In February 2018, Theresa May completed a visit to China with announcements of education deals largely focused around Wuhan, China’s “Student City”, as well as reported unspecified business deals worth in excess of £9.3 billion, presumably forged by members of the Prime Minister’s accompanying business delegation.
The recent visit by the Prime Minister was the most recent development in a rewarding Sino-UK relationship visualised by then Prime Minister David Cameron in 2015, aided by the enthusiasm of Chancellor of the Exchequer George Osborne. The relationship was coined the “Golden Era” of trade and international relations between the two countries and kicked off in October 2015 with the first state visit of a Chinese President to the UK in 10 years.
The argument for the Golden Era being more than merely rhetoric is largely supported by the increased investment the UK receives from it’s far eastern counterpart. Chinese to UK FDI has increased from £666 million in 2010 to around £6.6 billion in 2016 and £14.9 billion in 2017 respectively, according to China Daily. A year on year growth of 126% between 2016 and 2017 represents a dramatic increase and potentially the indication of an appetite to continue investing in the UK despite Brexit, for now at least.
However, not every indicator is as positive. According to a report by the House of Commons Library titled ‘Statistics on UK Trade with China’, the UK enjoyed a record year of exports to China in 2014, with a high of £18.9 billion bagged. 2015 total exports dropped to £16.4 billion. In 2016 (the first year after the Golden Era was prophesied in late 2015) whilst exports climbed year on year vs. 2015 to £16.8, the pessimist might say that for all the efforts of David and George in 2015, the state visits and the royal photos with the Queen in attendance, only a measly year on year growth in exports of £0.4 billion was obtained. A total still £2.1 billion short of the 2014 total.
It would be a mistake to think that the UK has nothing of value to offer the Chinese market. UK services, particularly those in fields of travel and legal consultancy excel in China and contributed to a 2016 trade surplus of £1.6 billion with China when viewed independently of goods traded (when goods and services are taken together, the UK recorded a deficit of £25.4 billion for trade with China in 2016).
In terms of goods exported to China, the UK’s largest single product group sold in 2016 was road vehicles, valued at £3.7 billion and representing 28% of all goods exported to China in the year. The second and third most popular groups were petroleum and pharmaceutical products. As highlighted within previous articles, British luxury consumer goods have the potential to break into the top three and improve the UK’s exports to China as a whole.
Perhaps it is coincidence that David and George’s announcement of the Golden Era with China came in the year following the UK’s all time record high of export value to China, or perhaps it was this that inspired the announcement of the Golden Era, to attempt to ride the wave generated in and prior to 2014.
Either way, exports to China have shrunk since 2014. Perhaps an organic, bottom-up approach driven by private enterprise is more effective than a top-down approach led by Eton graduates.