China stimulus, Chamber cloud win and old dry uncle Keith

Welcome to China in 5, from the British Chamber of Commerce in China.

Each week, we bring you up to speed with what’s caught our eye in the China-sphere in five(ish) minutes.?Grab a coffee, take a break, and dive in!

China calls for greater stimulus

What’s the background? China's economy, the second largest in the world, is currently grappling with slow growth driven by a prolonged real estate crisis and declining consumer confidence. Despite expectations of a robust recovery after the COVID-19, economic indicators such as retail sales and property investments have shown persistent sluggishness. Economists and analysts are now calling for stronger fiscal interventions, including issuing trillions in government bonds and stabilising the real estate market through more direct support. However, Beijing remains cautious about overspending, preferring gradual and targeted measures over broader stimulus seen in developed markets.

Fact 1: Goldman Sachs has lowered China's projected GDP growth for 2024 from 4.9% to 4.7%, reflecting delayed impacts of fiscal policy and recent data.

Fact 2: China's real estate sector continues to slump, with related investment down by more than 10% for the first eight months of 2024.

Fact 3: There is a growing call for increased government bond financing to stimulate infrastructure investment and alleviate the fiscal burdens at the local level.

As China’s economic landscape shifts, it is crucial for businesses to recognise both the challenges and opportunities that lie ahead. For UK companies invested in China, this means adjusting expectations while also finding opportunities in sectors such as technology, advanced manufacturing, and green finance, which remain priorities for Beijing. At the same time, the ongoing property crisis, while significant, may present openings for firms in real estate services and investment. However, restoring stability and confidence through clear policy direction is critical for both domestic and foreign businesses to navigate these uncertain times. To better understand how British businesses are faring in this economic environment, we have just opened our annual Business Sentiment Survey for responses. We encourage all British businesses operating in China to participate and share their experiences. Please find the link here to contribute to this vital conversation. Rachel Tsang - Managing Director

China opens up medical sector, manufacturing to foreign ownership in growth push.

What’s the background? China’s latest update to its “negative list” marks a further change in foreign ownership rules, allowing greater access for international investors in sectors previously restricted. Notably, foreign ownership limitations on cloud services and other value-added telecom services have been lifted in major regions, including Beijing and Shanghai. This move aims to attract foreign investment amidst declining economic activity.

Fact 1: The updated negative list reduces the sectors closed to foreign investment from 31 to 29, facilitating greater foreign participation.

Fact 2: Foreign ownership restrictions on cloud services and value-added telecom services are lifted in key regions, including Beijing and Shanghai.

Fact 3: Wholly foreign-owned hospitals are now permitted in major cities, signalling a large opening in the healthcare sector.

The financial services sector is a vital cog in the UK economy and when meeting China teams this year, it became clear that foreign ownership restrictions on cloud services was a large issue. The removal of these restrictions is further indication of the effectiveness of Chamber advocacy, with this being a major part of this year’s Position Paper. This change not only aligns with global trends towards digitalisation but also offers British companies a vital opportunity to engage in China’s burgeoning tech landscape. Harry Bell - Policy and Advocacy Manager

Coffee break read: Huawei’s laptop and China’s quest for tech self-sufficiency

Why we like it: The piece covers Huawei’s Qingyun L540 laptop, suggesting it embodies China’s ongoing drive towards tech self-sufficiency, particularly in the face of US export controls. With a domestically designed processor and Chinese-made software, this laptop is the poster child for the country’s localisation efforts, or “Xinchuang.” It’s being widely adopted by state bodies across China, highlighting Beijing's determination to reduce reliance on foreign tech. As tensions with the US escalate, China is doubling down on its ambitions to develop an independent tech ecosystem. This laptop, featuring a mix of domestic and foreign components, underscores both the progress made and the challenges ahead for China in building a truly autonomous supply chain.

Podcast of the Week: Autocracy, Exams and Stagnation: Imperial China’s Modern Legacy

Why we like it: Hailed by host Jordan Schneider as “one of the great China books of the decade,” Yasheng Huang’s The Rise and Fall of the EAST: How Exams, Autocracy, Stability and Technology Brought China Success and Why They Might Lead to Its Decline is a fascinating dive into the keju system of imperial civil service examinations. Though seemingly devoid of any link to today’s China, Huang argues that the keju system’s rewarding of conformity and discouragement of innovation has begun to take hold in modern China. This podcast – the first in a two-part series – sets the historical scene for the book, as well as a deeper dive into some of the statistical methods used by Huang in measuring social mobility in imperial China.

...and finally...

The death of "Old dry uncle Keith" - a British man known for his uncanny sandwiches - has Chinese netizens mourning. ITV News details how Keith's surge in popularity began after his wife started posting videos of him making sandwiches on Douyin, startling Chinese viewers. Although netizens were quick to make witty remarks regarding Keith's dry sandwiches, he fast became a loved sensation in the country. Keith, unfortunately, passed away due to bone cancer, which saw the hashtag the hashtag #DryUnclePassedAway garnering 170 million views and prompted over 26,000 discussions on Weibo. This story shows how someone simply going about his everyday life, making your average Monday morning breakfast with British ingredients, can amass such a loyal following.

Thanks for reading China in 5! For more information on the British Chamber's work and to check out our advocacy, knowledge, and community offerings, visit our website at britishchamber.cn .