China has opened its doors to UK firms

World trade might be sluggish. British consumers might be maxed out on the credit cards. The European market is heading into what looks like a recession, and the endless, muddled drama of our departure from the EU makes it hard to know how much access companies will have to it anyway. There is no shortage of reasons why companies might be feeling reluctant to invest right now. One opportunity, however, has just opened up: China. Yesterday, it finally passed a new law that opens up vast swathes of its economy to foreign businesses.

For British companies that could turn out to be huge. The first phase of China’s growth favoured countries such as Germany that are strong in manufacturing, but the next phase may well be a lot better for countries that are strong in services. Media, education and business services all have massive potential – and companies that get in early will be the ones to back.

The Chinese Foreign Investment Law will come into force at the start of 2020, and replaces a raft of earlier legislation. It opens up many more protected sectors for foreign firms, reduces the requirements for local partners, requires less technology to be transferred to the Chinese subsidiary and provides a lot more protection for property rights and – crucially – intellectual property. It won’t make China exactly the easiest place in the world to do business. But it is a significant improvement, and is likely to trigger a big increase in the flow of new money into the country. The law firm Linklaters this week predicted $1.5trillion (£1.1trillion) of foreign investment will flood into China in the next decade – and it was already a record $56bn in the last year alone.

No one needs reminding of the size of the opportunity in China. With 1.2bn people and a growth rate still above 6pc a year, it is on track to overtake the United States as the world’s biggest economy.

True, it remains to be seen how effective the new law will be. Even so, China’s economy is becoming more open, and British businesses need to move as fast as they can into that market. So which industries should our companies be looking at?

First, media and entertainment. Even with some relaxation, the Chinese are still going to keep tight control of news outlets. But information and entertainment are a different matter. Publishing, film, music and sport are all huge export industries for the UK, and there is massive demand for them. The key worry has always been protection for intellectual property. Without that, it is very hard to make the economics of those industries work, but if China starts to protect that then it should be a vast potential market. Book publishers and music labels should be buying up local subsidiaries – and the Premier League should be looking at matches in Shanghai and Shenzhen.

Next, education. Our top private schools and universities already attract tens of thousands of Chinese students every year. There are close on 100,000 students from China studying in this country. That is five times the number from the United States and more than from the whole of the EU.

But it would be far easier for the courses to go there. British university education has a prestige that has taken generations to create, and it is incredibly hard to replicate. Outposts of our biggest universities across China could be a huge industry.

Finally, business services. From consultancy, to law, to advertising, branding and accounting, Chinese businesses are going to need a vast amount of help and advice as they grow and expand. This country has one of the strongest traditions of supplying services to business. Markets such as the Middle East, India and North America are all important, and will remain so for a long time. But China will trump them all.

The Chinese economy may wobble, and growth may slow over time. But the predictions of a sudden calamitous crash have been sounded for years without amounting to very much. In reality, nothing is likely to stop it now. As it gets richer, progress in that market will be what determines whether a company succeeds or fails – which is why businesses need to get in now.

‘The Chinese Foreign Investment Law will come into force at the start of 2020’