China 'pivotal' market for foreign firms

Nearly 70 percent of foreign companies rank China as one of the top three priorities in their global investment plans for the next three years, indicating that the country continues to be a pivotal market where opportunities significantly outweigh risks for forward-thinking firms, said a new survey published by the China-Australia Chamber of Commerce.

The survey, polling 858 Chinese and foreign companies active across the China-Australia business corridor, shows that Australian companies are not stepping away from China. Instead, they are stepping up, recalibrating strategies, deepening partnerships and preparing to thrive in a more competitive, more sophisticated era of engagement.

"Despite years of headwinds — from the pandemic to geopolitics to regulatory uncertainties — Australian firms haven't pulled back," said Vaughn Barber, chair of AustCham China.

According to Barber, the 2025 Doing Business in China Report has found that nearly 70 percent of Australian companies surveyed still rank China as a top-three investment priority, while over 75 percent of foreign firms reported profitability last year, up from 58 percent in 2023.

Over half of the polled foreign firms — 404 in total, out of which 293 are Australian ones — recorded year-on-year revenue growth, and 46 percent increased investment in their China business in 2024, the report said, while one of every three plans to expand geographically within China over the next three years.

"Australia has what China needs. China has what can help Australia scale. As the report suggests — the risk is not that we partner with China. The risk is that we don't," Barber said.

After geographic expansion, the report shows that government affair is now the second-highest investment priority for foreign companies in China, reflecting a renewed focus on long-term positioning and regulatory alignment.

Respondents identified agribusiness, clean energy technologies and food and beverage as the sectors offering the strongest opportunities for Australian investment in China over the next five years.

Clean energy stands out as a truly shared priority — identified by both foreign and Chinese firms as a top sector for two-way trade, investment and strategic collaboration.

"The optimism of business toward China is grounded in financial performance and a positive outlook toward the bilateral relationship," said Tian Zhang, CEO of AustCham China, with 86 percent of respondents expressing positive sentiment about bilateral ties between China and Australia.

Zhang told China Daily that 53 percent of businesses said doing business in China had become easier since the improvement in China-Australia relations, with an increase in government engagement also seen as a positive and likely attribute to this.

"The report shows that this engagement (from the Chinese government) is more a helping hand rather than a meddling one."

With the survey conducted prior to the United States' "Liberation Day" tariff policies, Zhang said the chamber is planning to prepare a pulse survey to capture business sentiment in light of the sweeping US tariffs. "A cautious approach is being taken by firms with operations across China and other geographies."

Besides growing geopolitical uncertainty, rising protectionism and the increasing fragmentation of global supply chains, the report also pointed to market-specific challenges — foreign firms cited capital transfers, market access restrictions, and Customs regulations and procedures as top operational regulatory hurdles in China.

Meanwhile, just 1 percent of foreign firms — and none of the Chinese firms surveyed — described Australia's investment settings as conducive to Chinese capital. Up to 79 percent of respondents find Australia's Foreign Investment Review Board guidelines unclear and two-thirds view them as restrictive to Chinese investment.

"Both governments should improve the clarity and consistency of regulatory and investment frameworks," Zhang said.