Sukhdeep Dhillon, Global Economic Advisor, British Chambers of Commerce
Sukhdeep Dhillon, Global Economic Adviser at the BCC discusses how the prominence of China in the global economy has changed over the last 20 years and the opportunities China offers UK businesses.
The prominence of China in the global economy has changed markedly over the last 20 years. Between 1993 and 2013 Chinese GDP increased from $0.44 trillion to $9.24 trillion, and its share of global GDP rose from 1.7% to 12.2%. In contrast, the share of the global economy that Europe and America accounted for fell over the same period.
How important is China as a trade and investment partner for the UK?
The importance of China to the UK economy as a trading partner has increased markedly in the last decade.
China has become the UK’s second largest import partner behind America, accounting for 7% of UK imports in 2014 compared with 3.3% in 2004.
Exports to China have also risen, but at a lower rate over the same period, from £4 billion to £16.7 billion in 2014 - accounting for 3.2% of goods exports. As imports have grown at faster rate than exports, the UK’s goods trade deficit with China has also grown, standing at £22.1 billion in 2014, the second highest behind Germany and six times larger than in 2000. Moreover we have a surplus in services of £2.7 billion.
Earlier this year the Chancellor George Osborne set out an aim of making China the UK's second largest trading partner by 2025. He added that Britain must "raise its game" to increase exports to China from £25bn (246bn yuan) to £30bn annually.
What opportunities does China offer UK businesses?
China is a huge and expanding market for UK business. It has the fasting growing consumer market and a growing number of middle income consumers. With over 160 cities of 1 million+ inhabitants with new cities being built as we speak it offers a wide range of opportunities particularly in:
Financial and professional services: Liberalisation of regulation of China’s insurance market is expected to create significant opportunities.
Oil and gas: China is the world’s largest energy consumer, using over 20% of the world’s energy. Demand is expected to grow by 72% by 2030.
Renewable energy: China is leading the world in renewable energy by installing 20.7 gigawatts of wind power in 2014, nearly half of the world’s total.
Automotive: China is the world’s largest car market.
Advanced manufacturing: The Chinese government has plans to invest £237 billion into the industry over the current 5-year plan to improve manufacturing efficiencies.
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