Indo-Pacific tilt won’t help UK regain market share in China
Published: Mar 09, 2021 07:43 PM
Illustration: Tang Tengfei/GT

Illustration: Tang Tengfei/GT

The UK has lost significant market share in its key export destinations - Germany, the US and China - amid the COVID-19 pandemic last year, which also might have failed to grasp emerging market opportunities, according to new research published by Aston University's Lloyd's Banking Group Centre for Business Prosperity on Monday.

Aside from the impacts from the global trade chaos caused by the pandemic, there are obviously more reasons behind UK' trade woes. Extending the analysis to the three years prior to 2020, the research found that the weakening of the UK's global economic competitiveness has started quite a few years ago.

From a domestic perspective, UK's long-term productivity challenges and hollowing-out effect in manufacturing had put British companies at a severe disadvantage. This has been aggravated by a sharply low growth across its main export product lines.

As for external factors, the UK is adjusting from Brexit which is bound to bring impacts on the UK's foreign trade. UK has to reduce its dependence on the European market, and it needs to further expand market share in remote markets across the world.

A closer look into UK' foreign and trade policies shows that the country is facing bigger challenges than Brexit. Its approach in dealing with major trade partners recently is not to seek common ground or boost trade, instead, the country is increasingly tilted toward adopting an arrogant and profit-seeking approach, which reminds others of the "gunboat policy" taken by UK in the 19th century.

In a post-Brexit reset of priorities, UK is likely to seek greater diplomatic and military influence in East Asia and India and also to counter China's growing prosperity and prestige. 

Downing Street's post-Brexit review of its defense and foreign policy, scheduled to be published on 16 March, promises to reset Britain's international priorities with an Indo-Pacific tilt aimed at creating a counterweight to China, the Guardian reported.

Nigel Farage, the former leader of UK's Brexit Party, is reported to focus on pushing a campaign of "Stopping China". As the UK paid a heavy economic and human cost during the pandemic, some British politicians' animosity about China, a country that has successfully put the pandemic under control and actively contributed to the recovery of the global economy, is really puzzling.

The UK may think that it has made a carefully calculated decision - considering political, economic and technology factors - in its approach in dealing with China, which is to closely follow the US' arbitrary crackdown and attack on China and Chinese companies, while try to seek the largest possible interests in Chinese market at the same time. But does London really expect such an unreasonable approach is plausible?

During the post-Brexit transition, the UK will inevitably to seek alternative markets to offset the impact from leaving the Europe's single big market. The prospects of UK's economic growth and international competitiveness largely depend on whether the country can succeed to manage the issue. 

If successful, the UK could take current setback in foreign trade as a short pain of transiting. Otherwise, trade will become another long-term problem confronting the UK for the foreseeable future amid rising protectionism.

In terms of both market size and economic outlook, China is of economic significance to UK.  British politicians should consider whether unreasonable hostility towards China will help the UK bolster its economic competitiveness in the post-pandemic era.

The article was compiled based on an interview with Cui Hongjian, director of the Department of European Studies, China Institute of International Studies.

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