Starmer plans China trip, Xi meets tech giants and China’s population decline

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!

Starmer plans China visit

What’s the background? As part of his efforts to reset UK-China relations, UK Labour leader Keir Starmer is actively planning his first visit to China. The trip, which could happen as early as late 2025, would be the first by a UK prime minister in over seven years. The visit follows a string of high-level UK engagements with China, including trips by Chancellor Rachel Reeves and Foreign Secretary David Lammy. Notably, China’s Foreign Affairs Minister Wang Yi’s recent visit to London further underscored the ongoing dialogue between the two nations. This momentum builds on the G20 summit in November, where Starmer and Chinese President Xi Jinping met for the first time, emphasising a "consistent, durable, and respectful" relationship.

Fact 1: Starmer’s planned visit to China would be a historic step in the Labour government’s efforts to re-engage with Beijing, signalling a potential thaw in UK-China relations that have been frozen under previous Conservative leadership

Fact 2: Foreign Affairs Minister Wang Yi’s visit to London last week underscored the growing political and diplomatic exchanges, with an announcement of ministerial engagement on education, science, technology and energy

Fact 3: The UK government is undertaking an “audit” of its China policy, which aims to strike a balance between economic cooperation and national security concerns

Politico’s piece levels criticism at the current government strategy on China and the delay of the audit. The Chamber sees things slightly differently. Whilst the UK China Audit is yet to be released, there has been a return to normality when it comes to China, with the government reengaging with the country and ensuring consistent, pragmatic messaging across Whitehall. The increased engagement we've seen at ministerial level will only serve to promote British business interests in the country and should be an important part of the government's plan to deliver growth to the UK. When it comes to the audit, many key questions around how to implement tariffs and potential China inclusion in FIRS are complicated topics, with the former likely to shift under the US Trump administration. It will be better for the UK government to produce something better and later rather than rush to a less effective outcome. Graeme Wallace Managing Director, British Chamber of Commerce in China (BritCham China)

Xi Jinping’s Rare Meeting with Tech Giants Highlights China’s Shift Toward Private Sector Confidence Amid US Rivalry

https://www.reuters.com/world/china/chinas-xi-attends-symposium-private-enterprises-delivers-speech-2025-02-17/

What’s the background? On 17 February 2025, President Xi Jinping held a rare meeting with China’s top business leaders to strengthen the private sector’s role in the country’s economy. This move comes amid growing concerns about the slowdown in China’s economic growth and increasing competition with the United States, particularly in technology. The meeting marked a shift in the government’s approach to the private sector, moving from previous crackdowns to a more supportive stance. Xi’s speech focused on boosting confidence, encouraging entrepreneurs to drive innovation while aligning with state priorities, particularly in the tech and AI sectors.

Fact 1: Xi's meeting with leading entrepreneurs, including Alibaba’s Jack Ma and DeepSeek’s Liang Wenfeng, was seen as a strategic effort to boost private sector confidence and counteract the effects of US technological pressure.

Fact 2: DeepSeek, a Chinese AI startup, was highlighted as a significant success, with its breakthrough AI model positioning China as a serious competitor to US companies in the tech space.

Fact 3: Xi Jinping urged business leaders to be confident in China's economic model and emphasised the importance of private-sector innovation in advancing key industries like tech, electric vehicles, and AI, signalling a new direction for China’s economic policy

The recent gathering of China’s top business leaders comes at a time of growing uncertainty due to the ongoing US-China trade tensions. On the tech sector, whilst the government has previously targeted the tech sector with heavy regulations, the gathering could suggest a broader willingness to support innovation and competition, particularly in areas that impact China's global standing. For British businesses, this signals both opportunity and caution. China's strategic focus on key sectors like tech and green energy presents potential investment opportunities, yet the regulatory landscape remains in flux. As British firms look to capitalise on these opportunities, it will be important to monitor both the risks and rewards that could come from engaging with the evolving Chinese market. How these shifts affect market access and long-term business strategies will be key to understanding the full impact in the months ahead. Harry Bell Policy and Advocacy Manager, British Chamber of Commerce in China (BritCham China)

The Risks of Underestimating Competition from China

Why we like it: The article dissects the “illusion” of how some Chinese companies are not seen in Western competitive landscapes but suddenly emerge as world-leading competitors. The author, Zak Dychtwald, warns that executives in the West severely underestimate Chinese companies’ capacity for innovation and their competitiveness. Although tariffs and other regulatory restrictions have made it extremely difficult for Chinese companies to enter the U.S. and European markets, China’s hyper-competitive domestic market effectively acts as a proving ground for global consumers. However, since many Western leaders still focus only on competitors in North America, Europe, and Japan, by the time they notice these Chinese companies have gained far greater competitive advantages than their counterparts, it is too late to recover. In this year’s Sentiment Survey 2024-25, we have also seen a next trend where Chinese companies are increasingly expanding globally, and British professional service firms are assisting them. Chinese firms are setting global standards across industries, and it is increasingly important to closely monitor their product innovation strategy and competitive advantages. This has started receiving coverage, with the Economist having covered innovation in the healthcare sector this week.

Podcast of the Week: Demographic downward trajectory provides both opportunities and challenges for growth

Why we like it: The economic implications of China's declining population are not going away and is a dynamic that businesses are having to react to. With the country’s marriage rate at an all time low and the number of babies being born dropping from the high of 19.8 million 20 years ago to 9.5 million in 2024, an eye will be on policy makers on how they remedy this trajectory. This episode analyses how a reduced workforce may lead to decreased productivity and increased labour costs, potentially hindering economic growth. Exploring the particular impact on various sectors is important, including manufacturing and services, and how this affects China's long-term position in the global economy. In the short term when we look at consumer trends from a business perspective, the impact on mothercare and babycare sectors, for example, is clearly negative. Yet when looking at opportunities, you see growth in areas such as the pet industry, as more households substitute babies for domestic animals. Another industry area to keep track of is the ‘silver hair economy’ services, with the likes of post-retirement travel seeing considerable growth. Businesses from both the UK and China will likely be tracking such regional/provincial trends to ensure growth opportunities are not missed in-market.

...and finally...

The new Chinese animated movie “Ne Zha 2” is a sequel to the previous highest-grossing animated film in China. It raised more than $1 billion in ticket sales, the first non-Hollywood movie to achieve that mark. The movie has been praised by the state-run media for symbolising the country’s “growing cultural confidence.” It is expected to be released overseas including in the US, Canada and Australia next week.