UK-China Trade Reset: What Starmer's Beijing Deal Means for British Manufacturers

Prime Minister Keir Starmer’s four-day visit to China in late January 2026 marked the first such trip by a British leader in eight years. For UK manufacturers, the deals struck in Beijing signal both immediate opportunities and longer-term strategic questions about how Britain positions itself between its two largest trading partners.

The visit secured £2.2 billion in export deals, approximately £2.3 billion in market access wins over five years, and hundreds of millions in new Chinese investments into the UK. But beyond the headline figures, what does this reset actually mean for manufacturers on the ground?

The State of UK-China Trade: A Reality Check

Before examining the new deals, it is worth understanding the baseline. Total trade in goods and services between the UK and China stood at £102.3 billion in the four quarters to Q3 2025, according to the latest government data. That represents a slight decline of 0.5% year on year.

UK exports to China totalled approximately £30.7 billion, while imports from China reached £49 billion, resulting in a trade deficit of £18.3 billion. China remains the UK’s third-largest trading partner when combined with Hong Kong, and UK exports to China support around 370,000 British jobs.

The composition of those exports matters for manufacturers. Cars lead at £4.7 billion, followed by crude oil at £1.5 billion and mechanical power generators showing 7.8% growth. Pharmaceuticals, aerospace components, and precision machinery round out the key categories where UK manufacturers have maintained competitive positions.

Key Deals: What Was Actually Agreed

Whisky Tariff Reduction

The headline win for British manufacturing came in an unexpected sector. China agreed to cut import tariffs on Scotch whisky from 10% to 5%, effective immediately. The government estimates this is worth £250 million to the UK economy over five years.

China is currently Scotland’s 10th largest whisky market by value, and the tariff reduction arrives at a critical moment. Combined with the recent UK-India trade deal that slashed Indian import tariffs on Scotch, distillers now have improved access to two of the world’s fastest-growing premium spirits markets.

Mark Kent, Chief Executive of the Scotch Whisky Association, described China as a “priority growth market” that has “developed into a knowledgeable and premium-focused market with a strong appreciation of Scotch.” For distilleries and their supply chains, this opens tangible export opportunities.

AstraZeneca’s £15 Billion Commitment

The pharmaceutical giant announced a $15 billion investment in China through 2030 to expand R&D capabilities and grow its workforce by more than 3,000 to over 20,000. While this investment flows into China rather than the UK directly, it underpins approximately 10,000 UK jobs across AstraZeneca’s facilities in Cambridge, Macclesfield, Speke, Luton, and London.

For pharmaceutical supply chain manufacturers, this signals continued demand for UK-based expertise in drug development, clinical trials, and advanced manufacturing processes. AstraZeneca’s global portfolio draws on British innovation, and expanded Chinese operations typically require parallel capability in the UK headquarters.

Chinese Investment into UK Manufacturing

Several Chinese companies committed to establishing or expanding UK operations:

HiTHIUM, one of the world’s leading energy storage manufacturers, pledged £200 million in investment and 300 jobs in energy storage technology. This builds UK sovereign capability in a sector critical to grid reliability and the net zero transition.

Chery Commercial Vehicles, a major Chinese automotive manufacturer, confirmed plans to open its European headquarters in Liverpool. The company committed to supporting the local green supply chain and creating jobs in the UK.

Asymchem, a Tianjin-based life sciences group, announced a major expansion of UK operations, adding 150 highly skilled jobs over five years in advanced R&D and next-generation manufacturing.

POP MART, the entertainment company behind the viral Labubu toys, will establish London as its European regional hub, opening up to seven UK stores and creating over 150 jobs.

Market Access Improvements

Beyond direct investment, the visit delivered structural improvements in market access:

A new food safety cooperation mechanism will speed up import approvals for UK food and drink products entering China. For manufacturers in the food processing sector, reduced regulatory friction could significantly improve export viability.

Visa-free travel for UK citizens visiting China for up to 30 days (for business and tourism) removes a practical barrier for manufacturers seeking to develop Chinese customers or inspect supply chain partners.

The Geopolitical Tightrope

These deals do not exist in a vacuum. Hours after Starmer lauded the progress in Beijing, US President Donald Trump warned that it was “very dangerous” for the UK to do business with China.

Manufacturers need to understand the strategic context. The UK is attempting to balance relationships with both Washington and Beijing at a time when those two powers are locked in escalating trade tensions. Trump has already imposed and then partially rolled back tariffs on Chinese goods, and he has warned Canada of 100% tariffs over deals struck during Prime Minister Mark Carney’s China visit.

For UK manufacturers, this creates genuine uncertainty. Supply chains that route through China may face secondary effects from US policy decisions. Conversely, reducing dependence on US markets by diversifying toward China creates its own set of risks.

