Starmer meets Xi, global investors hesitating and more stimulus analysis

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!

“Consistent, durable, respectful” UK China relations

What’s the background? The UK Prime Minister and the Chinese President met in person for the first time since 2018, with Keir Starmer meeting Xi Jinping at the G20 summit in Rio de Janeiro. Sir Keir emphasised the UK's commitment to a "consistent, durable, respectful" relationship with China while addressing key concerns around human rights. The meeting took place amid a shifting international landscape, with President-elect Donald Trump's anticipated return poised to impact global trade and foreign policies, potentially pressuring the UK to align more closely with US views on China.

Fact 1: Sir Keir Starmer plans to start ‘full bilateral’ ties and restart economic and financial engagement between the UK and China in early 2025.

Fact 2: The tone of the dialogue between the UK and China appeared positive.

Fact 3: Both leaders emphasised a strong desire for business cooperation on areas of mutual interest, including international stability, the economy and climate, and have broader engagement on science, technology, health and education.

British businesses operating in market welcome the renewed focus on high-level, government-to-government engagement between the UK and China. The commitment to restoring confidence, with the promise of full bilateral ties and a consistent, pragmatic approach, is particularly reassuring to the business community. We understand that discussions are underway to restart the Economic and Financial Dialogue, along with JETCO, which our members view as a crucial step. Encouraging signs of progress in this area are vital not only for businesses already here but also for attracting new UK investments, particularly in sectors where UK-China collaboration is key, such as clean energy, finance, science and technology. As always, the British Chamber of Commerce in China remains committed to acting as a vital conduit between the governments and businesses, supporting both the development of robust economic ties and the continued success of British businesses in China. Rachel Tsang Managing Director, British Chamber of Commerce in China (BritCham China)

Is it too difficult to get capital out of China?

What’s the background? Global investors are hesitating to invest in Chinese assets, with David Solomon, CEO of Goldman Sachs, citing significant difficulties in repatriating capital. At the Global Financial Leaders’ Investment Summit in Hong Kong, Solomon emphasised that restoring investor confidence will require assurances on capital mobility and greater consumer confidence in the Chinese economy.

Fact 1: Venture capital transactions by U.S. investors in China fell to a four-year low in 2023, reflecting broader investment concerns.

Fact 2: Foreign direct investment in China is at historic lows, with accelerated capital outflow post-pandemic.

Fact 3: Last year’s British Chamber of Commerce China Sentiment Survey ranked 'accessing company finance' as the fourth largest regulatory challenge for British businesses.

With China striving to balance economic recovery and attract foreign investment, challenges like capital flow restrictions weigh heavily on global confidence. As Solomon notes, policies that reignite both investor and consumer trust will be critical to achieving sustainable growth. Harry Bell Policy and Advocacy Manager British Chamber of Commerce in China (BritCham China)

Coffee break read: ?EU to Demand Technology Transfers from Chinese Companies

Why we like it: The European Union is planning to compel Chinese companies to transfer technology to European businesses in return for EU subsidies, the Financial Times reported on Tuesday, citing two senior EU officials. The report suggests that this move is part of the EU’s broader strategy to ensure fair competition and protect its technological sovereignty. The proposed measures aim to balance the playing field by addressing concerns over unequal access to technology and subsidies between EU and Chinese firms. Details on the timeline and implementation of the proposal have yet to be disclosed, and it remains to be seen how China will respond to such measures.

Podcast of the Week: ChinaPower: How China might view a second Trump Administration

Why we like it: China’s effort to stimulate its economy has been the big talking point in markets and finance in the last month or so; with expectations high for quite radical reform, many were left disappointed by the limited measures to financial reform and local government debt. This good summary of the stimulus packages announced so far from Trivium China also explores where China’s government may turn to next to boost spending – or whether the government has misdiagnosed the issue itself.

...and finally...

The British Museum has received the UK’s most valuable museum donation: a ￡1bn collection of 1,700 Chinese ceramics from the Sir Percival David Foundation. The collection, spanning 17 centuries, includes treasures like the 1351 “David vases” and a 15th-century “chicken cup.” George Osborne hailed the gift as a “blockbuster decision.” On display since 2009, the collection cements the museum’s standing as a world leader in Chinese ceramics, inspiring future generations of artists and scholars.