China’s focus on nurturing new quality productive forces while promoting high-quality development provides foreign investors with enormous market opportunities and vast development prospects, amid rising uncertainties in the global economic landscape. In a series of recent engagements with China, foreign investors, including British businesses, have expressed confidence in the future prospects of the market.  

At the China-UK Business Collaboration and Communication Conference held on 2 April in Beijing, attendees were of the view that the digital economy has become a key area for the reshaping of the global economic structure, and the reconstruction of the global competitive landscape. China and UK possess advantages in digital technology and data factors and there is huge potential for cooperation in the digital economy industry. 

On the sidelines of the conference, Kiran Patel, a senior director of China-Britain Business Council (CBBC), an industry group promoting trade and investment between the UK and China, told ChinAfrica that the two sides are already cooperating in a wide range of areas, including “critical areas such as the digital transformation which combine the strengths of China’s significant industrial and supply chain sectors with the UK’s R&D and innovation capabilities.” Patel revealed that many of the British companies are expecting to expand investment and trade cooperation with China. 

This sentiment was also expressed by a group of US business leaders at the China Development Forum held in Beijing in late March. Tim Cook, CEO of the US tech giant Apple Inc., said, “Innovation is developing rapidly in China and I believe it will further accelerate.” According to Cook, despite challenges including external uncertainties, China remains an indispensable part of Apple’s global supply chains due to the nation’s manufacturing prowess, as well as its growing research and development capabilities and highly efficient logistics system. 

According to China’s National Bureau of Statistics, overseas firms are important drivers and beneficiaries of the country’s innovation-driven growth, with the R&D investment by major foreign-funded industrial enterprises in the country surging by 91.5 percent from 2012 to 2021. The number of their valid invention patents increased from 68,000 to 241,000. 

Behind the figures are the country’s persistent endeavours to encourage innovation on all fronts. Official data showed that China’s spending on R&D totalled 3.087 trillion yuan (about $427.5 billion) in 2022, an increase of 10.4 percent over the previous year. 

‘Increasingly smarter’  

Patel, who has lived in Beijing for around 20 years, said that the nation is getting increasingly smarter. “I’m fully accustomed to all my transactions being through a digital payment provider. I can’t deny that for international businesspeople or tourists or even long-term residents like me, it’s so efficient and great.” 

According to the Asia Digital Economy Report 2023, China is far ahead in Asia in the digital economy in terms of scale, with its value reaching $7.47 trillion in 2022, followed by Japan at $2.37 trillion and the Republic of Korea at $952.3 billion. By the end of 2023, China has about 1.09 billion Internet users, nearly double the number recorded at the end of 2012. Meanwhile, Internet penetration increased from 42.1 percent to 76.4 percent during this period, surpassing the global average of 66.2 percent. 

Patel said that over the last decade, China has moved swiftly to digitise all aspects of its economy where it is useful to do so. “China’s made great strides and achievements in the digital economy,” he said. 

According to a report on China’s digital trade in 2022, the country’s digitally delivered service trade value rose 3.4 percent year on year to $372.71 billion, accounting for around 9 percent of the global total. 

For foreign companies, China’s vast digital economy offers significant opportunities to develop new products and services. “China’s emphasis on research and development, coupled with the nurturing of their own technology giants, has led to breakthroughs in areas like AI and e-commerce, influencing the trajectory of the global digital economy,” Patel said. 

China ranked 11th on the Global Innovation Index 2022 released by the World Intellectual Property Organisation, up 23 places from its 2012 ranking. Meanwhile, Massachusetts-based International Data Corp predicted that China’s artificial intelligence (AI) market will exceed $26 billion by 2026. 

Greater confidence 

Patel believes that multinational companies, especially those in digital areas, should continue to invest in China.  

“We are in this new normal whereby the China market still matters as much as probably it ever did … Trying to create new export markets for our products and services is not easy. And if you look at a market of the sheer scale as China, it’s very difficult to replicate,” Patel said. 

He believes that the UK also has work to do to build confidence and trust in its investors in China, adding that his organisation is working from both sides to support trade and investment between the two countries. 

Last year, UK companies such as AstraZeneca invested billions of US dollars in the Chinese market, according to Patel. “So in certain sectors, I think you’ll find there is confidence. And I think the businesses that have been here and ridden out the challenge of the pandemic, of the shifts in policy around certain sectors, are here to stay. They’re not going to be leaving … because there’s no market that [can] replace it,” he said. 

Tapping into potential 

Shi Yuntao, head of delivery service at ThoughtWorks Inc., a global technology consultancy working in the field of digital innovation, said this year is the 16th year of the company’s operation in China, and his 14th year with the company. When he first joined the company, there were only 200 people. Today, there are 2,500 people across China, spread across six offices and six regions. “This shows how important the Chinese market is to us,” he said. 

“The quality of the labour force in the Chinese market is very high and the market is huge. It is difficult to find [another] China in the world. Apart from the US, it is difficult to find a single large market like China,” Shi said.  

“The emergence of generative AI illustrates China’s expanding capacity for innovation while also opening up sizable potential that plays to our advantages,” said Shi. The company is making more efforts to enhance the business coordination between its offices in Shenzhen, Guangdong Province, and Hong Kong to expand its business in the GBA.

African Times has published this article in partnership with ChinAfrica Magazine.