Is Starmer’s China visit a lose-lose trip?
Starmer was looking for win-win, Golden Era opportunities from his China visit, but the reality has yielded few tangible outcomes, writes Sam Goodman
Keir Starmer’s visit to Beijing this week has been a carefully stage-managed affair with both sides keen to talk up the prospect of a new and improved “sophisticated relationship”. Some have likened the trip’s tone and focus on “win-win” trade opportunities as akin to the Cameron government’s “Golden Era” of relations with China, which ran from 2010 until 2016.
The high-level production of this state visit makes sense given that a quarter of the UK trade delegation was made up of theatre, museum and orchestra representatives, which reflects the role of the creative industries as one of the strategic sectors in the government’s recently published industrial strategy.
Only nine representatives from the financial services and wealth management industries were in attendance, which may indicate the sector’s assessment of China’s economy and the likelihood they will see genuine market access after years of unfilled promises.
Within the context of China’s $1 trillion trade surplus, its move towards increasing economic self-sufficiency and its projection to increase from 30 per cent to 40 per cent share of global manufacturing, this trade trip was always going to be difficult.
What’s changed since the UK’s last visit?
Since the last time a UK Prime Minister set foot in Beijing in 2018, the UK’s trade deficit with China has doubled while the UK’s market share for goods and services in China fell last year after remaining largely unchanged since 2014.
Despite the framing of China as a natural partner to drive growth in the UK economy, China only accounts for 0.2 per cent of foreign direct investment, which contrasts starkly against the USA which accounts for £1 in every £3 of foreign investment.
The UK public is all too aware of the high price of getting Chinese investment into the UK wrong, whether that is the £2bn of taxpayer money being spent on stripping Huawei from our 5G telecommunications network or the £700m given to China Nuclear General to exit Sizewell C.
Past “successes” of the UK-China economic relationship have not stood the test of time. The Chinese owner of Lotus last year announced the cutting of 42 per cent of its UK workforce, while UK-listed pharmaceutical company Astrazeneca’s local executives continue to languish in jail in China on allegations of fraud and violating the country’s Data Security Law.
China trip yields few tangible wins
Similar to the recent visits of Canadian Prime Minister Mark Carney and French President Emmanuel Macron to Beijing, the tangible outcomes from this visit appear few and far between. These announcements include non-binding Memorandums of Understanding, the extension of visa-free travel to UK nationals which European nationals received a year ago, a migration cooperation agreement that amounts to the Chinese Ministry of State Security asking Chinese retailers like Temu and Alibaba not to sell boat motors to criminal gangs in France, China slashing UK whiskey import tariffs by five per cent and Astrazeneca announcing £15bn worth of investment in China as part of its ongoing plans to relocate more of its manufacturing and research and development away from the UK despite the risks to personnel and intellectual property.
The UK government estimates that the slashing of whiskey tariffs will be worth £250m to exporters over the next five years, which is comparable to the amount of money the UK government has spent since April 2024 on its partial nationalisation of British Steel. This begs the question of how seriously these deals with China will move the needle of economic growth, which Starmer has stated consistently is the primary goal of his government.
Instead, this trip appears to be an ice-breaker with the promise of more engagement to come and a study of future possible deals, despite the patchy track record that the UK has with its China investments. The challenge now will be for the government to answer critics of its China policy, who assert that national security concerns are being ignored and increased investments and trade from China has not materialised.
Sam Goodman is the senior policy director of the China Strategic Risks Institute