Starmer warned on ‘severe’ risk of trading with China
Keir Starmer has been warned about the “severe” risk of trading with China as he said building economic relations with the world’s second largest economy would drive growth.
The Prime Minister landed in Beijing on Wednesday for meetings with Chinese officials including President Xi Jinping in the coming days.
He has been joined by City minister Lucy Rigby, business secretary Peter Kyle and dozens of business officials reflecting the Labour government’s desire to build closer ties with China in its push for higher growth.
But research by Allianz Trade found that China posed a “severe” risk for UK exporters given delays to payment collections.
Buyers in China, which makes up 10 per cent of UK exports, take as long as 94 days to take payments, according to research.
It makes China riskier for trade than other major economies including India and the US.
In Allianz Trade’s rankings on collection complexity by country, China is the sixth riskiest market for UK exporters after the likes of Saudi Arabia, Mexico and South Africa.
Analysts said problems around debt collection were “compounded by opaque legal structures comprising county, state and federal systems”.
Starmer’s trade hopes
Firms have also been warned about the security risks of trading with China given state-backed hackers are reported to have gained access to sensitive information across the private sector and attacked internal systems.
Chinese-based companies linked to Salt Typhoon, a state-affiliated hacking operation, have been sanctioned by the UK government.
But UK government officials and business representatives are keen to expand on existing ties, with trade between the two countries worth around £103bn.
Upon landing in China, Starmer said: “As one of the world’s biggest economic players, a strategic and consistent relationship with them is firmly in our national interest.
“That does not mean turning a blind eye to the challenges they pose – but engaging even where we disagree.”
Starmer is also hoping to link his trade ambitions to his central message in government on tackling the cost of living, suggesting the trip would help put “money in [people’s] pockets”.
Some business groups have supported Starmer’s trip, with the British Chambers of Commerce’s trade director Steven Lynch endorsing lower trade barriers with China.
Bank of England policymaker Alan Taylor has also suggested that greater trade diversion from China into the UK as a result of President Trump’s tariffs would lower inflation at a faster pace than economists widely predicted.
Tory leader Kemi Badenoch said: “When it comes to China, Keir Starmer is too weak.
“Yes we need a relationship with China. But China doesn’t believe in democracy, it has sanctioned our MPs, disrupts the global trade system, and has designs on Taiwan.
“We must not be in hock to China.”