FT: "Bilateral Thinking" - UK-China trade patterns

On October 20th 2008 the FT released a pullout on the general topic of "Doing Business in China."

Included are a number of excellent articles that I will be linking to over the next few days.

The first article reveals the extent of UK bilateral trade with China and discusses the potentially rich rewards. I highlight below some of the more interesting paragraphs.

Bilateral thinking [FT]

It is the second largest exporter of goods and will become the number one within a few years. It is the largest consumer of metals, the biggest emitter of carbon dioxide and will quite soon be the world’s largest consumer of primary energy.

It also offers unrivalled opportunities for British businesses, which already export more to China than to any other Asian country and invest more in the country than any other European nation. Unsurprisingly, the UK government is keen to further strengthen trade and investment links and has increased its support for British-based organisations hoping to enter the Chinese market.

Yet the impact of the global credit crunch has dented investor confidence, as the world waits to see just how sensitive the Chinese economy will be to the slowing economies of Europe and North America. Moreover, the business environment in China remains challenging, with some sectors off-limits to UK businesses, continuing problems in protecting intellectual property rights and inflation boosted by rising commodity prices and labour shortages in the biggest centres.

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The evolving relationship is illustrated by the sharp increase in bilateral trade between the UK and China, which has more than doubled in the past five years. British exports of goods and services to China surged more than 40 per cent in the first half of 2008, while imports increased 10 per cent. The UK is investing in 6,000 projects in China worth more than £8bn, and is by far the biggest recipient of Chinese foreign direct investment in Europe – capturing 11 per cent of the total.

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China’s desire to increase energy efficiency and reduce pollution and carbon emissions is also providing lucrative opportunities for British companies. Investment in renewable energy increased 91 per cent in 2007 to £6.1bn, with most going into mini-hydroelectric generation, solar water heating and wind power.

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