Data hack, FDI action plan, and piano lessons on the way out

Data hack, FDI action plan, and piano lessons on the way out

UK government accuses Chinese state-backed actor of electoral roll data hack

What’s the background? The UK government announced that a Chinese state-backed actor was behind a cyber-attack which accessed the data of 40 million voters on the UK electoral roll between 2014 and 2022. The announcement, which came in a joint statement with the US, has seen the UK sanction two Chinese individuals and one organisation in response, but it is yet to be seen whether the government will heed Tory backbencher calls for the country to be formally declared as a threat to Britain’s national security. It has been a leading story in the UK featured on the front page of multiple newspapers along with receiving coverage in the Chinese press.

Fact 1 The hack, denied by the Chinese embassy, comes following previous espionage allegations from both sides, with China having made accusations in January and allegations of a spy working on behalf of the Chinese in Parliament in 2023.

Fact 2 The Chinese Embassy refuted any claims of espionage in a strongly worded statement, calling sanctions “illegal” and suggesting it will take “necessary measures to resolutely protect its legitimate rights and interests”.

Fact 3 Prime Minister Rishi Sunak faced questions from Parliament's Liaison Committee following the announcement, where he suggested the UK had a robust strategy towards China, in which the country has taken significant measures to protect its interests.

The UK government announcing malicious cyber-activity by China in Britain is extremely alarming for British businesses in the country. The move comes after one of the post-COVID high points in the relationship, with British Chamber of Commerce members having met with Members of Parliament from both the Conservative and Labour parties last week to discuss key issues facing them here, with many conversations relating to genuine long-term issues facing bilateral trade. Any increased tensions at government level will likely have a negative impact on the business environment for British businesses in China at a vital juncture in the bilateral relationship between the countries, with the Chinese government pushing hard to attract foreign investment. Harry Bell, BritCham Policy and Advocacy Manager

Big week for boosting inward FDI

What's the background? In August last year, the State Council released the 24-Point Guideline to attract foreign investment, enhance the business environment, and encourage greater financial inflow, which was expected to be a game-changer. Recent days saw the release of a follow-up action plan that provides detailed measures on how exactly the guideline will be implemented. Besides this, a newly announced data flow regulation gave very specific criteria for personal and important data and details about the data negative list, which has been a long-desired action by foreign companies. The ongoing China Development Forum also aims to give a boost to business confidence, with a number of CEOs from major multinationals in town.

Fact 1 An assessment has found that more than 60% of the 59 policy measures in the 24-Point Guideline have either been implemented already, or have begun to be implemented.

Fact 2 New data policies just announced have confirmed that if a company collects and generates data through international trade, cross-border transportation, academic cooperation, transnational manufacturing, and marketing, they are exempted from the three compliance procedures, provided the data does not contain any PI or important data.

Fact 3 On the China Development Forum, the IMF head, Kristalina Georgieva, called for China to implement "a comprehensive package of pro-market reforms," saying China could grow considerably faster with reforms starting with sound macroeconomic fundamentals, and the additional growth would add $3.5 trillion to the Chinese economy.

These initiatives are essential steps towards improving the business environment and fostering mutual benefits for both Chinese and foreign enterprises. The new action plan in particular – coming out only half a year after the release of the 24-Point Guideline – tackled some of the long-standing barriers that have been niggling at foreign businesses in China, including easing administrative burdens, expanding market access in key industries, and evening the playing field for foreign companies. Additionally, the clarity brought by the new regulations on data flow contributes to a more transparent and predictable operating environment. With the country’s digital economy continuing to grow, cutting red tape on data flow might also bring in more opportunities in the foreseeable future. Regarding the China Development Forum, it is worth noting its alignment with the development goals highlighted in the Two Sessions report, affirming China's future emphasis on high-quality development, digitalisation, and a green transition. The Chamber appreciates the substantial progress in encouraging foreign investments. However, it remains to be seen how these initiatives will be translated into concrete actions. Waer Zhang , Government Affairs and Policy Associate

Coffee break read: From Keys to Strings? An Evolving Musical Education in China

Why we like it: For decades, China has maintained a global reputation for producing top-level pianists. Often beginning from a young age, piano lessons have proved to be a staple in China.?

But could this piano culture be on the decline? This recent article from Sixth Tone suggests that a resurgence in the popularity of traditional instruments may be speeding up a shift away from the piano. Instruments like the guzheng and the pipa, both plucked Chinese traditional instruments, are seeing a steep increase in interest among the youth. On Bilibili and other social platforms, videos with these traditional instruments are garnering huge viewerships. In fact In 2023, the number of students taking exams for the guzheng for the first time surpassed the number for those taking piano exams. Students are also no longer able to earn extra academic points for piano proficiency, a regional policy which had previously motivated parents to invest in lessons.

Nonetheless, while the article points to a clear downward trend for piano education within China, it is clear that a deep-rooted passion for instrument study remains.



Podcast of the Week: Kerry Brown on the exercise of Chinese power

Why we like it: The latest Sinica podcast episode features a compelling “meditation on power” with its thorough exploration of China’s rise to the forefront of Western countries’ political and economic concerns. Host Kaiser Kuo and guest Dr Kerry Brown of King’s College delve into the main themes of Brown’s latest work, wherein by advocating for informed empathy, Brown assesses the extent to which recent geopolitical dynamics can be attributed to external Western cultural and political conceits. Rooting us in historical Western perceptions of the Chinese worldview, the episode encourages us to think flexibly about the relationship between Western and Chinese cultures. Discussion of the impact of shocks such as the 2008 Global Financial Crisis and the 2016 Donald Trump election also emphasises the impact of exogenous shocks on China’s political economy, highlighting the significance of unconscious cause-and-effect relationships. Brown and Kuo stress the need to examine how the syncretism and complexity of the Chinese belief and value system unsettles Western thinkers and decision-makers in their pursuit of “universalism”. Ultimately, the podcast reminds us it is vital to move beyond binary models when thinking and engaging with China in the present day.


And finally...

Amidst discussion of increasing FDI into China, we're keeping a close eye on trade flowing the other way from China to the UK. EVE energy is in talks to commit an initial £1.2bn EV battery gigafactory in Coventry. The factory is poised to create up to 6000 high quality jobs and will look to expand to twice the size of the Nissan EV factory in Sunderland. This news comes on top of Indian conglomerate Tata Group’s pledge last year to build its £4bn pound gigafactory in Somerset.


Thanks for reading China in 5! Have thoughts about what you'd like to see, suggestions for our coffee break reads, or a favourite podcast you want to share? Let us know below, or reach out via our website at britishchamber.cn.

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