The UK’s economic relationship with China has evolved significantly over the past few decades, with both nations recognising the mutual benefits of strategic investment partnerships. With the Labour government pursuing an ambitious UK growth agenda, the UK finds itself at a pivotal moment in terms of collaborating with and seeking investment from China. China’s expanding role in the global economy offers a wealth of opportunities for collaboration that could help the UK navigate a complex global economic dynamic and build a resilient, innovative future.
The historical context of UK-China economic relations
The UK-China economic relationship is grounded in a history of trade and investment. Key milestones in recent years include the establishment of the UK-China Economic and Financial Dialogue (EFD) in 2008, which provided a framework for discussing shared economic priorities. Over the years, this dialogue has fostered greater cooperation, helping to align mutual interests in trade, investment, and innovation.
However, the hiatus in EFD meetings, which spanned six years, reflects the complexities within which the potential role of China in the UK’s growth agenda operates. However, the resumption of the EFD during UK Chancellor of the Exchequer Rachel Reeves’ visit to Beijing in January 2025 signals a renewed commitment to finding common ground. The agreements secured during this visit – including new licences and quota allocations for UK financial firms such as HSBC, Schroders, abrdn and Aspect Capital and commitments to address market access in China for law firms, engineers, and accountancy qualifications, among many others – highlight the potential for a more collaborative and prosperous partnership.
Commenting on the resumption of the EFD, CBBC President Lord Sassoon said: “UK-China economic and financial dialogues have had a significant impact on generating investment, jobs and profitable business for the UK over many years. The resumption of the EFD is welcomed by our members, both in financial and professional services, but also across the wider economy.”
Current economic ties and investment landscape
China is currently the UK’s fourth-largest trading partner, with bilateral trade amounting to over £100 billion annually. British exports to China span a wide range of sectors, including automotive, pharmaceuticals, and financial services, collectively supporting hundreds of thousands of UK jobs – over 129,000 jobs according to a 2020 Cambridge Econometrics report. Chinese investments in the UK have been similarly diverse, covering infrastructure, renewable energy, and advanced manufacturing.
During Chancellor Reeves’ January 2025 visit, agreements worth £600 million were announced, focusing on areas such as financial services, trade facilitation, and climate-focused initiatives. These deals underscore the breadth of opportunities available for both countries to enhance economic cooperation. Indeed, a recent survey of over 120 CBBC member companies revealed that nearly 70% feel optimistic about their organisations’ business prospects in China over the next 5 to 10 years.
The role of Chinese investment in the UK growth agenda
Chinese investments have proven to be a significant driver of growth in various sectors critical to the UK’s economy.
In the renewable energy sector, Chinese companies have played a pivotal role in developing solar and wind energy projects, aligning with the UK’s priorities of reducing carbon emissions and transitioning to a sustainable energy future.
In 2017, China Resources National Corporation acquired a 30% stake in the Dudgeon offshore wind farm off the Norfolk coast for £600 million. This investment not only provided capital for the UK’s renewable energy infrastructure but also facilitated knowledge exchange in offshore wind technologies. Chinese companies Mingyang Smart Energy and Orient Cable are in discussions to establish factories in Scotland, focusing on offshore wind farm components. These initiatives align with the UK’s net-zero targets by enhancing domestic manufacturing capabilities in the renewable energy sector.
The technology sector has also benefited from Chinese partnerships, with investments enabling advancements in areas such as artificial intelligence (AI), telecommunications and fintech. For example, Ping An Insurance, a major Chinese financial services company, has been a significant investor in 10x Future Technologies Ltd, a London-based fintech firm. In 2021, Ping An participated in a $187 million Series C funding round, supporting the development of advanced banking technologies.
Opportunities for collaboration
Emerging industries present promising avenues for deeper UK-China collaboration. Green energy remains a key area of focus, with both nations investing heavily in wind, solar and hydrogen technologies. The financial services sector also holds potential for expanded partnerships, particularly in areas like fintech, insurance and green finance, where China’s expertise can complement UK initiatives.
Furthermore, the UK’s education sector continues to benefit from strong ties with China. With thousands of Chinese students enrolled in UK universities, there are opportunities to strengthen academic and research partnerships. Collaborative projects in science and technology could further enhance the innovation ecosystem, driving growth in both nations.
Efforts to improve trade facilitation, such as reducing barriers to market access and enhancing regulatory alignment, are also underway. These initiatives aim to create a more conducive environment for businesses in both countries to thrive.
Navigating challenges
Despite the evident benefits of Chinese investment, challenges remain. Concerns over national security have led to increased scrutiny of Chinese involvement in critical sectors, such as telecommunications and nuclear energy. Policymakers have sought to balance economic openness with the need to safeguard sensitive infrastructure and technology.
Human rights concerns have also influenced the discourse around UK-China relations, with some calling for a more cautious approach to engagement. The UK government must navigate these complexities carefully, ensuring that economic collaboration does not compromise ethical and strategic considerations.
Additionally, geopolitical tensions, such as those related to the ongoing US-China trade war, have implications for the UK’s approach. Maintaining a pragmatic stance will be essential for fostering a stable and mutually beneficial partnership with China, as Chancellor Rachel Reeves emphasised during her recent visit to China: “…pragmatic cooperation between the world’s largest economies can help us boost economic growth for the benefit of working people – a priority of our Plan for Change,” the Chancellor said. “More widely, today is a platform for respectful and consistent future relations with China. One where we can be frank and open on areas where we disagree, protecting our values and security interests, and finding opportunities for safe trade and investment.”
Conclusion
China’s role as a strategic investment partner is crucial to the UK’s economic growth agenda. From renewable energy to technology and financial services, Chinese investments have the potential to drive innovation, create jobs, and enhance the UK’s global competitiveness. While challenges persist, a balanced and pragmatic approach can ensure that this partnership delivers mutual benefits.
The 2025 UK-China Business Forum is a full-day conference focused on the theme of UK-China partnerships and the opportunities for growth in both markets through export and investment.
During the morning session, the Forum will explore how to develop these opportunities, analysing both the benefits and challenges from a practical point of view, with senior businesspeople sharing their valuable insights through real-life case studies.
In the afternoon, the Forum will examine four key areas:
- Ageing populations require a different approach to healthcare, with more focus on prevention rather than cure, there is huge scope for UK-China academic and business collaboration.
- The Chinese consumer, amongst which there is undoubted interest in UK brands, where engagement is built on cultural relevance and emotional connection.
- Smart transport solutions, which have the potential for tremendous benefits, both for the UK as a whole, as well as for businesses and their employees.
- Green transition, an area where China and the UK are both looking for wins, and where there is potential for cooperation and growth in both markets.
The event will be followed by CBBC’s Spring Reception.
Click here for more information and to register for the UK-China Business Forum
