China’s decision to reduce or remove some retaliatory tariffs has encouraged a cautious optimism among British businesses. Yet while the trade climate appears to be improving, brands entering or re-entering the Chinese market are faced with the more complex challenge of navigating a complex consumer ecosystem shaped by policy shifts, cultural expectations and rising nationalism.

The reality is that while some trade barriers have lowered, others, especially those linked to regulation, culture and politics, remain significant.

Regulatory headwinds

China’s business environment has become more tightly governed in recent years. Foreign firms must now comply with a range of new requirements, from data privacy and security laws to investment restrictions and evolving digital content regulations.

Entire industries have undergone sweeping regulatory changes. From livestream ecommerce to education, the rules are continually being rewritten—often at short notice and with opaque enforcement. Understanding these changes is critical for British brands seeking market entry or expansion.

“In an unstable environment, I believe in a ‘Ready, fire, aim’ approach. Move quickly, test early, then refine your strategy. Those who wait for certainty may miss the window,” says Yang Ding, Founder and Director of New Silk Route Digital.

New Silk Route supports British brands across sectors such as sport, education and culture. Their work involves localising campaigns for Chinese audiences through livestreaming, influencer partnerships and culturally attuned storytelling. “It’s not just about exporting products,” Yang adds. “It’s about exporting values, and doing so in a way that resonates locally.”

Cultural literacy and soft power

British culture retains a powerful pull for many Chinese consumers. From the Premier League to Harry Potter, the UK continues to enjoy strong cultural cachet. But audiences today demand more than surface-level branding. They want relevance, authenticity and an understanding of what truly matters to them.

This was evident in the years leading up to the pandemic, when tourism was a central pillar of UK–China engagement. Public-private collaboration enabled large-scale, coordinated efforts to attract Chinese visitors to Britain’s regions.

“Before the pandemic, when China was a key visitor market and the UK government was investing heavily to keep Britain competitive, we had the opportunity to work with some of Britain’s most popular tourism destinations,” says Meimei Zhao, Founder of Variety Plus. “One standout project was in collaboration with London & Partners, where we supported the development and launch of tourism products designed specifically for the Chinese market — connecting London and Manchester with surrounding regions.”

Variety Plus helps UK and European brands expand into China, and Chinese brands go global. Zhao credits the success of these campaigns to the Discover England Fund — a £40 million government initiative that united airlines, hotels, attractions, and metro mayors around a shared vision. “It was a strong example of what’s possible when public and private sectors align,” she says. “Sadly, in the absence of sustained, large-scale funding for multi-year programmes, initiatives of this scale have become much harder to deliver.”

Despite this, British institutions and brands continue to foster cultural links through partnerships, creative collaborations and targeted campaigns — especially in education, design, heritage and lifestyle.

Shifting consumer dynamics

Today’s Chinese consumers are more value-driven, digitally fluent and locally proud. While international brands are still welcomed, especially in sectors like skincare, nutrition and premium fashion, they face stiff competition from high-quality domestic players.

British brands must bring more than heritage. They need relevance and adaptability, especially online. Digital ecosystems such as WeChat, Xiaohongshu and Douyin dominate daily life. Brands that localise their presence within these platforms are best placed to build lasting engagement.

Live commerce and influencer-led marketing are no longer optional, they’re central to the brand discovery journey. But execution matters. Chinese consumers are sensitive to tone, aesthetics and messaging. A misstep can be costly, while a well-executed campaign can deliver exponential returns. “Influencers in China are not just marketers,” says Yang Ding. “They’re cultural translators. The right partnership can open doors that advertising alone never will.”

Some of the most successful British brands in China today are those that combine product excellence with credible storytelling. This often involves deeper collaborations with local communities, creators and cultural tastemakers.

Political context and risk

While trade relations may be warming in some areas, wider UK–China relations remain complex. Issues such as technology, national security and academic exchange continue to shape the bilateral relationship. And for brands, politics cannot be ignored.

Chinese consumers are increasingly attuned to perceived slights, whether real or manufactured. Misjudged campaigns, poorly timed statements or partnerships with controversial figures can quickly spark backlash. State media and social platforms can amplify reputational risk within hours.

As a result, many brands are treading carefully. Some are pivoting to lower-risk sectors, such as health and wellbeing, education technology or sustainability. Others are investing more in market intelligence and crisis planning.

Still, there are windows of opportunity. Regional governments in China remain enthusiastic about foreign investment, particularly when it brings innovation, jobs or exports. British firms with a clear offer and flexible delivery models can still gain traction—if they act decisively. “We are in an era where agility beats certainty,” says Yang Ding. “It’s no longer about finding the ‘perfect’ strategy. It’s about learning fast, acting local, and building real human connections. That’s how you build brand equity in China today.”

