In a separate move, China’s commerce ministry last week declared a sweeping 90-day halt for US corporate entities named on its fictitious-unreliable entities list. For China, this decision represents an important step in its long-term game plan. It’s intended to mitigate the likely disruption of Chinese products from British supply chains, created by a potential US-UK trade agreement.
As the UK continues to define its relationship with the US in a post-Brexit world, China will still be integral to global trade and investment. In 2024, bilateral trade between China and the United Kingdom upped over £98.4 billion ($203 billion). That astonishing number made China the UK’s fifth biggest overall trading partner. This week’s trade news illustrates the tenuous state of global trading relationships. It emphasizes the dangers of getting too tight with the US.
China’s Strategic Moves
China’s announcement is the latest turn in a series of actions taken to deepen its trade ties across the world. President Xi Jinping met with Brazil’s President Luiz Inacio Lula da Silva, signaling China’s efforts to rally support amidst increasing tensions from US tariffs. To alleviate bilateral trade friction, China has reduced the average tariff on US products from 125 percent to just 10 percent. They have further declared a freeze of non-tariff measures against 17 US entities.
In further goodwill gestures, China will grant 90-day extensions of the reprieve to 28 other US companies that have appeared on its export control list. These measures would seem to reflect China’s desire for good-faith dialogue and negotiation, although persistent friction with the US continues.
“Cooperation between countries should not target or harm any third party.” – Lin Jiang
China fears being locked out of strategic markets, including through exclusions in automotive supply chains. This concern partly informs its sceptical stance towards the negotiations on a UK-US trade deal. The whole nation should be concerned by this possible gambit to partition Chinese products out of the British market. Yet if finalized, this move would be nothing short of transformational across several sectors.
Implications for UK-China Relations
The UK government has recognized that deepening trade and investment ties with China are important to its economic prosperity. A spokesperson from the Department for Business and Trade emphasized the importance of maintaining robust economic ties with China, despite the looming influence of the US.
If the UK goes too far in mimicking the US, experts caution that it could backfire on Britain. Dr. Yu Jie noted that “China has offered a warning to the rest of the world, that if other countries decide to be on the side of the United States, China will go after and punish them — I think that message has been quite loud and clear.”
This sentiment further highlights the personal and political balancing act that countries will need to face in a more polarized geopolitical environment. The effects of the proposed US-UK trade agreement could be felt much deeper than immediate economic fallout, shifting long-term alliances.
The Broader Economic Landscape
China’s economic links with Australia are now more extensive than its relationship with the UK. This increase marks a broader trend, telling a different story about Chinese trade interests. The country has already banned sales from some US companies. These strict import regulations make it more difficult for foreign entities to work within their borders.
Yet negotiations for the all but definitive US-UK trade agreement are continuing. Analysts continue to call on American businesses with a deep footprint in China to be vigilant and on guard. Jeffrey Henderson remarked, “This is how we propose to proceed in the future, so those of you who have a major Chinese presence in your supply chains, and whatever products you’re sending to the United States, then beware.”
He further noted that “the US government may be using the British trade deal as a demonstration,” suggesting a broader strategy to leverage international alliances against perceived economic adversaries.
