Report on the Development ofChinese Enterprises in the UK

$POUFOUT $IBJSNBO'TMFTTBHF01 &YFDVUJWF4VNNBSZ03 $IBQUFS1:LBOETDBQFPG$IJOFTF$PNQBOJFTJOUIF6K13 %FNPHSBQIJD)JHIMJHIUTPG$PNQBOJFT4VSWFZFE1FPQMFBOE(PWFSOBODF FJOBODJBM1FSGPSNBODFPG$IJOFTF$PNQBOJFTJOUIF6K7JFXTPOUIF6K'TBVTJOFTT&OWJSPONFOU $IBQUFS2:)JHI-2VBMJUZ%FWFMPQNFOU41 $IBQUFS3:MVUVBMMZBFOFDJBM$PMMBCPSBUJPO59 $IBQUFS4:AQQFOEJY:FVMM4VSWFZ2VFTUJPOTBOE3FTQPOTFT75 Chairman’sMessage Ongoingeconomicandgeopoliticalchallengeshavemeantthat2023hasbeenachallengingyearforChinaandtheUK.Despitethesechallenges,thepotentialforcollaborationremains.Thisyear'srepokdemonstratesthebenefitsoffosteringacloserandmutuallybeneficialrelationshipbetweentheUKandChinatocreatehigh-qualitydevelopmentoppokunities. ChinaandtheUKhavebeenaffectedbytheslowestglobaleconomicgrowththisyear(apakfromCOVID-impacted2020)sincetheaftermathofthe2008-2009financialcrisis(1).HighinterestrateswilllikelycontinuetoimpactfuturegrowthandhavesignificantlyescalatedtheoperationalcostsofChinesecompaniesoperatingintheUK.TheUK'schallenginglabourmarkethasalsoincreasedthedifficultyofrecruitinglocaltalent.Amidtheseunprecedentedchallenges,collaborationbetweenourtwocountriesremainscrucial.Whilstwehavedifferencesinopinionsinsomeareas,wemustseektoengageindialoguethatwouldbenefitbothsides. Therehavebeenencouragingdevelopmentsingovern- mentpolicyonbuildingapragmaticandconstructive relationshipbetweenChinaandtheUK.InMarch2023,theUKgovernment’sIntegratedReviewRefresh2023(2)proposedtoengageconstructivelywithChinatobuildbettercooperationandunderstandingbetweenthetwocountriesinlinewiththeUK'scorenationalinterests.Therecenthigh-levelmeetingsbetweenourtwocountries-suchasthenBritishForeignSecretaQJamesCleverly'svisittoChinainAugust2023-havealsohelpedstrengthentheseties.InanofficialspeechthisAprilatMansionHouseintheCityofLondon,JamesCleverlyoutlinedtheUKgovernment'spositiononChina:“Astable,prosperousandpeacefulChinaisgoodforBritainandtheworld.”ThisSeptember,ChinesePremierLiQiangandBritishPrimeMinisterSunakalsometattheG20Summittoenhancecooperationandboostcollaborationintrade,investment,greentechandsustainabledevelopment. Inthiscontext,Ipresentour2023RepokontheDevel-opmentofChineseEnterprisesintheUK.Iampleasedtoseethatdespitechallenges,mostChineseenterprisesremainresilientintheUK'sbusinessenvironmentandarereadytoincreasetheireconomicandsocialcontribu- (1)NIESR,‘GlobalEconomicOutlook:Summer2023’,9August2023 (2)GovUK,‘IntegratedReviewRefresh2023:Respondingtoamorecontestedandvolatileworld’,13March2023 tionstotheUK.Forexample,morethan80%ofenter-prisessuseyedrepokedstableorincreasedrevenueandprofitbeforetaxinthe2022-2023financialyear.Inlinewiththeirlong-termfinancialcommitmenttotheUKabouttwo-thirdsofsuseyedcompaniesalsoreinvestedtheirprofitsintheUK.Thenumberofcom-paniesthatincreasedtheiremployeecounthasalsorisen7%overthepastfouryears,demonstratinganincreasedtrendtowardslocalhiringandrecruitmentintheUK.ThisyearalsosawanincreasedappetiteforinvestmentoutsideofLondonandtheSouthEast,suppokingChinesecompanies'broadersocialcontribu-tiontothewiderUKecosystemandunderscoringtheirlong-termcommitmenttosuppokingemploymentanddrivinggrowthacrosstheUK'sregions. In2023,theguidingprincipleofhigh-qualitydevelop-menthasbecomeincreasinglyimpokant.Inlinewiththesegoals,ChinesecompaniesalsoemphasisedtheircommitmenttomeetingESGstandards,developingintelligentanddata-drivensolutionsthatbenefitcom-panies,customersandcommunitiesbyleveragingtheUK'sstrongcapabilitiesinareassuchasgreenfinance. MutuallybeneficialcollaborationisafukhercrucialareaofbusinessstrategyforChinesecompanieswithUKoperations.CollaborationintheeducationandR&Dfieldsisakeyfocusarea,whileUK-ChinacollaborationintheenergysectorisdrivinginnovationandgrowthtoprovidefukherbenefitsforUKconsumersandmarkets.ChinesecompaniesarealsointerestedincollaboratingwithUKorganisationsandinvestinginotherregionstosuppokmutualgrowthandtheUK'sLevellingUpagenda,especiallyinenergysectorsandsustainablefinance.SustainablefinancialsesicesarebecomingakeyareaofUK-Chinacollaborationinlinewiththeirbroadergreendevelopmentambitions,andalignmentinemergingareas,suchasAI,willenhancethecentralgoalofimprovingmutualunderstanding.AIisalsoafast-growingareawherecollaborationisneededtoensureitssafety.ThisOctober,China'svice-ministerofscienceandtechnologyWuZhaohuijoinedhisUSandUKcounterpaksonstageattheUK'sAISafetySummit,withallthreecountriesgoingontosignthelandmark BletchleyDeclaration.ThisisjustoneexampleofhowUK-Chinamutuallybeneficialcollaborationcansuppokbothourcountriesinmanagingemergingtechnologies-bothintermsofrisksandoppokunities. AlthoughChineseenterpriseshavefacedchallengesandrisksintheUK,theystillhavegreatpotentialtoexpandtheirbusinessesandmakefukherinvestmentsintheUK.Chineseenterprisescanthereforecontinuetobuildbridgesandpromoteamorecollaborativeandunder-standingenvironmentbyactivelyengagingwithlocalstakeholderssuchasgovernments,businesses,andcommunities,contributingtothesharedprosperityofourtwonations. ExecutiveSummaQ 5.25% TheBankofEngland'sbenchmarkinterestratereached5.25%thisJul