Join CBBC’s China Consumer 2025 to learn more about the consumer and retail sector in China

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If Part 1 of this series focused on what brands must do to prepare before signing with a Chinese distributor, Part 2 explores the more difficult scenario: what happens if that relationship breaks down?

As Zarina Kanji, Managing Director UK & Europe at WPIC, puts it: “The best thing is to avoid getting stuck in the first place.” But if things do go wrong, whether the distributor isn’t delivering, the market strategy has changed, or the working relationship has simply soured, brands must move swiftly, strategically and with clarity.

“Trust is absolutely fundamental in Asia,” says Kanji. “It’s a region where relationships matter. The number of UK brands and beauty partners is small, people talk. If you can keep things professional and polite, you’ll stand a better chance of exiting on good terms.”

That’s not always easy, but it’s critical. “If you’re planning to stay in the Chinese market, you’ll need to line up a new partner and manage the transition carefully,” she explains. “Platforms like Alibaba or an agency like WPIC can sometimes support the handover. The new partner might help with transferring stock, keeping the store live and downtime minimal. But this is only possible if the breakup isn’t acrimonious.”

If tempers flare or the relationship turns hostile, things can spiral quickly: stores shut down, sales data is lost, and customer reviews disappear. “In the worst-case scenario,” she adds, “it’s a reminder of why doing due diligence upfront— and retaining ownership of your store — is so important.”

A phased approach—not a scorched earth

Kristina Koehler-Coluccia, Head of Business Advisory at Woodburn Accountants & Advisors, has seen this scenario play out many times, including with long-established brands.

“I’ve worked with companies that started with wholesale, then expanded into e-commerce and even hired staff. When the time was right, they decided to set up their own company in China. But instead of cutting ties with their distributor, they took a phased approach.” In this case, the company drew up a list of everything the distributor controlled — logistics, warehousing, customs clearance — and identified what to take back in-house and what to leave in place.

“Just because the distributor’s no longer right for the e-commerce or brand management side, doesn’t mean they’re not good at operations,” says Koehler-Coluccia. “So rather than burn the bridge, keep them doing what they’re good at. It also avoids triggering hostility.”

This type of staged transition can be particularly valuable for brands that rely on physical stock management. “Distributors don’t always just run the store,” she says. “They may also hold your inventory, fulfil orders, or handle customer service. You need to think about the whole supply chain, not just the front end.”

If it turns ugly, get legal, get local

But what if the distributor won’t cooperate? What if they refuse to transfer ownership of assets – or worse, continue using your brand? “If it turns ugly, you need a Chinese lawyer,” says Koehler-Coluccia. “Don’t try to manage this through a UK firm. Chinese law, Chinese platforms – this is where you need expertise on the ground.”

The first step is to review your contract. Hopefully, it includes clear terms on asset ownership and an exit clause (as advised in Part 1). If the distributor has no licensing rights and doesn’t own the trademark, you have leverage. “If they’re still using your brand post-termination, you can stop shipping,” she says. “That gets their attention. Meanwhile, your legal team can engage directly with the platform—whether that’s Tmall, JD, or another.”

She also recommends reaching out to the platform itself. “Tmall and JD don’t want this conflict either,” she explains. “They earn off your sales. They want to keep your brand active. You can get a client manager, and in some cases, they’ll help you change usernames and passwords. But you need a lawyer to do this—it’s not a simple customer service job.”

Keep your company structure in mind

For brands with serious long-term ambitions in China, one option is to incorporate locally. “Platforms will only let you own your store directly if you have a Chinese entity,” explains Koehler-Coluccia. “So many companies we work with start by using a distributor, but then form their own local company to take over.” That local entity can then contract directly with the platform, manage invoicing, repatriate profits, and even hire staff. “You can still outsource warehousing and logistics, even keep the same partner in a reduced role,” she adds. “But you control the brand and the data.”

For brands exiting completely, the priorities are slightly different. “If you’re done with the market,” says Kanji, “then the key is to get everything closed as quickly and cleanly as possible. Connect with the platforms and ask to close the stores, retrieve any stock, reclaim your platform deposit and close contracts—especially if you’ve got months left and nothing’s happening.”

Think strategically, not emotionally

In Kanji’s experience, British brands often get caught up in the heat of a bad situation. “But think long term,” she advises. “If you might want to come back to China, then it’s worth leaving on good terms.”

She recommends again using the CBBC, DBT, or approaching platforms directly for guidance. “There are people who’ve done this before and can help. Don’t go it alone.” And ultimately, as Koehler-Coluccia points out, this is about thinking operationally. “Too many brands only think about the e-commerce channel. But if you’ve been doing wholesale too, that’s a whole different relationship. Do a SWOT analysis. What are your distributor’s strengths? Where are the weaknesses? How much can you do yourself—and how much do you need help with?” She concludes with a reminder: “If your distributor has done a good job with logistics, why change it? The goal is to regain control, not destroy what’s working.”

