UK, China rush to forge business deals

Chinese businesses have pledged hundreds of millions of pounds’ worth of investment in the U.K. and struck new partnerships with British peers as Prime Minister Keir Starmer’s visit to China spurred a flurry of bilateral business activity and investment flows. 

During his four-day visit in China last week, Starmer met Chinese President Xi Jinping and secured deals that would see hundreds of millions worth of new investments from Chinese businesses, in addition to £2.2 billion ($3 billion) worth of exports and £2.3 billion in market access, according to a statement from the prime minister’s office. 

Following the high-profile visit, the two leaders hailed the benefits of cooperation, with Xi describing the bilateral ties as “mutually beneficial.” Starmer, who brought a large delegation of executives from banking, pharmaceutical, and automobile companies to China, also described the country as vital to Britain’s interests. 

While no sweeping free trade deal was reached, companies across several industries have announced major investments and partnerships aimed at deepening the bilateral ties, including Pop Mart, the toymaker behind Labubu dolls, e-commerce group JD.com, and battery giant CATL. 

The flurry of deals came as the British leader sought to rebuild ties with Beijing despite U.S. President Donald Trump’s warning that it could be “very dangerous” for the U.K. to get into business with China. 

The diplomatic reset also came as European Union leaders repeatedly raised concerns over China’s export surplus flooding European markets. 

Chinese overcapacity is “a marginally less acute concern” for the U.K., said Gabriel Wildau, managing director at Teneo, as the greater role of services in Britain’s economy reduced the political focus on competitive threats from made-in-China exports. 

Concerns over critical infrastructure security, espionage risks and technology dependency on China have been a focus for U.K. policymakers in recent years, drawing tougher scrutiny and bouts of selective decoupling, Wildau added.

Pop Mart said last Friday that it planned to establish a regional headquarters in London, with the goal of opening 27 new stores across Europe in the coming year, including seven in Britain. The plan would create over 150 jobs in the U.K., it said.  

Similarly, Chinese automaker Chery Commercial Vehicles plans to establish a regional headquarters in Liverpool, according to a social media post by the city council. While few details of the deal have been disclosed, Chery is widely expected to partner with the U.K.’s Jaguar Land Rover for its British operations.

Tianjin-headquartered life sciences group Asymchem is planning a major expansion of its U.K. operations, which will add 150 jobs over the next five years in advanced research and development, and next-generation manufacturing, the U.K. government said. 

In another sign that Starmer was able to leverage the fresh ties into economic gains, Chinese energy storage manufacturer HiTHIUM pledged to invest £200 million in Britain and to add 300 jobs in the country. The Chinese company will provide technologies that make its grid “more reliable,” the U.K. government said. 

The deals followed AstraZeneca’s announcement last week for a $15 billion investment in China to expand local R&D capability and grow its workforce by more than 3,000 to over 20,000 by 2030, according to a company statement.

Furthermore, British asset manager Schroders said Friday it has signed a memorandum of understanding with Contemporary Amperex Technology Co., known as CATL, to develop battery energy storage systems in Europe and will also support the battery giant’s international expansion. 

As part of the U.K.-China agreement, Beijing promised to broaden access for British businesses into the world’s second-largest consumer market and to improve a business environment that has deteriorated in recent years.

Chinese e-commerce conglomerate JD.com said it would help British brands to sell to the hundreds of millions of consumers on its platform and provide logistics services to support their online orders. The tech giant will launch its online retail platform Joybuy, that is currently in beta-testing, in the U.K. in March. 

The deal with JD.com came as British companies reported that the business environment had deteriorated for six straight years in China amid persistent deflationary pressure, broad consumption slump, and intensifying local competition, according to a survey conducted by the British Chamber of Commerce in December. 

China’s domestic consumption has shown “no signs of returning to the heady days of pre-pandemic spending,” hampering sales for luxury goods and high-end brands, the body said.

But opportunities emerged in experience-oriented spending, a trend that could benefit British firms in industries like sports, entertainment and wellness, the industry body added. 

Firms appeared to stay upbeat about China’s market, with around a third of respondents planning to ramp up investments in the country, the survey showed, particularly for expanding operations, forming new partnerships, and localisation experiments.

Starmer’s visit also delivered a string of other promises from U.K. brands like Welsh manufacturer Cultech and British bikemaker Brompton to increase exports to China.

For life sciences, Birmingham Biotech, a British biopharma firm, announced plans to scale its operations in China, expecting around £20 million in sales in China in the coming years. 

U.K.’s largest energy supplier Octopus Energy Group said last Friday that it planned to form a new joint venture with China’s PCG Power to trade renewable energy, marking its first foray into the world’s largest clean energy market.

— CNBC’s Evelyn Cheng contributed to this report.