27th Annual Global CEO Survey China Report

PwC’s Annual Global CEO Survey, now in its 27^th edition, offers valuable insights into the current macroeconomic trends through the lens of thousands of CEOs across the globe. This year’s survey, the largest to date, encompasses the insights of 4,702 CEOs, including 215 from the Chinese mainland and Hong Kong SAR.

Against the backdrop of China’s ongoing recovery from the past three years and the country’s green transition to meet its climate pledges, the China report explores how CEOs are recognising the pressing need for business reinvention and starting to embrace innovative solutions, such as generative AI, to transform their business models in the face of profound changes in the market. 

Despite recent economic hurdles that brought overall weaker corporate growth and revenues in China, Chinese companies remain cautiously optimistic about the country’s future and, to a lesser extent, their own prospects as well. This is greatly attributable to a slew of new economic policies by the government aiming at buoying market confidence and attracting foreign investments through the easing of market access for foreign companies. Although the effects of those measure have not yet translated into the economy, foreign companies are showing interest to renew their commitment to the Chinese market.

Concurrently, although Western economies and Japan remain major trade partners, we are observing a growing interest for Chinese companies to invest regionally in the RCEP and, to a lesser extent, in the BRI countries. Government policies have also been instrumental in incentivising more trade and investment in the region. This opens new expansion avenues for Chinese firms that may have not otherwise invested abroad and present attractive diversification options for the ones already operating internationally.

In a continuation to last year’s trend, Chinese CEOs feel they are more than ever in need to rethink their business models in order for their companies to survive. The main drivers for change in China are government regulations, shifting consumer habits, and technological innovation, however we see demographics and climate related issues taking an increasingly important role in the need of Chinese businesses for transformation, highlighting the importance of these rising issues. The government has here again implemented new policies and regulations in order to address those underlying issues, creating new investment opportunities through incentives and easing loan policies.

Chinese CEOs are reporting on average they are conducting more actions than their global counterparts to reinvent their business. This highlights the keen awareness of Chinese CEOs of much needed transformational changes and a willingness to take any type of measures to undertake them. However, Chinese companies still experience major hurdles in transforming themselves, especially when it comes to government regulations, supply chain issues in a still restrictive trade environment, and the lack of support from certain stakeholders.

Despite declaring on average that they are being subject to climate related issues in a greater extent, Chinese companies haven’t implemented as many climate related actions than their global counterparts. Although there is a genuine interest in implementing green measures, timid growth and profit margins in recent years have stalled Chinese companies’ transformational investments, especially in ESG which often imply lower returns. This is in line with a broader sentiment that has stalled the progress of sustainable investments around the world on the face of international economic headwinds.

The Chinese government has been on its part consistently pushing new reforms to incentivise the public and private sector to invest more in green measures. Years of policy making have created large avenues for businesses’ green transformation and propelled China to a position of global sustainable energy powerhouse. With excellent progress in developing solar and wind power, electric vehicles and power batteries, China is a champion of the world in clean energy.

Chinese CEOs are quite bullish on GenAI, recognising the benefits of the transformational nature of this technology. This is in line with the underlying desire of Chinese CEOs to reinvent their business models by a wide range of measures, and especially tech-related solutions. Meanwhile, the Chinese government spearheads global regulations on GenAI in order to foster a healthy environment for the market to grow in, creating a springboard for Chinese companies to leap from and start investing, fulfilling their transformational goals in the process.

Chinese CEOs acknowledge that the transformation towards AI would bring many changes within their company and the industry they are operating in as a whole. However, they do not perceive risks and challenges as being as important, strengthening overall market enthusiasm compared to global sentiment but maybe overenthusiastically glancing over the inherent dangers of AI technology.