Benign development of ties with China to boost UK economy
Published: Jan 27, 2021 08:46 PM

Illustration: Tang Tengfei/GT

While the number of the novel coronavirus infections has surpassed 100 million, Britain became the first nation in Europe reporting more than 100,000 fatalities. Facing grave challenges, the British economy is estimated to have a long way to go before it can get back on track and regain momentum. 

According to latest IMF estimation revealed on Tuesday, the British economy might have fallen by 10 percent in 2020. Following such a sharp plunge, its forecasted growth in 2021 of 4.5 percent seems not quite promising comparing to other major economies. 

There have been concerns raised that the UK may be one of the last developed countries to return to pre-pandemic economic level.

Even before the outbreak, the British economy was facing multiple pressures, from a sluggish productivity to spiraling public debt, as well as a bumpy Brexit. Now with the COVID-19 pandemic and a more contagious virus variant weighing in, risks and challenges facing the economy have become more prominent.

Three major driving forces of the country's economy, including consumption, export and investment, have all encountered headwinds. Under such circumstances, its unemployment rate reached 5 percent at the end of November, with more than 1.7 million jobless, the highest level since August 2016.

Not only that the country will not recover to its pre-crisis level any time soon, simply raising public spending by the government may not be enough to reverse the sharp downturn. London needs to roll out a comprehensive and effective stimulus plan to pull its economy out of quagmire, from fiscal to monetary policies which have been widely adopted by countries to offer financing to businesses.

Britain, an export-oriented country, may see switching trade patterns after leaving the EU trade bloc. It is seeking more free trade agreements with other economies and joining free trade zones, such as the Comprehensive Progressive Trans-Pacific Partnership (CPTPP).

As a leading force for the global economy post-pandemic, China has also been a crucial trading partner for the UK outside of Europe. Bilateral goods trade surged to $92.3 billion in 2020 from $50.1 billion in 2010, and China's investments in the UK increased nearly 20 times in the period.

The two nations initiated a "Golden Era" of cooperation since 2015, though there have been some setbacks the overall development of bilateral ties is relatively stable with sound cooperative foundation.  

Carrying on friendly relations with China will facilitate the effective recovery of the struggling British economy. The two sides enjoy cooperative potential in many areas, for instance, trade, finance, as well as climate change. 

Alongside the cooperative development of bilateral ties, there have always been some ideology-skewed politicians in the UK seeking to sabotage bilateral collaboration. It may not pull down the essential basis of cooperation, however, there's no denying that political discords will extend effects into economic and trade areas, slowing down paces and decreasing effectiveness of cooperation, which is clearly not in line with the UK's necessitous recovery. 

It is expected that London can clearly see the direction of historical trends and meet China halfway to pursue a mutual-beneficial relationship which aligns with essential interest of both countries and peoples. 

The article was compiled based on an interview with Li Gang, an associate professor at the Institute of European Studies under the Chinese Academy of Social Sciences.