China’s foreign firms grapple with upward mobility in post-Covid era as state-owned peers rise
- Industrial output among SOEs in China is seen benefiting from ‘yawningly different’ effects of Beijing’s policy shifts, to the detriment of other companies
- In an increasingly murky business climate, foreign firms are left wondering how much more they might become marginalised or eased out of the expanding state sector
There are blunt indicators that the golden age of foreign-invested firms in China has lost its shine, if not come to an end, with the ecosystem appearing more like a gilded cage of restricted growth. And breaking free of imposed confines looks to be as challenging as ever.
Foreign businesses have watched their share in the Chinese economy – as well as their relevance and profitability – dwindle in recent years.
They’ve gone from being an indispensable part of China’s development boom – bringing in outside technologies and management know-how – to what appears to be an increasingly inconsequential sector on the periphery of China’s economy.
In a revealing sign of the uneven recovery, industrial output among foreign entities in the country grew in 2023 by a meagre 1.4 per cent, year on year, underperforming the 5 per cent growth reported among state-owned enterprises (SOEs).
And many of those concentrated in more economically dynamic coastal regions have even endured negative growth. In Shanghai, which boasts the biggest cluster of foreign companies’ headquarters in China, foreign industrial output slumped by 5.4 per cent in all of 2023 while that of SOEs grew by 5.3 per cent.
