Three things business needs from a UK China strategy
The UK must replace its current reactive approach to China with a clear, predictable, and durable strategic framework to provide businesses with the stability needed to manage risk, diversify supply chains, and leverage opportunities in advanced services, says David Bharier
Today the Prime Minister is in China for the first UK prime ministerial visit since 2018. The timing is significant: relations with the EU remain structurally complex, and the recent Greenland episode shows that the United States is using tariffs as a bargaining tool for political aims well beyond trade. Small business exporter sentiment has been in sharp decline as a result.
Against that backdrop, the UK should not make hasty decisions on China. The recent ‘mega-embassy’ decision shows the intensity of the political debate. Instead, the UK needs a rational approach with a clear framework that ends the drift, defines opportunities, sets limits, and leverages its existing assets – including its global political network and Chambers of Commerce – to give businesses the predictability they urgently need.
Business sentiment towards trade is fragile
Small business confidence has been on a decade-long downward decline, as Brexit, Covid and now tariffs have taken their toll on sales and investment. Geopolitical risk is now part of the day-to-day noise firms must contend with. The Greenland tariff threats highlighted this. Analysis from Aston University shows that in every scenario, retaliatory action would have made the UK worse off. Market access, even with close partners, can no longer be assumed to be stable.
Attitudes towards China are often shaped by these sorts of external events. In 2018, a British Chambers of Commerce survey found that 53 per cent of responding firms wanted the UK to prioritise a trade deal with China. By early 2022, that figure had fallen to 19 per cent, as aggressive Covid-19 lockdowns, supply-chain breakdowns and rising costs damaged perceptions.
For businesses with exposure to China, the country is not a single market but several at once: a customer base, a production platform, a source of critical inputs, and increasingly a standards-setter in fast-moving sectors.
China is not standing still
In December 2025, I participated in ‘Supply Chain Resilience Week’ – a major programme of events organised by the British Chamber of Commerce South China across Shenzhen, Guangzhou, and Shanghai. I met with around 100 organisations, discussing the current economic climate, and two structural shifts stood out that matter for UK strategy:
First, China’s industrial breadth is historically unprecedented. It is the only country with production capacity across all 41 major UN industrial categories. It accounts for roughly a third of global manufacturing output and around $3.6 trillion in merchandise exports. In many product lines there is simply no alternative ecosystem that can match China on cost, speed and depth. At the same time, Beijing is pushing aggressively up the value chain, from electric vehicles to advanced electronics. Speed has also become a defining competitive edge – automotive suppliers told me that development cycles are being compressed from five years to less than one year in some cases.
Second, China’s direction of travel is increasingly about rule-setting. Its forthcoming 15th Five-Year Plan (2026–2030) signals a shift from participating in global governance to shaping it – in areas such as green finance, carbon accounting, industrial standards and platform regulation. For UK firms, this raises a practical question of whose standards will govern the world economy in the future.
But this ascent is not frictionless. Firms operating in China now face “involution”. Many firms I met described intense domestic competition and falling margins as major pressure points, and suppliers with weak financial buffers could easily topple if there is another supply chain shock. Subdued internal demand, high youth unemployment and a “middle-income trap” risk all add to further operational and social volatility.
The UK’s dilemma: strategy versus drift
The government’s challenge is not choosing between being “tough” or “open”. It is deciding whether to run China policy by reaction or through a clear, durable framework that businesses can plan around.
The British Chamber in China’s 2025 position paper captures the consequences of drift. Businesses report mixed signals from both governments; long-standing technical barriers – from professional qualifications to visas, data regimes and licensing – remain unresolved; and legitimate security concerns around Intellectual Property (IP), data and critical infrastructure often overshadow practical engagement.
Yet the UK is not starting from zero. It runs a services trade surplus with China, and my trip reinforced where the opportunity to add UK value actually lies: advanced engineering, financial and legal services. It also possesses an underused asset: Brand Britain. A 2024 BCC survey found that 52 per cent of exporters believe the UK’s reputation actively supports growth overseas, with only 11 per cent seeing it as a hindrance. Soft power, carefully deployed, could be the UK’s comparative advantage.
Three things businesses will need to see from a China strategy
First, publish a clear framework. Set out where the UK welcomes deeper commercial engagement, where safeguards apply, and where activity will be blocked outright. Businesses can work with clear red lines; they cannot plan around ambiguity.
Second, treat China policy as part of ‘portfolio risk management’. In a situation where the UK’s principal security ally can threaten tariffs over territorial claims, diversification of supply chains and customers becomes one of the few levers to manage exposure. This becomes increasingly important if UK finds itself between a more transactional US and a system-shaping China. Diversification, however, requires time and capital and cannot be done at the drop of a hat. Firms in China consistently reported that the “China-plus-one” strategy – particularly moves into Southeast Asia – often proved more costly than anticipated, with some operations ultimately quietly returning to China.
Third, build trusted channels for real-world business evidence. One of the UK’s hidden strengths is its global Chamber network, spanning tens of thousands of businesses and thousands of events annually. Supply Chain Resilience Week is a case in point: sector-specific convening that generates real-time commercial intelligence that can be embedded in decision-making.
Less performance, more predictability
China is not a relationship the UK can simplify. But it is one the UK can stabilise, for business and for security, by being more deliberate.
That means resisting the urge to frame China as either a binary opportunity or an existential threat, and focusing on structured engagement, targeted protection, and a predictable framework that allows firms to invest with their eyes open.
The British Chambers of Commerce will take this forward through deeper research, clearer policy engagement, and practical delivery mechanisms – including its new Diplomatic Advisory Hub (in partnership with the FCDO) and Trade Accelerator programme – to help firms navigate risk and expand internationally.
Clarity, not choreography, is what business needs now.
David Bharier is head of research at British Chambers of Commerce