UK-China Trade Opportunities and Challenges Overview
Exploring the trade dynamics between the UK and China, this analysis delves into the evolving relationship, including the potential for deeper agreements, rising exports from the UK to China, and key sectors of focus. It also addresses the impact of tariffs, trade imbalances, and the strategic positioning of both countries in the global trade landscape.
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UK China Trade opportunities Peter Holmes University of Sussex With special thanks for the input from Julia Magntorn
China and UK in global system How will UK place itself in trilateral US, EU, China trade conflict? Can we catch up with New Zealand in influence? China signs FTAs for strategic and tactical reasons NZ smart negotiators but Norway honoured Dalai Lama 2
Bilateral issues China interest in shallow (tariff only) FTA EU has wanted deeper deal, starting with BIT, UK? UK trade with China rising but more slowly Imbalance still large but slightly less UK has offensive interests in cars and services, but what can it offer China? Anti-dumping and MES 3
UK exports to China rising a little, trade imbalance massive but a bit lower UK-China goods trade and tariffs, summary UK trade with China UK trade balance with China ($bn) Share of total UK goods exports going to China Share of total UK goods imports coming from China Export rank Import rank UK average applied tariff on China (%) China trade with UK Share of total Chinese goods exports going to UK Share of total Chinese goods imports coming from UK Export rank Import rank Chinese average applied tariff on UK (%) * Tariff data for 2018 Source: Trade data from UN Comtrade, HS 2007, accessed through WITS. Tariff data from TRAINS, including ad-valorem equivalents. 2008 -49.2 1.9% 8.3% 11 3 2.8 2008 2.5% 0.9% 7 24 9.5 2018 -35.7 5.7% 9.5% 6 2 4.2 2017 2.5% 1.3% 9 18 9.4* 4
Biggest export cars UK exports concentrated top 10 4 digit 65% UK top 10 exports of Goods to China Product UK Exports ($bn) Share of UK exports 2018 China simple average tariff (%)* to China 8703 - Motor cars 5.1 20.6% 25.0 2709 - Petroleum oils (crude) 4.3 17.3% 0.0 7108 - Gold (unwrought/semi-manufactured forms/powder form) 3.1 12.7% 0.0 3004 - Medicaments 1.2 4.9% 5.3 8708 - Parts and accessories of motor vehicles 0.4 1.8% 9.8 7404 - Copper waste and scrap 0.4 1.8% 1.5 8411 - Turbo-jets, turbo-propellers and other gas turbines 0.4 1.8% 2.5 4707 - Recovered (waste and scrap) and scrap 0.4 1.7% 0.0 7110 - Platinum (unwrought/semi-manufactured/powder form) 0.3 1.2% 0.8 8548 - Waste and scrap of primary cells.. 0.3 1.1% 11.3 Total 16.0 65.0% * Note: During 2018 China reduced its MFN tariff rates on a range of products, for example motor cars and car parts. This is not yet accurately reflected in the available tariff data and as a result some tariffs may currently be lower than what is listed in this table. Source: Trade data from UN Comtrade, HS 2007, downloaded from WITS. 4-digit codes aggregated from 6-digit HS codes. Trade values are averages for 2017-2018. Tariff data from TRAINS, accessed through WITS. Tariff rates are simple averages for 2018 including ad-valorem equivalents 5
