The United Kingdom is making up its policy on China “as it goes along” and faces the risk of having its strategy dictated by Washington or Beijing, a parliamentary report has concluded.
An investigation by the Commons business, innovation, science and trade select committee mentioned that Labour’s failure to formulate a coherent strategy since 2024 “combined the worst of both worlds” for the UK in relation to China, reports Guardian.
The report found that the government could neither deliver commercial opportunities to British businesses nor control the “increasing exposure to unquantified, managed risk” in relations with Beijing.
Failure to deliver consistency
In 2024, the new government promised a strategic, long-term, and consistent UK approach to China, but it has failed to deliver on this commitment. The report warned “Britain must shape its own relationship with China or risk having that relationship shaped for us in Washington or Beijing.”
Liam Byrne, Labour lawmaker and chair of the committee, said the UK’s policy on China was also endangering business with the European Union, posing the risk of being “cut off” from major manufacturing contracts.
Sharply criticising the government’s piecemeal approach, Byrne said, “Britain’s businesses cannot plan when the government keeps making up its China policy as it goes along.
Ministers promised clarity and consistency. Instead, we have opportunities missed, risks unmanaged and decisions left until the 11th hour.”
Diplomatic ice age and economic realities
The UK’s relationship with China has been marked by a lack of engagement over the last 10 years, with Keir Starmer making the first official visit in January since Theresa May’s visit in 2018.
Although the trip was billed as an effort to end the “diplomatic ice age”, China has benefited since 2018 from an export boom that is now fuelling fears of deindustrialisation, adding to deep-seated concerns over cyber espionage and national security.
Despite these risks, lawmakers acknowledged the commercial advantages of trading with Beijing, noting that British businesses maintain profitable operations in China, “are ambitious to grow”, and seek to learn from the country’s “world-leading” innovations. Consumers also benefit from low-cost imports, such as electric vehicles (EVs), at a time when household incomes are squeezed.
Opaque decisions on energy and steel
The committee highlighted recent government interventions as being “characterised by reactivity, inconsistency and opacity.”
In March, ministers blocked the Chinese firm Ming Yang from constructing a £1.5 billion wind energy plant in Scotland after years of negotiation, citing unspecified security risks.
Scotland’s first minister, John Swinney, has called on Andy Burnham to reconsider Starmer’s decision.
That intervention, alongside the emergency takeover of British Steel from its Chinese owners, was cited as evidence of an inconsistent stance.
To establish stability, the report calls for “clear new rules of the game”. It recommends designating a “red zone” for industries that would be off-limits to Chinese investment, alongside a “green zone” where trade should be actively encouraged.
The committee stated that work on a new strategy should be combined with official preparations for new trade remedies to counter unfair competition, including potential tariffs on EVs, a measure Downing Street has not ruled out.
European Union alignments and global competition
Byrne warned that a China strategy is an urgent concern as “Europe is changing fast” and “proposing new trade protections as it gets bolder with Beijing and warier of Washington.” He cautioned that new EU laws “may trap Britain outside EU trade walls, cutting us off from our largest market.”
Byrne suggested that the government “should be prepared to consider dynamic alignment” with the EU, including tariffs on EVs, “as the price of securing British firms a place in the EU’s Made in Europe project” and to help guard against Chinese dominance.
While the UK faces mounting pressure to align with the EU on EV tariffs, Business Secretary Jonathan Reynolds stated he will decide in the best interests of the UK.
Meanwhile, the report noted that “the UK’s partners are moving further and faster.” The EU has already imposed tariffs on Chinese EVs, capped hybrid car imports, and is considering a Franco-German proposal for a “kill switch” to block imports if China weaponises trade, following its curbs on rare-earth minerals and chips last year.
China is currently on track to surpass last year’s record $1.19 trillion trade surplus with the rest of the world. Its latest five-year plan, covering 2026 to 2030, prioritises the strategic expansion of high-value green exports, including EVs, batteries, wind turbines, hydrogen, and solar panels.
