Even with the recent news about China’s slowing economy causing volatile markets worldwide, with a population of 1.3bn and the largest economy in the world by GDP (PPP), there can be no doubt that China has the potential to be an even more important trade, tourism, investment and economic partner to the UK than at present. With China’s President Xi Jinping visiting the UK in October 2015, now is the time for the UK to improve on its somewhat ambiguous relationship with China and to demonstrate its willingness for better relations and more economic agreements.
In 2014, China was the UK’s second largest import partner with imports worth £37.6bn and one of the UK's largest export partners buying exports worth £16.7bn; however, with the UK/EU still enforcing large tariffs on Chinese imports this is limiting further growth in these areas. Looking back to 2013, when the UK sent a trade delegation to China, the Prime Minister presented the idea of a possible EU-China free trade agreement which could reduce or eliminate tariffs on certain goods such as pharmaceuticals and electrical goods or possibly a much wider agreement. Now with the EU being China’s largest trading partner it is quite easy to see the benefits of this – in fact the benefits to the UK economy alone could be up to £1.8bn per year; however, the EU has to balance trade relations with China and relations with the US and it is right to be cautious; there is a potential for a EU-US free trade agreement which initially would be worth much more than this Chinese agreement. In addition, the Chinese and EU economies are run very differently and as a result, unknown factors limit the usefulness of any predictions; in the short term this reduces the likelihood of any agreement between EU partners.
In principle, the UK could just start encouraging more Chinese investment in the UK on its own; the UK is already more popular than any other European country for Chinese investment which created/protected 6000 UK jobs in 2013-2014. Furthermore, £14bn of trade and investment deals were signed between UK and Chinese firms in 2014. However, it must take care not to damage UK-EU relations; since with upcoming re-negotiation of the UK’s EU position, that would not be the most sensible path to take. Nevertheless, with 87,895 Chinese students in UK higher education, many of whom will go back to China and some of whom will later reach high positions in Chinese businesses, in the future there will be an even greater potential for Chinese investment – something that cannot be ignored.
Although, large scale free trade agreements take a long time and have many complications, one area which the UK could quickly improve on is visa regulations. Already, the UK has taken steps to reducing the time and effort required for Chinese citizens to get a UK visa; however, it is still not enough. A tourism or business-visitor visa to the UK costs £750 for 10 years or £85 for 6 months, so this hardly encourages multiple trips to the UK and with the new US-China visa agreement a tourism or business-visitor visa to the US (lasting for 10 years) costs £100. Moreover, the UK forces applicants to have a visa appointment, to give biometric information and to complete the visa application in English.
Chinese tourism is already worth a lot to the UK – £549m in 2013. But with 1.3bn potential tourists in China this could be worth so much more. Of course just trying to maximise the income from tourism is not the best long term approach, we also need to encourage more Chinese businesses to invest in the UK as well as encouraging British companies to invest in China – we need a sustainable and strong UK-China relationship to maximise the benefits for both sides and this can only be established with more trade agreements.