Part 1 Recap: What to do before engaging a Chinese distributor
Read the first feature in this two-part series for a full breakdown of how to choose the right distributor, avoid common mistakes, and ensure you retain control of your brand in China.

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In a surprising twist, the United States and China have decided to cool down their heated trade battle, agreeing to cut tariffs for the next three months. This move comes after months of back-and-forth in which both countries slapped hefty taxes on each other’s goods, causing worry about empty shop shelves and rising prices. According to a report from the Times, the US will now lower its tariffs on Chinese products to 30 per cent, while China will reduce tariffs on American goods to 10 per cent.

The trade war kicked off when US President Donald Trump ramped up tariffs on Chinese imports to a staggering 145 per cent. China hit back hard, imposing 125 per cent duties on American products. This tit-for-tat escalation had everyone on edge, especially American farmers who rely on China to buy their corn and soybeans, and shop owners who feared they wouldn’t have enough stock to sell. The Times noted warnings that if the trade war didn’t ease up, American stores could face empty shelves, which would’ve been a nightmare for shoppers.

The announcement of the tariff cuts came after intense talks in Geneva, where US Treasury Secretary Scott Bessent met with Chinese Vice-Premier He Lifeng. Bessent described the discussions as making “substantial progress,” while He Lifeng called it an “important first step”. China’s Vice Commerce Minister, Li Chenggang, was equally optimistic, telling Bloomberg, “This will be good news for the world. As we say back in China, ‘If the dishes are delicious, the timing doesn’t matter.’” This suggests both sides are hopeful that this deal could pave the way for better relations.

The news sent ripples through global markets. The pound took a bit of a hit as the US dollar strengthened against other currencies, according to the Times. Investors seemed to breathe a sigh of relief, moving away from safe bets like gold, which dropped 2.8 per cent to $3,234.65 per troy ounce. Earlier this year, when the so-called “liberation day” tariffs were announced in April, gold had soared to a record high above $3,400 per troy ounce, as reported by Reuters. Stock markets, on the other hand, were buzzing with excitement. London’s FTSE 100 climbed 0.6 per cent, Germany’s market jumped 1.5 per cent, and France’s rose 1.3 per cent. In Asia, Hong Kong’s Hang Seng surged 3.4 per cent, and China’s SSE Composite gained 0.8 per cent, the Times reported.

President Trump, never one to shy away from sharing his thoughts, took to his social media platform, Truth Social, to call the talks a step toward a “total reset” in US-China relations. He described the negotiations as “friendly, but constructive,” and stressed the importance of opening up China to American businesses, saying, “We want to see, for the good of both China and the US, an opening up of China to American business,” as quoted by the Times. This isn’t the first time Trump has tried to strike a deal with China. Back in January 2020, he signed a trade agreement, but later accused China of not sticking to it and claimed his successor, Joe Biden, failed to enforce it, according to CNN. This led to Trump imposing a blanket 10 per cent tariff on all Chinese goods in February, prompting China to retaliate with tariffs on American agricultural products.

The Geneva talks marked the first face-to-face meeting between senior officials from the world’s two biggest economies since Trump introduced steep new tariffs last month, sparking a fierce response from Beijing. The escalating measures had American farmers and retailers on tenterhooks. Farmers, in particular, were worried about losing China as a major market for their crops, while retailers feared supply shortages. On NBC’s Meet the Press, Trump brushed off concerns about empty shelves, saying he didn’t think an 11-year-old girl “needs to have 30 dolls … I think they can have three dolls or four dolls because what we were doing with China was just unbelievable. We had a trade deficit of hundreds of billions of dollars with China,” as reported by the Times.

From Geneva, US Trade Representative Jamieson Greer explained the reasoning behind the tariffs, pointing to the massive $1.2 trillion trade deficit with China. “The president declared a national emergency and imposed tariffs,” Greer said in a statement quoted by the Times. “We’re confident that the deal we struck with our Chinese partners will help us to work toward resolving that national emergency.” This trade deficit has been a sore point for the US, with the Economic Policy Institute noting that it reflects an imbalance where the US imports far more from China than it exports, affecting jobs and industries.

The tariff cuts are a temporary measure, set to last 90 days, giving both sides a chance to keep talking and hopefully avoid another round of trade chaos. For now, the deal has brought a sense of calm to markets and businesses, but there’s still a long road ahead to sort out the deeper issues. The BBC reported that trade tensions between the US and China have been simmering for years, driven by concerns over fair trade practices, technology transfers, and market access. This latest agreement might not solve everything, but it’s a step toward easing the strain felt by farmers, shop owners, and consumers on both sides of the Pacific.

