UK politics: Quick View - May's China visit strengthens commercial ties

Content Type
Country Data and Maps
Institution
Economist Intelligence Unit
Abstract
No abstract is available.
Topic
International Relations, Politics, News Analysis, Forecast
Political Geography
United Kingdom

Event

On February 2nd the UK prime minister, Theresa May, concluded a three-day state visit to China and held talks with her Chinese counterpart, Xi Jinping.

Analysis

Mrs May's visit comes at an awkward time for the prime minister, who faces a challenging domestic political situation in navigating the UK's exit from the EU. Her visit was designed partly to assuage Chinese concerns that Brexit could derail the putative "golden age" in UK-China relations established by her predecessor, David Cameron, particularly after Mrs May hesitated in approving a new Chinese-backed Hinkley Point nuclear power station in August 2016.

Mrs May signed a number of commercial agreements during the course of her trip, reportedly worth £9bn (US$11.7bn) in total. Medopad, a UK health start-up, signed more than £100m (US$141m) worth of deals with a number of Chinese companies in the internet, insurance and education sectors. Mrs May further announced a £550m education deal, which is expected to create 800 jobs in the UK. Significantly, the two sides also signed an agreement to lift China's 20-year ban on British beef imports within six months, following recent similar deals made with France and the US. Mrs May said that these agreements would "pave the way" for an ambitious future trading relationship.

Neither side, however, was able to make significant progress on the larger political issues. Despite the fact that Standard Chartered, a British bank, announced a five-year project financing deal worth Rmb10bn (US$1.5bn) related to China's Belt and Road Initiative (BRI), Mrs May declined to sign a memorandum formalising the UK's backing of the framework. The UK has cited concerns with international standards, intellectual property protection and project bidding transparency associated with the BRI. Her reticence mirrored similar hardening attitudes towards Chinese overseas investment from both elsewhere in the EU and the US. Meanwhile, although both sides agreed on a broad trade and investment review, China was unwilling to provide the UK with a concrete bilateral trade framework, citing the need for the UK first to conclude Brexit negotiations before moving ahead with any agreement.

Data provided by: