The Future of UK China Trade 

The United Kingdom and China share a long history of both imperial and post-imperial diplomatic interaction and trade. Today, the only change is the dominant party in this trade relationship. During the third quarter of 2024, British dependence on Chinese trade amounted into the billions, resulting in a trade deficit with China worth £25 billion, around 5.2% of all the United Kingdom’s foreign trade. As Britain's fifth-largest trading partner, China  has long been seen as holding a significant position in Britain's post-Brexit strategy and trade negotiations and this current agreement makes this clear. This strategy becomes even more pertinent when considering that the USA is headed for a 'Golden age' of 'trade and development', in which the United States seeks to eek out more profit by aiming its sights firmly on China.

As stated in the latest policy paper, accurately but not briefly named the “2025 UK-China Economic and Financial Dialogue: Policy Outcomes,” from the Treasury, the UK and China recognise the central role of their financial centres in facilitating international trade and connections. The agreements between China and Britain on climate change remain strong and are promoted through their partnership in both green and biodiversity finance.

This involves investor finance for green energy technology, reductions, and transformations into new industries currently hindered by ‘outdated’ fossil fuel technology.The Agreed plans include the first issuance of the Chinese Renminbi sovereign green bond on the London Stock Exchange (LSE) and steps to enhance connections between the LSE and the Shanghai Stock Exchange (SSE), allowing UK financial institutions to trade in China's OTC share market, meaning greater efficiency and lower costs as well as higher risks, including lack of impartial regulatory authorities for British financial companies operating in China. However as the saying goes, with risk comes reward, and without a doubt, British financial institutions will capitalise on this prospect. 

This dialogue, although seemingly benign, marks a breakthrough in recently stagnating British-Chinese relations. In light of recent geopolitical events across the Atlantic or Pacific, depending on your reference frame, increased interconnectedness has become a priority. China and the UK “reaffirmed their support for multilateralism and cooperation”, both seemingly underscoring their desire to move towards a  Free Trade Agreement (FTA), though this is unlikely to happen in the near future. 

Paying special regards to this important diplomatic evolution, the cause of this alignment is most peculiar, as just over a year ago the then prime minister, Rishi sunak proclaimed that he was “"acutely aware of the particular threat to our open and democratic way of life” and that “all necessary steps” to ensure that the chinese state could not interfere in the ways of the british state. 

However, this revelation and potential pivot towards a more open stance on China foreshadows a greater geopolitical shift underway on the international stage. With a new, seemingly growing, friendship between the United Kingdom and its multinational neighbour, the European Union, and strengthening ties with a more assertive China, Britain seems set to simultaneously address the weak links both the EU and China have with a continuously isolationist and protectionist America. In this new global arena, Britain could be looking to capitalise on a new position in global politics, potentially becoming the trading post of the northern hemisphere, acting as a middleman in international trade. This push to renew multilateral agreements with China can thus be seen as an act of diplomatic prelude, setting the stage for years of potentially fruitful diplomatic engagement. The expectation then that a continued and growing partnership between the UK and China continues seems likely, despite immediate setbacks precluded by the fact that Britain is a strong NATO and United States ally. 

Despite the importance of this new UK-China trade deal, the British government predicts that the total value of the agreement will be worth “£600 million over the next five years”, with the potential to contribute up to “£1 billion to the British economy”. However, this pales in comparison to the scale of British trade with the United States. During the third quarter of 2024, the UK exported £182.6 billion worth of goods and services to the US, resulting in a total trade surplus of £71.1 billion, according to the Department for Business and Trade.

While trade with China is not yet compromising the UK's special relationship with the US, there is potential for growing friction as the UK navigates its trade relationships with both nations foreign policies, which are increasingly at odds.

Some other Key takeaways from this deal include the fabled continuation and habitual process of opening up British pork markets for Chinese consumption as eccentrically alluded to by former conservative Secretary of State for Environment, Food and Rural Affairs Liz Truss in 2014. Additionally, and somewhat crucially for whiskey investors,  China will now accept Whisky Line Of Thought (LOT) number codes for British whisky products with an alcohol content over 10%. This means that extra information, like the production date, won't be necessary for British whisky imports to China, streamlining the process. In addition to this, Chinese markets are gradually opening up to foreign law firms, especially to those from the UK, allowing law firms to set up representative offices in China. This move could, in time, foster an environment in which closer business ties and smoother legal operations between the two countries 

In summary, January has been a productive month for the British and Chinese governments, with both parties agreeing to continue green deals and promoting free trade amidst an era of isolationist policies from the Trump administration.All in all, it remains to be seen if this new year, the year of the snake, will in fact spell the dawn of a new intuition and strategy between China and United Kingdom or if this deal really will just slither out of importance with the megalithic changes that are to come to the international system. 

In next month's edition, Life in our time Magazine will focus on the impact of Trump's tariff implementations on China and the resulting implications for the UK. The edition will explore whether the UK can further consolidate its position as a ‘northern trading hub’ within Europe or seek to strengthen its trade relations with the US to safeguard its already extensive trade operations.

Thank you for taking the time to read Life in our time Magazine's first publication surrounding trade between the UK and China. For more information please visit our Website, LinkedIn or Instagram.

Sources:

Corera, G. & Grammaticas, D., 2023. China poses threat to UK way of life, says Rishi Sunak , London: BBC.

Department for Business and Trade, 2025. Trade and Investment Factsheets: China, London: HM Government UK.

Department for Business and Trade, 2025. Trade and Investment Factsheets: United States, London: HM Government UK.

HM Treasury , 2025. 2025 UK-China Economic and Financial Dialogue: policy outcomes: 2025 UK-China Economic and Financial Dialogue. London: HM Government.