UK committee warns of business risks due to lack of China strategy

Lack of strategy and business risks

The Commons business, innovation, science and trade select committee concluded the UK makes up China policy "as it goes along" and risks having its strategy dictated by Washington or Beijing. The investigation by the committee found that the failure to formulate a coherent strategy since 2024 combined the worst of both worlds for the UK in its relations with China. Liam Byrne, the committee chair and Labour MP, said the government cannot deliver commercial opportunities to British businesses or control unmanaged risks in relations with China. He stated that Britain’s businesses cannot plan for the future because ministers make decisions left until the 11th hour. Byrne also warned that the government’s piecemeal approach endangers business with the EU, as the UK risks being "cut off" from large manufacturing contracts.

The committee’s report noted that the UK’s relationship with China has lacked engagement for 10 years, with Keir Starmer making his first official visit in January since Theresa May visited in 2018. This trip aimed to end the "diplomatic ice age," but China has since benefited from an export boom that fuels fears about deindustrialisation and national security. The committee cited the decision to block the Chinese firm Ming Yang from building a £1.5bn wind energy plant in Scotland. Following the decision, John Swinney asked Andy Burnham to reconsider the move because of security risks. The report also noted that the emergency takeover of British Steel from its Chinese owners was reactive and inconsistent.

Trade competition and industry zones

The report recommends the UK establish clear new rules of the game, including a "red zone" for industries off-limits to Chinese investment and a "green zone" where trade should be encouraged. This comes as the UK must prepare for new trade remedies to counter unfair competition, such as potential tariffs on electric vehicles. Byrne argued that a China strategy is urgent because Europe is changing fast and proposing new trade protections as it gets bolder with Beijing and warier of Washington.

China’s trade surplus with the rest of the world reached $1.19tn last year, and its latest five-year plan prioritises the expansion of high-value green exports. The EU has already imposed tariffs on Chinese electric vehicles and is considering a Franco-German proposal for a "kill switch" to block imports if China weaponises trade, similar to last year’s curbs on exports of rare-earth minerals and chips. Byrne suggested the UK should consider "dynamic alignment" with the EU, including tariffs on electric vehicles, to help secure a place for British firms in the EU’s "Made in Europe project". While the EU moves faster, business secretary Jonathan Reynolds said he will make a decision in the best interests of the UK.