2025 Doing Business in China

Led by the China-Australia Chamber of Commerce (AustCham China) with support from the Australia-China Relations Institute at the University of Technology Sydney (UTS:ACRI) and the Australia China Business Council, the report, now in its fourth edition, surveys senior executives from companies actively engaged in the Australia-China bilateral corridor, including trade, investment, joint ventures and operational activities. Conducted online from November 30 2024 to January 31 2025, the survey recorded 858 responses, its largest dataset to date.

The role of UTS:ACRI was as an independent partner for data analysis and report contribution. UTS:ACRI’s role was limited to post-collection analysis, excluding survey design, distribution or data collection, to ensure objectivity.

Foreword

By James Laurenceson

The 2025 Doing Business in China survey finished in the field at the end of January 2025. This coincided with the second Donald Trump administration entering office and almost immediately unleashing a trade war of unprecedented proportions that had China as a particular focus. By the end of the Biden administration, the average US tariff on Chinese goods already stood at 21%. On 1 February, President Trump slapped an additional 10 percent tariff on Chinese goods. Beijing responded with retaliatory tariffs of its own. Tit-for-tat escalation then followed and by April prohibitive average tariffs exceeding 100 percent were being levied by both sides.

The temptation is to imagine that the latest Doing Business in China survey has been overtaken by events. True, if the survey were completed today some of the results would no doubt be different. But here’s why it remains relevant.

First, the impressively large sample is comprised of foreign and Chinese-owned businesses deeply engaged in the Australia-China trade and investment corridor, and the Australia-China and US-China economic relationships have long operated on different tracks. Whereas the American and Chinese economies have become more competitive, Australia’s remains highly complementary. Both sides of Australian politics continue to emphatically welcome increased trade with China.

And unlike Washington, Canberra has never shown any interest in containing China’s economic rise. Canberra also sees deeper regional economic integration, including with China, as beneficial not just for prosperity but stability and security too. When the first Trump administration began imposing tariffs on China in 2018, Canberra swiftly made clear that it did not support the moves. When the Biden administration imposed export controls targeting China in 2022, Australia’s Trade Minister, Don Farrell, described them as “draconian”. Following the return of the Albanese government, Minister Farrell also made clear that “We don’t want to do less business with China, we want to do more business with China”. He further emphasised that “we continue to engage with China based on our national interests and not on what the Americans may or may not want”.

There is also no China-US equivalent of the China- Australia Free Trade Agreement (ChAFTA). Struck in 2015, ChAFTA now sees all Chinese goods entering Australia tariff- free, while the average trade- weighted tariff that China places on Australian goods is just 1.1 percent. In contrast, as of early April, the tariff wall that Australian exporters to the US face is nearly 10 times that level. Underlying economic complementarities and ChAFTA mean that there will be plenty of Australia-based farmers and miners engaged with China looking eagerly at money that US companies forced to abandon the China market have left on the table.

Second, as headline-grabbing as Trump 2.0’s trade policy moves have been, China’s $US18 trillion economy is fundamentally a much bigger story. In 2024, goods exports to the US only accounted for 11 percent of China’s total exports, and goods exports in total have fallen to less than 20 percent of China’s GDP. This means that the days when China’s economic reality depended crucially on US demand are long gone, and the economic pain that Washington can inflict is easily exaggerated. Trump’s tariffs are a tax on American importers and consumers. With the US relying far more on Chinese goods than the reverse, a strong case can be made that escalation dominance and the balance of leverage in the trade war lies with Beijing.

Relatedly, recent developments are concentrated around geopolitical risk. But businesses engaged with China face a much broader suite of challenges – and opportunities. One of the big questions being asked in the financial press during 2023 and 2024 was around whether China was still “investable”. More than geopolitical disruption, this reflected doubts about whether Beijing could successfully engineer much-needed structural reforms, like arresting demographic decline, curbing debt accumulation and transitioning the economy away from a traditional growth model that relied on property and infrastructure construction. The survey results shed light on what businesses engaged in the Australia-China trade and investment corridor are thinking about this broader, and ultimately more important, suite of issues.

If there is a single takeaway to be drawn from the survey findings it is that businesses are upbeat about China’s business environment, its broader economy and the opportunities that deeper Australia-China economic engagement presents.

Key findings

By AustCham China

The strengthening of Australia-China relations has ushered in a wave of optimism among businesses, significantly enhancing confidence across various sectors. The vast majority of companies now view the bilateral relationship positively, citing tangible improvements in diplomatic and trade dynamics. This positive sentiment has translated into operational ease, with many firms reporting that conducting business in China has become notably simpler compared to previous years. This shift has prompted a strategic realignment, with numerous companies recalibrating their long-term plans to capitalise on China’s evolving market landscape. For many, China remains a cornerstone of global investment strategies, consistently ranking as a top priority due to its vast market potential and economic significance. 

Financially, foreign firms have experienced a robust upswing in 2024, with nearly all reporting profitability – a substantial improvement from the prior year. A significant portion of these firms have also seen their profit margins expand, reflecting stronger market performance and operational efficiencies. Over the past several years, many companies have increased their investments in China, signalling confidence in the market’s long-term prospects. However, most maintain a prudent approach to exposure, deriving only a modest share of their global revenue from China. This balanced strategy helps mitigate risks and counters concerns about overreliance on a single market.

Looking ahead, the outlook remains overwhelmingly positive, with a majority of foreign firms expressing enthusiasm about China’s market opportunities over the next few years. This optimism is underpinned by confidence in their ability to execute innovative and digitally driven strategies tailored to China’s dynamic business environment. Key growth priorities include expanding sales revenue, forging deeper partnerships with local entities, and streamlining operations to boost efficiency. To navigate potential risks, many firms are proactively diversifying their supply chains, ensuring resilience against disruptions. Australian exports continue to flourish in high-demand sectors such as agribusiness, clean energy technology, biopharma and education, while Chinese investments in Australia are increasingly focused on areas like renewable energy, critical minerals, electric vehicle infrastructure and healthcare. Geographically, major cities like Shanghai, Beijing and Shenzhen remain focal points for business expansion, though emerging inland hubs are gaining traction as viable investment destinations.

Despite the positive momentum, challenges persist. In China, firms face complexities arising from regulatory intricacies, macroeconomic uncertainties, and ongoing geopolitical tensions, which continue to shape the risk landscape. Meanwhile, in Australia, the Foreign Investment Review Board’s (FIRB) policies are a significant point of contention. The majority of firms find FIRB’s guidance unclear and its settings overly restrictive, particularly for Chinese investors, creating hurdles for cross-border investment. While most companies describe China’s economy as stable or on a growth trajectory, some acknowledge pockets of volatility that warrant careful monitoring. 

Nevertheless, the commitment to the Chinese market remains steadfast. The optimism surrounding future opportunities far outweighs concerns, driven by China’s unmatched market scale, innovation ecosystem and strategic importance. Businesses are navigating challenges with a blend of caution and ambition, leveraging local partnerships, digital capabilities, and diversified strategies to sustain growth. This resilience underscores a broader narrative: despite uncertainties, China continues to be a pivotal market where opportunities significantly outweigh risks for forward-thinking firms.