Sir Keir Starmer’s visit to China last week is the first sign that the two nations are seeking to end the diplomatic “freeze” that has defined their relationship. Both leaders face economic pressures at home and are seeking new opportunities for trade and investment following the disruption to the international trading by the USA’s current leadership. Starmer is the first British prime minister to visit China since Theresa May in 2018, heading to Beijing with an aim of highlighting the strength of British firms in finance, pharmaceuticals, healthcare, clean energy and car making. President Xi Jinping likewise aimed to display how his nation could be a reliable partner and alternative to the US for Western economies. Although no mighty free-trade deal could be made, the visit did signify a cautious but active reset to the economic ties between the nations.
The largest commercial announcement came from AstraZeneca, which committed to invest £11bn in China over the next four years, to expand research and manufacturing of medicines. This marks the company’s largest investment in China to date. In the energy sector, Octopus Energy is set to enter the Chinese market for the first time through a partnership with PCG Power to develop a digital platform for trading electricity. This allows the British firm entry into China’s large and growing energy market, where demand for clean energy and digital trading is on the increase.
China also agreed to halve tariffs on Scotch whiskey, from ten per cent to five, which the UK government says could generate over £250 million for the British economy over the next five years. Scotch whiskey is a valuable export for Britain’s alcohol sector, with more than £5bn in annual exports. In the past few years, China has been one of the faster-growing consumers of the beverage. Another deal made was visa-free travel for British citizens visiting China for up to 30 days on holidays and business, putting the UK on par with around 50 other countries, including France, Germany and Australia.
The visit, whilst promising in its potential, comes with significant diplomatic risks. US President Donald Trump recently warned that Canada could face 100% tariffs over deals struck with China during Mark Carney’s visit, and has warned the UK over deepening its commercial ties with China too. Starmer brushed off Trump’s criticism by noting the US president himself will be in China in April. Starmer’s visit follows others since November, including nations traditionally aligned with the US like France, Spain and South Korea. This visit is just the latest in a number of Western powers looking to move their business away from the unreliable US market.
