. Nevertheless, the numbers show that the switch to this model has not reduced the number of Chinese students coming to the UK, and Clayburn points out that students who have studied in a TNE programme in-country still have a greater awareness of the UK education market and may be more likely to come to the UK to pursue a postgraduate degree. 

The challenges facing UK-China education partnerships

Although the conditions for UK-China education partnerships are positive, there are some challenges that UK institutions should bear in mind.

In recent years, Chinese universities have been closing the gap with UK universities in terms of quality. In the latest Times Higher Education World University Ranking, released on 12 October 2022, China now has an unprecedented seven universities in the top 100, up from only two just six years ago. This could tempt more Chinese students to study in-country, especially with the prestige offered by a degree from the country’s top universities, such as Tsinghua (now ranked 16^th in the THE ranking, the highest in Asia).

The challenges facing the transnational education sector in China, while real and potentially affecting the viability of the China market for some UK institutions, are far from insurmountable.

Moreover, Chinese students are becoming increasingly savvy and selective in their study abroad plans. It is no longer enough to have studied for any degree in the UK; students are looking for programmes with clear utility that translate into a career advantage. An increasing number of mature students are looking to international postgraduate education to upskill in fields in which they have several years of employment experience. Universities will need to bear this in mind when marketing existing programmes or designing new ones.

Finally, it is no surprise that the political sensitivity of the conversation around China in recent years has filtered into the education field. There has been increased scrutiny on UK-China research collaborations, especially in fields covered by the National Security and Investment (NSI) Act, such as AI, communications and satellite and space technologies. Over the past few years, five research collaborations – including centres at Imperial College and the University of Manchester – have closed due to their links with Chinese aerospace or defence companies.

However, Clayburn notes that a move away from STEM programmes towards the creative arts could be beneficial for many UK universities and that Chinese students will be drawn in by the strength of the UK’s creative industries in fields like fashion and design.

The challenges mentioned above may drive the diversification of the UK education sector’s relationship with China, which will ultimately be beneficial. This is especially true for institutions that sit further down the league tables or don’t have a famous name to fall back on. Many post-1992 universities – not traditionally the focus of Chinese student applications – have found success with TNE initiatives in China, and the appetite for TNE in China is likely to continue.

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