Gabriel Wildau, Managing Director at Teneo, noted that Chinese overcapacity is “a marginally less acute concern” for the UK compared to the EU, given the greater role of services in Britain’s economy. However, concerns over critical infrastructure security, espionage risks, and technology dependency remain on the policy agenda.

What This Means for Different Manufacturing Sectors

Pharmaceuticals and Life Sciences

The sector appears well-positioned. AstraZeneca’s commitment signals continued demand for UK-based pharmaceutical innovation. Asymchem’s expansion creates opportunities for British workers in advanced R&D roles. Birmingham Biotech announced plans to scale its platform in China, projecting £20 million in UK exports.

For pharmaceutical manufacturers and their supply chains, China’s ageing population and expanding healthcare system represent a long-term growth market. The challenge will be navigating regulatory requirements and protecting intellectual property.

Automotive

The picture is more complex. UK automotive exports to China totalled £4.7 billion, making it a significant market. Chery’s decision to establish its European headquarters in Liverpool could bring supply chain benefits, potentially including partnerships with UK component manufacturers.

However, China’s own automotive sector has transformed dramatically. Chinese EV exports have grown almost twentyfold since 2000, and companies like BYD now compete directly with European manufacturers. UK automotive suppliers may find more opportunity in supplying Chinese manufacturers than in exporting finished vehicles to Chinese consumers.

Food and Beverage

The whisky tariff cut is the headline, but broader food safety cooperation could benefit manufacturers across the sector. Glasgow Prestwick Airport’s three new direct cargo routes to China, worth £76 million in new business and 250 jobs, support high-value Scottish exports including salmon and seafood.

Cultech, a Welsh manufacturer, announced a partnership with China Resources expected to deliver £90 million in exports over five years while creating 55 jobs in Port Talbot.

Clean Energy and Green Technology

Octopus Energy’s entry into China through a joint venture with PCG Power marks its first foray into the world’s largest renewable energy market. For UK manufacturers of clean technology components, China’s scale creates both opportunity and competition.

HiTHIUM’s £200 million investment in UK energy storage brings advanced battery technology and manufacturing expertise. Supply chain manufacturers serving the energy transition should monitor these partnerships for procurement opportunities.

Practical Recommendations for UK Manufacturers

1. Assess Your China Exposure

Review both your customer base and supply chain for China dependencies. Understand where revenue comes from and where critical components originate. This baseline is essential for strategic planning regardless of which direction the UK-China relationship moves.

2. Monitor US Policy Developments

Trump’s tariff policies remain fluid. Auto part tariffs for UK goods currently sit at 10%, reduced from higher levels. But secondary effects from US-China tensions could impact manufacturers with exposure to either market. Build scenario planning into your operations.

3. Explore Market Access Improvements

The new food safety cooperation mechanism and streamlined import approvals could reduce the friction costs of exporting to China. If you have previously dismissed Chinese customers due to regulatory complexity, it may be worth revisiting.

4. Consider Supply Chain Diversification

Chinese investment in UK manufacturing, particularly in energy storage and automotive, could create local supply chain opportunities. Manufacturers currently importing components from Asia might find competitive UK-based alternatives emerging.

5. Protect Intellectual Property

Companies expanding into China should invest in robust IP protection strategies. This remains a persistent concern for Western manufacturers operating in Chinese markets. Work with legal specialists familiar with Chinese IP law before sharing sensitive technical information.

6. Build Relationships, Not Just Transactions

The visa-free travel provision removes a practical barrier to relationship building. For manufacturers serious about the Chinese market, there is no substitute for in-person visits, factory inspections, and face-to-face negotiations.

The Longer View

The UK’s share of global manufacturing value added has declined from 3.1% in 2000 to 1.9% in 2022, according to Cambridge Industrial Innovation Policy research. Over the same period, China’s share rose from 6.4% to 31%. This structural shift is not going to reverse.

For UK manufacturers, the question is not whether to engage with China, but how. The Starmer visit has created a framework for pragmatic cooperation. It has not resolved the underlying tensions between Western democracies and Beijing, nor has it eliminated the risk of getting caught between US and Chinese policy decisions.

What it has done is open specific doors. Whisky distillers have a clearer path to Chinese consumers. Pharmaceutical manufacturers have signals of continued investment. Clean energy companies have partnership frameworks. Food exporters have streamlined regulatory pathways.

The manufacturers who benefit will be those who move decisively on these specific opportunities while building resilience into their broader strategic planning. Waiting for geopolitical certainty is not a viable strategy. The certainty is that uncertainty will persist.

As Starmer put it in Beijing: “We can’t ignore China.” For British manufacturers, the task now is to engage with clear eyes, practical goals, and contingency plans for a world where trade relationships remain in flux.