China becomes the UK's biggest source of imports

China has replaced Germany to become Britain’s biggest source of imports for the first time since 1997, when the current batch of statistics started to be compiled. The United Kingdom’s goods imports from China reached GBP16.9 billion in the first quarter of this year, data from the British Office for National Statistics showed. Its imports from Germany fell to GBP12.5 billion in the same period, which is believed to have resulted from disrupted UK-EU trade after Brexit.

Figures from the UK’s Revenue and Customs showed China registered the second-largest value increase month-on-month in March and the largest value increase in year-on-year terms in the same month. The customs data also revealed China accounted for 13% of the total value of goods the UK has imported. This was an increase from 5.5% in March 2020. With the pandemic and Brexit, economists say it is hard to tell if the trend will persist. “It’s hard to make definite conclusions from a year during which the UK has experienced not only Brexit, but also the worst experience with the pandemic in Europe in terms of deaths per capita. So we would need to watch the trends for another year at least to find ‘normal’ patterns,” said Gayle Allard, Professor of Economics at IE University in Spain. (According to Worldometer, the worst death toll per capita in Europe was recorded in Hungary, and Belgium and a few other countries are also still ahead of the UK.) Professor Allard added: “Initially, it looks like Brexit and the supply constraints coming from the pandemic have been very favorable for Chinese exports. Remember that after Brexit, EU products lost some of their cost advantage in the UK.”

Chris Rowley, Business Professor at the University of Oxford, said UK-China trade relations have been tense in the light of strained diplomatic relations, but trade will continue. “Nevertheless, there are trade opportunities, moving beyond more traditional ones, such as foods and drinks, to sectors ranging from pharmaceuticals and aerospace to green energy,” said Professor Rowley.

Analysts say Brexit should create more opportunities for UK-oriented Chinese exporters. “The pound has fallen since the Brexit vote, making EU goods more expensive, and some EU inputs for products manufactured in the UK will also be too expensive. Supply chains will be broken for many products and will need to be remade,” Allard said. In a separate report, Office for National Statistics (ONS) data showed the UK imported more goods from China than from any other country since the second quarter of 2020. Imports of goods from China accounted for 16.1% of UK goods imports in the first quarter of 2021, having increased by 65.6% compared with the first quarter of 2018, a larger increase than exports. The increase in imports from China in 2020 was boosted by textile fabrics for face masks and personal protective equipment (PPE), the China Daily reports.