China's Wen Jiabao backs UK business

The UK government says £1bn of deals will be made during Chinese Premier Wen Jiabao's visit.

by Elizabeth Anderson
Last Updated: 06 Nov 2012
Chinese Premier Wen Jiabao is in the UK on a trip aiming to strengthen economic and commercial ties between the two countries.  David Cameron is certainly feeling optimistic about the visit - he predicts more than £1bn worth of deals are likely to be struck.  

China’s most powerful man started the British tour with a visit to Stratford-upon-Avon, where the Shakespeare lover heard bits of Hamlet, before visiting the former Rover factory at Longbridge in Birmingham on Sunday; now of course owned by Shanghai Automotive Industry Corporation. Today he’ll meet the PM, and the two leaders will agree to help UK companies get greater access to the goods and services market in China. But it’s expected the issue of human rights will be raised by Cameron if the UK is to increase investment. Britain wants to double trade with China to $100bn by 2015, in line with its strategy of expanding business with emerging markets. A ban on British poultry exports to China is also expected to be lifted, which should give around £10 million to the UK each year, and we’re going to be allowed to export 800 breeding pigs, which we hope won’t go straight to the wok.

This visit has received more attention than previously (the UK-China Summit takes place yearly) as it coincides with the Greek debt crisis. Jiabao announced that China is willing to help bankrupt European countries as the continent struggles with the ongoing debt crisis.  China has already increased the purchase of EU government bonds, suggesting it’s still feeling confident about the European economies and the euro zone. The EU is China’s largest trading partner, so it would do well to ensure its customers don’t go bust.

Increasing trade links with China has become a major focus for the UK government, particularly over the last year.  China is now the world’s second biggest economy and has the world's largest foreign exchange reserves.  The growth of the middle class has led to a change in domestic consumption, giving more opportunities for UK companies to sell their products – although many complain that access to Chinese customers is severely restricted.  In the first eight months of 2010, UK exports of goods to China rose 44% to £4.5 billion. But there’s still a lot of room for improvement - most of those tens of thousands of containers go back to Shenzhen empty.

The UK also has a long way to go to catch up with Germany, which exports more to China than the US.  Britain, by contrast, exports more to Ireland than China. 

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