What does the UK stand to gain from its economic relationship with China?
China recently approved its 15 Five-Year Plan, which seeks to secure China’s leadership in the industries of the future while boosting its own economic self-reliance. It has a huge middle class, dynamic innovation ecosystems, and an improving business environment.
Meeting details
In China, the UK has a strong reputation for the quality of its brands, its education system, and its creative industries.
The current Government has committed itself to pursuing the growth opportunities that China offers. But what opportunities does China offer UK business that outweigh the threats – and what is the cost of those opportunities? Given the changes sweeping the world economy and China itself – geopolitical upheaval, technological transformation, the fragmenting global trading system – how sustainable are those opportunities likely to be?
In China consumption remains low and domestic competition is fierce. Made in Britain is no guarantee of success against increasingly sophisticated, but still low priced, local competitors. UK firms wishing to succeed in China’s market need deep expertise in the local business regulations, the political environment, online ecosystems, and consumer tastes, all of which differ significantly from those in the UK.
Commentators have highlighted the risks to the UK’s wider economic security that greater interdependence with China could bring.
In an overall picture of a growing UK trade deficit with China, a few facts stand out. While exports to China overall are straight declining, the UK is running a steadily growing surplus in its trade in services with China (+£9.5 billion in 2025).
Imports from China were declining, but as Politico recently reported after an FOI request to HMRC, £8.3 billion worth of de minimis goods — parcels priced under £135 — were imported into the UK completely tax-free last year, up from £3.9 billion in 2023/24.
And the Government decision to block much-needed investment in the UK by Chinese firm Ming Yang highlighted a central dilemma facing the UK economy. How much business can the UK afford to do with China?
The opening evidence hearing of the Committee’s inquiry on China and the UK economy brings together heads of industry and manufacturing and representatives of the UK’s leading services sectors to ask:
- what does UK business know about doing business with China?
- how good is the UK Government at helping navigate the opportunities and threats?
The Committee will seek to:
- Analyse the current and potential benefits to the UK of deepened economic engagement with China.
- Explore how UK businesses weigh up the risks and rewards of doing business with China.
- Assess how firm- and industry-level calculations of commercial risk differ from national-level calculations of economic security risk.
- Assess the opportunity costs to businesses and the UK overall of pursuing a deeper economic relationship with China rather than with other economic powers.
- Gauge the UK business community’s view of the effectiveness of the Government’s approach to China and its guidance to businesses.
Rt Hon Liam Byrne MP, Chair of the Committee, said: “Right now, British business faces a ‘duo-shock’ of new American tariffs and unprecedented Chinese state subsidies for local Chinese firms. That’s why British business needs help getting its China strategy right.
"There are undoubtedly rewards for developing trade with China, but there are huge risks too. The question is no longer whether we engage, but how we do so without losing control of our future. British firms are succeeding in sectors like services, education and the creative industries - but they are not playing on a level playing field.
"Our inquiry will test whether the UK has a clear strategy to seize the opportunities, guard against the risks, and ensure that trade with China strengthens - not weakens - Britain’s long-term security and prosperity, in what is a very uncertain world.”