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China’s economic allure, with a projected GDP growth of around 5% for 2025, continues to draw global investors, including British firms seeking to tap its vast consumer base and innovation-driven markets. However, the country’s foreign investment regime, governed by the Foreign Investment Law (FIL) of 2019, balances openness with stringent controls, particularly in sectors deemed sensitive to national security or cultural identity. For UK businesses, navigating these restrictions is essential to unlocking opportunities in a market where bilateral trade reached £111 billion in 2022.

The Framework: Foreign Investment Law and Negative Lists

Enacted on 1 January 2020, the FIL transformed China’s approach to foreign direct investment (FDI) by replacing a patchwork of approval-based rules with a unified framework. The law promotes “national treatment,” ensuring foreign investors are treated similarly to domestic ones, except in sectors outlined in the Negative List for Foreign Investment Access. The 2024 edition of this list, issued by the National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM) on 8 September 2024 and effective from 1 November 2024, reduced restricted and prohibited sectors to 29 from 31 in 2021, signalling progressive liberalisation. Prohibited sectors include news media, internet publishing, and audio-visual production, reflecting China’s tight grip on information and cultural industries. Restricted sectors, such as telecommunications and medical institutions, often require joint ventures with Chinese partners, with foreign equity typically capped at 50%.

Complementing the Negative List is the Market Access Negative List, which applies to both domestic and foreign investors. In April 2025, this list was trimmed to 106 items from 117 in 2022, easing barriers in sectors like hotel management and construction. Free Trade Zones (FTZs), such as those in Shanghai and Guangdong, operate under a separate FTZ Negative List, which is less restrictive but still enforces sector-specific rules. For example, while the 2024 Negative List lifted all manufacturing restrictions nationwide, FTZs had already relaxed these rules in 2021, offering British firms in fintech and professional services a testing ground for investment. However, inconsistencies between these lists can complicate compliance, and firms should seek expert guidance.

Sector-Specific Restrictions

Manufacturing: A New Era of Openness

The most significant reform in 2024 was the complete removal of foreign investment restrictions in manufacturing. Previously, sectors like publication printing and traditional Chinese medicine processing faced ownership caps or joint venture requirements. Effective 1 November 2024, these barriers were eliminated, allowing wholly foreign-owned enterprises to operate freely in manufacturing. This aligns with China’s “Made in China 2025” strategy, which prioritises high-end manufacturing and innovation. For UK firms in advanced manufacturing, such as aerospace or clean technology, this presents a golden opportunity to establish fully controlled operations, though local competition and IP risks remain concerns.

Services: Gradual Liberalisation

The service sector, critical for UK exporters in finance, healthcare, and technology, is undergoing cautious liberalisation. In telecommunications, pilot programmes in cities like Beijing, Shanghai, and Hainan, launched in April 2024 and expanded in 2025, relaxed foreign ownership restrictions for value-added services, including Internet Data Centres and Content Delivery Networks. The 2024 Negative List also removed foreign equity caps in app store services, reflecting China’s push to integrate AI and digital services. However, basic telecommunications services still require Chinese control, limiting foreign influence in core infrastructure.

Healthcare, a priority under the “Healthy China 2030” initiative, saw a landmark reform in 2024. A joint circular from MOFCOM, the National Health Commission, and the National Medical Products Administration permitted wholly foreign-owned hospitals in nine cities, including Beijing, Shanghai, and Hainan. This shift, effective from 1 November 2024, opens doors for UK biosciences firms, but strict regulations persist. Approvals for medical services and compliance with human genetic resource rules for research involving stem cells or gene therapy are mandatory, requiring robust due diligence.

Financial Services and Listed Companies

China’s financial sector, a stronghold for UK firms like HSBC, has seen progressive easing. The 2020 Negative List lifted equity caps for foreign investors in banking, securities, and insurance, allowing full ownership in certain financial services. In November 2024, rules for foreign investment in listed companies were relaxed, lowering the asset threshold for non-controlling investors from $100 million to $50 million and introducing tender offers as an approved investment method. These changes aim to attract capital to China’s stock markets, though geopolitical tensions and market volatility may temper enthusiasm.

Data, Cybersecurity, and Anti-Espionage Laws

China’s data and cybersecurity regulations pose significant challenges for foreign investors, particularly in tech-heavy sectors where the UK excels. The Cybersecurity Law of 2017, updated in 2024, mandates local storage of personal and “important” data and requires government approval for cross-border transfers. The Personal Information Protection Law (PIPL) of 2021 further tightens data handling, impacting firms in e-commerce and digital services. The Anti-Espionage Law, amended in July 2023, expanded its scope to include “documents, data, or materials” related to national security, raising concerns about vague enforcement. Foreign firms, including UK tech companies, must navigate these laws carefully, as compliance failures can lead to fines or operational bans. The CBBC recommends partnering with local legal experts to ensure adherence while protecting IP, especially in China’s first-to-file patent system.