Chinese exports heavily IT (- ITA give 0% duty but still much T&C. More diverse than UK to CN China top 10 goods exports to UK Product Exports ($bn) Share of China exports to UK 2018 UK simple average tariff (%) 0.0 0.0 12.0 3.0 11.9 1.8 2.0 16.9 4.1 1.9 UK proposed no-deal tariff (%) 0.0 0.0 1.4 0.0 4.0 0.0 0.0 0.0 0.0 0.0 8517 - Telephone sets 8471- Automatic data processing machines 6204 - Women's or girls' clothing 9405 - Lamps and lighting fittings 6110 - Jerseys, pullovers, cardigans.. 9401 - Seats and parts thereof 9403 - Other furniture and parts 6402 - Footwear with soles of rubber.. 4202 - Trunks, suit-cases, vanity-cases 9503 - Tricycles, scooters, pedal cars Total Source: Trade data from UN Comtrade, HS 2007, downloaded from WITS. 4-digit codes aggregated from 6-digit HS codes. Trade values are averages for 2017-2018. Tariff data from TRAINS, accessed through WITS. Tariff rates are simple averages for 2018 including ad-valorem equivalents, aggregated from 6dig to the 4dig level. 3.8 3.5 1.5 1.4 1.3 1.2 1.2 1.2 1.2 1.2 17.5 6.8% 6.2% 2.6% 2.6% 2.3% 2.2% 2.2% 2.1% 2.1% 2.1% 31.1% 6
CN exports to UK more hi tech than UK to CN! UK-China trade by technology intensity Share of UK's exports to China Share of UK's imports from China 2008 2018 2008 2018 High 14.7% 10.3% 24.9% 29.8% Medium-high 47.6% 35.5% 19.4% 24.1% Medium 21.9% 27.3% 16.0% 16.0% Medium-low 10.9% 23.5% 38.3% 29.1% Low 0.3% 0.8% 0.5% 0.5% Not classified 4.6% 2.5% 0.9% 0.5% N.B. classified according to OECD STAN Industry I4 2-digit classification. Note that other versions of the STAN classification may yield different values. 7
Pre Brexit UK tariffs to CN very low no deal even lower UK and China tariff structures (2018) Tariff Ranges (%) 0 >0 - 5 >5 - 10 >10 - 20 >20 Missing tariff info * During 2018 China reduced its MFN tariff rates on a range of products, for example motor cars and car parts. This is not yet accurately reflected in the available tariff data and as a result some tariffs may currently be lower than what is listed in this table. Source: Tariff and import data from UNCTAD TRAINS. UK import data from UN Comtrade UK exports to China 25.3% 20.5% 18.3% 3.6% 32.3% 0.1% China exports to UK* 39.0% 37.3% 12.3% 11.0% 0.0% 0.3% 8
Cars and parts potential market opportunity Potential market opportunities for the UK in China, by highest tariffs Product Exports to China ($bn) Exports to ROW ($bn) Share of UK's total exports to the world China tariffs* 711319 - Articles of jewellery & parts thereof 0.03 4.49 1.1% 30 870322 - Vehicles, engine capacity between 1000cc and 1500cc 0.35 3.88 1.0% 25 870333 - Vehicles with engine capacity >2500cc 0.04 3.84 0.9% 25 210690 - Food preparations, n.e.s. 0.03 1.21 0.3% 17.4 840734 - Spark ignition reciprocating piston engines 0.15 1.59 0.4% 10 870830 - Brakes & servo-brakes 0.02 0.94 0.2% 9.0 848190 - Parts of the appliances of 84.81 0.02 0.57 0.1% 8.0 841480 - Air pumps, air/other gas compressors.. 0.01 0.57 0.1% 7.1 903289 - Automatic regulating/controlling instr. 0.03 0.91 0.2% 7.0 848180 - Taps, cocks, valves 0.04 1.41 0.3% 6.8 Total 0.72 19.41 4.7% 9
China has high Services barriers in several sectors of interest to UK Chinese STRI (OECD) in UK important services sectors for UK Services sector Restrictions on foreign entry Restrictions to movement of people Other Barriers to competition Regulatory transparency Overall STRI Average STRI for all countries discriminatory measures Commercial banking 0.22 0.02 0.05 0.09 0.04 0.41 0.23 Insurance 0.23 0.03 0.05 0.10 0.03 0.44 0.22 Accounting 0.41 0.20 0.04 0.05 0.05 0.75 0.33 Legal 0.33 0.15 0.02 0.01 0.02 0.53 0.38 10
Conclusions UK faces strategic choice in relations with China go with US or CN USTR FTA plans say no UK-US if a UK CN China probably willing to talk about shallow FTA but what can UK offer in return for cars and services if no deal tariffs mostly zero? Political concessions? 11
Thank you https://blogs.sussex.ac.uk/uktpo Follow @uk_tpo 12
