MNI INTERVIEW: UK FDI To China To Buck Wider Slowdown

UK investment in China is expected to remain relatively resilient despite a broader slowdown in foreign direct investment inflows, supported by improving business confidence, growing opportunities in healthcare and innovation and renewed efforts to strengthen British-China economic ties, a senior UK business leader in China told MNI.

British firms' sentiment and investment intentions have improved alongside incremental progress in opening China's services sector, an area where UK companies retain significant competitive advantages, said Chris Torrens, chairman of the British Chamber of Commerce in China. Initiatives such as Shanghai's recent adjustments to rules governing foreign law firm representative offices, including measures to simplify the process for changing chief representatives, demonstrate Beijing's commitment to gradual liberalisation, he added. 

The resumption of high-level economic dialogue between London and Beijing, including the UK-China Economic and Financial Dialogue and the Joint Economic and Trade Commission, has also helped restore channels for addressing longstanding commercial issues, Torrens noted. The comments come as Beijing seeks to stabilise foreign investment. Vice Minister of Commerce Ling Ji told reporters on Monday that further opening of the services sector remains a priority for attracting foreign capital after China's actual use of foreign investment fell 8.6% y/y in January-May.

However, Torrens said policymakers need to focus on implementation as well as policy announcements. "The mechanisms are back, sentiment is improving, but implementation and concrete outcomes now matter more than dialogue," he said.

OUTBOUND INVESTMENT

British firms are also benefiting from growing Chinese outbound investment and overseas expansion, Torrens said. Local governments are encouraging that trend as they search for new sources of economic growth and tax revenue amid the prolonged downturn in the property sector, he noted.

At the same time, growing regulatory complexity and geopolitical uncertainty in Europe and North America are increasing demand for legal, financial, consulting and government-relations services, areas where British firms possess substantial international expertise. Despite those challenges, Europe and North America remain attractive destinations for Chinese companies because of their market size and profit potential, he added.

CHINESE INVESTMENT

Torrens also sees scope for the UK to attract greater levels of Chinese investment despite continuing political sensitivities surrounding national security and critical infrastructure.

Interest among Chinese companies has increased recently, particularly in automotive manufacturing, commercial vehicles, renewable energy and consumer-related sectors, he said. Some firms are evaluating the UK as a manufacturing base that could help them access markets in Europe and North America, where policymakers have increasingly sought to shield domestic industries from Chinese competition.

Torrens pointed to the partnership between Chinese automaker Chery and Nissan's Sunderland operation as an example of successful Chinese investment in the UK, contrasting it with controversies surrounding British Steel and the proposed Mingyang wind project. While debate over investment in sensitive sectors is likely to continue, significant opportunities remain in less strategically sensitive industries, particularly as Chinese companies seek platforms for international expansion, he said.