Geopolitical and Trade Considerations

The U.S.-China trade war, escalating in 2025 with U.S. tariffs on Chinese goods reaching 145%, has ripple effects for foreign investors. Dual tariffs—125% on components imported into China and 145% on exports to the U.S.—complicate supply chains for manufacturers reliant on China for assembly. While the UK faces fewer direct trade barriers, China’s retaliatory measures, such as rare earths export controls in April 2025, underscore its economic leverage. British firms benefit from a stable UK-China relationship, reinforced by the UK-China Economic and Financial Dialogue (EFD) in 2025, which eased barriers in agri-food exports. However, the UK’s National Security and Investment Act (NSI) mirrors China’s scrutiny, requiring notifications for investments in 17 sensitive sectors, highlighting the need for transparency in bilateral deals.

Incentives and Challenges

China’s Catalogue of Encouraged Industries, updated in 2024, incentivises investment in high-tech fields like gene sequencing and green energy, offering tax breaks and land-use subsidies. The “24 Point Guidelines” of 2023 promote equal treatment in government procurement and streamline data flows, though local implementation varies. Despite these efforts, challenges persist. A 2023 CBBC survey found 73% of British multinationals faced restrictions, from opaque licensing to discriminatory procurement. The World Bank’s 2023 transparency score of 1.75 out of 5 reflects regulatory complexity, particularly for SMEs. Bureaucratic delays in profit repatriation and local competition further complicate operations.

Strategic Considerations for British Businesses

For UK firms, success in China hinges on strategic planning. The CBBC offers market insights and partner vetting, critical for navigating restrictions. Local partnerships can ease compliance, especially in restricted sectors like healthcare. Understanding consumer preferences and digital platforms like WeChat is vital, as is safeguarding IP through proactive registration. Collaborations, such as Westwell Holdings’ AI-powered trucks at Felixstowe port, showcase UK-China synergy in aligned sectors like AI and clean tech.

China’s investment regime is evolving toward greater openness, but restrictions in services, data, and sensitive sectors remain. For British businesses, the challenge is to balance compliance with ambition, leveraging China’s market while mitigating risks. With careful navigation, UK firms can capitalise on this dynamic economy, fostering mutual growth in a globally connected world.

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From evolving trade policies to technological decoupling, this article gives a brief overview of what we know so far about what Trump 2.0 means for China.

Whither the US-China trade war

A defining feature of Trump’s first term was the US-China trade war, characterised by tariffs on hundreds of billions of dollars in Chinese goods. While no immediate tariffs were announced in Trump’s first day in office, a trade memo directed the government to scrutinise US trading relationships and evaluate China’s compliance with the 2020 US-China Economic and Trade Agreement.

There were some signs of détente in the form of a meeting between Elon Musk and Chinese Vice President Han Zheng just before the inauguration, where Han reportedly invited US firms including Tesla to deepen investments in China and Musk reaffirmed Tesla’s commitment to expanding cooperation with China.

Nonetheless, this measured start is unlikely to extend into the long term. Trump’s approach to trade will focus on securing tangible, short-term wins for the US, often without regard for broader strategic consequences. Moreover, China is in a weaker economic position than it was during the opening salvo of the trade war, as it faces a sticky real estate crisis, rising youth unemployment and depressed consumer confidence.

The TikTok question

For an example of Trump’s strategic unpredictability in US-China relations, we need only look to his handling of the TikTok controversy. During his first term, Trump ordered a ban on the Chinese-owned app, citing national security concerns. However, on 20 January 2025, Trump signed an executive order to delay the enforcement of a law requiring TikTok owner ByteDance to sell its US operations to an American or allied buyer or face a ban for an additional 75 days. After going dark for a few hours on Sunday, an announcement on the app credited Trump as its saviour. The TikTok decision underscores Trump’s tendency to use high-profile cases as leverage for broader concessions – especially if they benefit him, as TikTok did during his campaign. China will have to navigate the risks and opportunities of this transactional policymaking.

Decoupling in technology

Despite his TikTok reprieve, technology will remain at the heart of Trump’s US-China policy.

His first term saw the blacklisting of companies such as Huawei, and restrictions on semiconductor exports – actions that disrupted China’s tech ecosystem. The Financial Times reports that further measures targeting critical technologies – such as artificial intelligence and quantum computing – are likely to curb China’s ambitions in these fields.

