For the fifth straight year, more British businesses report that doing business in China has become increasingly difficult. And they are once again calling for a more favourable policy environment where “rules that are clear, fairly enforced and consistently applied”, according to the latest position paper by the British Chamber of Commerce in China.

As political disputes threaten to upend the global economic order, China also has an opportunity to distinguish itself if barriers can be removed, the chamber said. And despite the challenges they are facing, British firms “continue to demonstrate substantial engagement with, and commitment to, the Chinese market”.

For British firms doing business in China in the past year, there has been a growing sense of unease around regulatory opacity, rising compliance costs and complexities, geopolitical uncertainties and a perceived depreciation of foreign firms in China’s evolving industrial policy, the chamber said in the paper published on Wednesday.

The trend now reflects deeper structural and geopolitical concerns far beyond the lingering effects of the pandemic in the early 2020s that centred on travel restrictions and logistical disruptions.

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China’s Xi doubles down on self-reliance, rallying officials to bolster manufacturing

China’s Xi doubles down on self-reliance, rallying officials to bolster manufacturing

Meanwhile, the percentage of firms feeling confident about China’s long-term outlook has declined, year on year, even as many continue to see opportunity, the report said.

Compounded by escalating tensions between China and the US – including technological decoupling and national security disputes – many British firms now find themselves caught between the competing superpowers and are delaying investments not just in China, but globally with any China exposure.