The British Chamber of Commerce in Beijing said that the country's tight restrictions on international travel are the top concern for British firms, but they are more optimistic than last year because of inconsistent travel and visa policies.
China still has strict controls on long quarantines and restrictions on flights and visas, despite the fact that other countries in Asia have slowly opened their borders to international travel.
China is more isolated from the world today than at any time since entering the World Trade Organization 20 years ago. The contrast with China is striking as international travel starts to recover globally, the chamber said.
Nearly a quarter of companies saw staff numbers fall in 2021, and 41 per cent expect numbers to decrease next year due to concerns over separation from family or friends or uncertainties over being able to come back.
China has defended its COVID 19 control measures as an effective way to protect its citizens, but officials have said they will not change any time soon, even though the country has pledged to relax rules for US business travellers.
The British survey said recovery from pandemic-related disruption had been fragile, but firms are more optimistic about prospects in China than they were last year.
Nearly two fifths of businesses expect earnings to surpass pre-pandemic levels in 2021, and nearly half expect them to increase from last year, it said. In 2020's survey, only 30 per cent of companies expected earnings to be higher than the year before.
Nearly half of the respondents came from the professional services, education, and advanced manufacturing and transportation sectors.
There were concerns raised by companies about China's cybersecurity regulations and rising labor costs.