For China, the emphasis will shift to achieving self-reliance. The Made in China 2025 strategy, which aims to reduce dependence on foreign technology, is poised to take on even greater importance. However, Beijing faces significant hurdles, including its reliance on advanced semiconductor manufacturing equipment from US-aligned countries. While China has made progress in innovation, it remains constrained by gaps in high-end technologies, a vulnerability that Trump’s policies will continue to exploit.

Geopolitical rivalries in Asia

Trump’s “America First” agenda has historically created openings for China to expand its influence across Asia. However, his second term may see a recalibration of this strategy. Trump is likely to adopt a more assertive stance in the Indo-Pacific, leveraging alliances to counterbalance China’s growing clout.

This renewed focus aligns with Trump’s broader goal of containing Beijing’s regional ambitions, particularly in the South China Sea. Nevertheless, Trump’s transactional diplomacy could undermine the unity of these alliances. For example, his demands for increased defence contributions from allies like Japan and South Korea may alienate key partners, inadvertently strengthening China’s position in the region.

Conclusion: A high-stakes four years

Trump’s second term presents both challenges and opportunities for Beijing, from potential trade resets to heightened risks of technological decoupling and geopolitical competition. For policymakers on both sides, managing this complex relationship will require balancing immediate priorities with long-term strategic considerations.

China’s response to Trump’s agenda will be closely watched worldwide. Whether Beijing chooses to double down on self-reliance or seeks avenues to de-escalate tensions, the stakes are immense for the global economy and international stability. As the two superpowers continue their strategic rivalry, the international community can only hope for a path that avoids escalation and fosters cooperation on pressing global issues.

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Reeves’ visit follows the dialogue opened last year between Prime Minister Keir Starmer and President Xi Jinping at the G20 Summit in November 2024, the first between the two countries’ leaders in six years. At that meeting, Starmer emphasised the importance of a “strong UK-China relationship” for the benefit of both nations, underscoring the need for China and the UK to foster economic cooperation.

Joining the Chancellor on her visit – the first by a UK Chancellor in nearly a decade – to China were the Governor of the Bank of England, Andrew Bailey, and the Chief Executive of the Financial Conduct Authority, Nikhil Rathi. A senior business delegation also joined the Chancellor, including CBBC President, Lord Sassoon, as well as senior representatives from abrdn, Fidelity, HSBC, London Stock Exchange Group, Prudential, Schroders, and Standard Chartered.

The central focus of the Chancellor’s visit was the 11th UK-China Economic & Financial Dialogue (EFD), the first since 2019. Co-chaired by Chinese Vice Premier He Lifeng and the Chancellor, the EFD is a key mechanism for government-to-government bilateral exchange and communication and is expected to result in significant outcomes for British business.

Following the EFD on Saturday, 11 January 2025, a series of substantial outcomes were announced, covering a wide range of sectors and initiatives. We summarise below some of the key messages:

• Pragmatic cooperation with China will result in agreements worth £600 million to the UK economy over the next five years and sets a course to deliver up to £1 billion of value for the UK economy.
  
• New licences and quota allocations for UK financial firms such as HSBC, Schroders, abrdn and Aspect Capital have been granted, as well as initiatives to improve capital market connectivity, pensions (including the establishment of a UK-China Pensions Symposium on a regular basis), insurance and sustainable finance cooperation.
  
• A range of initiatives have been announced to cover better capital markets connectivity (including bond issues in the UK market), greater offshore RMB trading and hedging.
  
• In services, there are a range of commitments to address market access in China for law firms, engineers, and accountancy qualifications.
   
• There are also a number of commitments to improve people to people exchanges, including a new UK-China Chevening Financial Fellowship programme.
  
• The Ministry of Commerce (MOFCOM) and the Department for Business and Trade (DBT) agreed to convene the 14th UK-China Joint Economic and Trade Commission.

CBBC will ensure that it is central to these activities, offering its members the opportunity to be part of these vital exchanges.

“The agreements we’ve reached show that pragmatic cooperation between the world’s largest economies can help us boost economic growth for the benefit of working people – a priority of our Plan for Change,” the Chancellor said. “More widely, today is a platform for respectful and consistent future relations with China. One where we can be frank and open on areas where we disagree, protecting our values and security interests, and finding opportunities for safe trade and investment.”

CBBC President, Lord Sassoon, said: “UK-China Economic and Financial Dialogues have had a significant impact on generating investment, jobs and profitable business for the UK over many years. The resumption of the EFD is welcomed by our members, both in financial and professional services, but also across the wider economy.”

CBBC played a central role in the visit, including organising a roundtable for the Chancellor to meet with leading British companies in China and co-hosting a reception, bringing together UK and Chinese business representatives.

The government is explicit in its desire to build a platform for a long-term relationship with China that works squarely in our national interest – ensuring our economy has the broad base and resilient foundations for the growth that makes working people in every corner of Britain better off.

Commenting on Reeves’ visit to China, CBBC Chief Executive Peter Burnett said, “CBBC is delighted to see the 11th EFD underway after a break of some six years. Economic and business growth is a central mission for both the United Kingdom and China. We are confident that this dialogue will herald the start of a more stable and practical relationship between both countries and will build confidence for exports, investment, financial engagement and growth.”

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The move, which prohibits the export to the US of products such as gallium, germanium, antimony, and superhard materials, strengthens China’s existing limits on critical mineral exports and represents a rapid retaliation to the US Commerce Department’s latest round of tech export controls announced on Monday, 4 December 2024.

These export controls, introduced on national security grounds, curtailed the sale of two dozen types of semiconductor-making equipment to China and restricted 140 Chinese companies from accessing American technology.

The measures add to the many existing US tech controls imposed against China in recent years, which have reduced the types of semiconductors that American companies are allowed to sell to China.

In addition to China’s retaliatory controls on strategic materials, the US government’s action also prompted four major Chinese industry associations to advise against using US chips on Tuesday, claiming they are “no longer safe” and advocating for domestic alternatives.

The warning may affect major companies such as Nvidia, AMD, and Intel and was criticised by the Semiconductor Industry Association, a US industry body.

Analysts view the coordinated warnings as a significant escalation in the trade war and China’s export ban on critical minerals as a major retaliatory measure.

Chinese semiconductor firms, including Naura Technology Group, stated that their inclusion in the US Department of Commerce’s Entity List will have minimal impact due to their focus on domestic markets, supply chain control, and the use of domestically sourced or alternative components.

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Although the year was challenging for both countries – China’s economy did not “rebound” as expected following the lifting of pandemic restrictions in late 2022, and the UK’s GDP grew by just 0.4% amidst lingering inflation and high interest rates – UK goods exports to China rose 0.9% to £22.4 billion (according to ONS data), reversing the decline seen in 2022. It’s worth noting that HRMC, which calculates differently, showed goods exports falling 1.6% to £21 billion. Imports fell by 11.1%, resulting in an £8 billion cut to the UK-China goods trade deficit.

Overall, China remained the UK’s third-largest trading partner, with total two-way trade in goods and services amounting to over £105 billion.

The tracker shows trade with China has the potential to be a key driver of regional growth in the UK. According to HMRC data, UK goods exports to China generated £16.5 billion in wealth for regional economies outside of London.

Notably, the Midlands emerged as a trade powerhouse in 2023. The East Midlands’ and West Midlands’ trade exports to China generated £6.7 billion over the year, growing faster than any other UK region individually dethroning London to become the UK’s top exporters. The other two regions that saw positive growth in their exports to China were the South West and Northern Ireland.

In terms of goods categories, “Power Generating Machinery & Equipment” rocketed 48% to £4.45 billion, surpassing the previous number one category “Road Vehicles”, which grew from £3.7 billion to £3.8 billion.

“These numbers highlight China’s vast potential as a market for UK goods,” says Rob Ismay, Interim Chief Executive at the China-Britain Business Council. “With a land area 39 times that of the UK, 160 cities with populations exceeding one million, and as the home of 20% of the world’s middle class, China continues to be an attractive export destination for British products.”

The China Trade Tracker was launched by the China-Britain Business Council (CBBC) in 2021 as a reference tool providing the facts and figures about UK-China trade, and how Britain’s regional economies are impacted by their trade with the world’s biggest market. It is updated on a half-yearly basis.

Issue Nine of the Tracker provides an overview of goods trade between 12 UK regions and China in 2023. Unless stated otherwise, references to China in this report include Hong Kong.

Click here to read Issue 9 of the China Trade Tracker

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Parts of the UK saw a strong recovery in trade with China in the second quarter of 2022 as its economy recovered from severe lockdowns earlier in the year, new analysis from the China-Britain Business Council shows.

Although Chinese exports and imports valued in US dollars grew only 2.1% year-on-year in April – the slowest increase since the height of the pandemic in June 2020 – there were still some signs of success.

Figures show significant year-on-year increases in UK export values for medicinal and pharmaceutical products (up 19% from £275 million to £329 million), professional, scientific and controlling instruments (up 25% from £153 million to £192 million) and manufacture of metal (up 61% from £34 million to £55 million), which all performed better year on year in Q2 2022.

“The UK and China have a long history of trade and diplomatic ties going back over 400 years. With the right guardrails in place, we can enjoy a pragmatic trading relationship that works for the national interest, while standing up for our values,” said Andrew Seaton, CBBC Chief Executive, adding: “This is vital for supporting British jobs and our economy, particularly as we face some of the toughest challenges in a generation.”

While exports to China fell across most regions of the UK, Yorkshire and the Humber saw goods exports increase 41% year-on-year – the biggest rise in the country – fuelled primarily by surging petroleum exports, up nearly 680%.

Other parts of the country, including the wider North of England, also proved relatively resilient, with rises in export values from the North East (+1.4% YoY), the North West (+3.9%) as well as the East Midlands (+3.7%).

Wales – which saw the strongest growth in goods exports to China out of any UK region in Q1 – continued to benefit from Chinese demand for power-generating machinery and specialised machinery, improving its goods exports in Q2 by 36% year-on-year.

The report comes as the spotlight once again turns to UK-China relations, with Prime Minister Rishi Sunak using his recent speech at the Lord Mayor’s Banquet to outline his vision for foreign policy, saying he would focus on “standing up to our competitors, not with grand rhetoric but with robust pragmatism”. The UK would be “stronger in defending our values”, he said, while avoiding “simplistic Cold War rhetoric”.

The day before, Minister for the Indo-Pacific Anne-Marie Trevelyan told Australia’s National Press Club, “We cannot afford to do anything other than focus on this region…In short, this region is critical to the UK – to our economy, our security and to the international rules-based system, that both our countries cherish.”

UK goods exports to China have grown a staggering 495% over the past 15 years, making China the UK’s third largest goods trading partner.

With the UK facing tough economic times, we must use every tool at our disposal to create growth. China presents an extraordinary opportunity in this regard — Andrew Seaton, CBBC Chief Executive

The China Trade Tracker was launched by CBBC in October 2021. Produced every quarter, it acts as an ‘always-on’ reference tool providing the facts and figures about UK-China trade and the impact on the UK economy, including at the regional level, of trade with the world’s second-biggest economy.

Each issue of the China Trade Tracker provides an overview of the impact of Chinese trade and a detailed analysis of each region across the whole of the UK. It draws on Government, HMT, DIT and ONS data, compiled by CBBC’s specialist analysts.

Click here to read Issue 6 of the China Trade Tracker

The post The latest CBBC UK-China trade statistics appeared first on Focus - China Britain Business Council.

Trade and Economic Ties 

• China is now the UK’s 4th largest goods trading partner, after the U.S. and Germany. In 2021, China was the UK’s 6th largest export market for goods and the single largest source of imports.
• The UK’s links to China via goods trade, tourism and education support an estimated 114,000 to 129,000 jobs across the country, according to 2020 research by Cambridge Econometrics.
• The UK’s goods exports to China rose 0.8% year-on-year in 2021, to a total of £18.1 billion. Imports from China increased 16.2% year-on-year to £63.5 billion.
• In 2021, exports of essential goods (excl. crude oil and gold) were up 11.4%, compared to a much weaker recovery of comparable exports to other major trading partners: USA (1.7%), EU (2.0%), Japan (1.7%).
• In 2021, the UK shipped 12.6% of its road vehicle exports, and 6.6% of its machinery and transport equipment exports to China.
• The UK’s services exports to China increased by 1.1% in 2021, to a total of £8.2 billion. Service imports from China rose 15.4% to £2.5 billion.
• In August 2022, UK goods exports were worth around £2.0 billion, up 28.5% year-on-year. Chinese imports into the UK were worth £5.1 billion, a drop of -11.4% compared to the same month in 2021. In August, China was the UK’s second-largest source of imports after Germany and the sixth-largest export destination. It was the UK’s fourth largest trading partner behind Germany, the United States, and the Netherlands. 

Investment and Financial Services 

• The UK is Europe’s most popular destination for Chinese FDI; between 2000 and 2020, Chinese firms invested €51.9 billion (~£44 billion) here.
• By the end of 2019, British firms held FDI positions worth £10.7 billion in mainland China. The stock of Chinese FDI in the UK stood at £3.2 billion.
• The London-Shanghai Stock Connect opened in June 2019, the first trading link for a mainland Chinese market outside of Hong Kong.
• London is the world’s largest hub for trading in the renminbi outside China. 

Education 

• The Chinese Embassy in the UK estimates that there are currently between 200,000 and 216,000 Chinese students currently enrolled at British universities. Chinese students are by far the largest cohort of foreign students in Britain, accounting for a fifth of full-time places.
• Chinese students contribute £2.1 billion (7% of all revenue) to the UK education sector. 

Tourism 

• Chinese tourists made a total of over 880,000 visits to Britain in 2019, up nearly sevenfold from a decade ago.
• Those tourists spent some £1.7 billion in the UK, with London, Edinburgh and Oxfordshire among the most popular destinations.

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