Chinese companies' shipments to the UK are rising sharply, reaching levels not seen in years.
Bloomberg reported on the 25th that official data from both China and the UK show that after the US imposed high tariffs on Chinese goods, China’s exports to the UK have rebounded. Notably, Chinese exports of small parcels and electronic products to the UK have increased significantly, indicating that China may be shifting trade routes to circumvent US tariffs.
This data further proves that as Trump’s trade barriers reduce US reliance on Chinese products, demand for these products often shifts elsewhere rather than disappearing.
UK Minister for Business and Trade, Kemi Badenoch, said they are monitoring the impact of trade diversion and are prepared to use powers to prevent the dumping of cheap Chinese products such as steel in the UK market.
The large influx of cheap Chinese goods into the UK has both benefits and drawbacks: The benefit is that it can more quickly reduce UK inflation, while the drawback is that it weakens the pricing power of UK domestic manufacturers.
According to seasonally adjusted data from the UK’s Office for National Statistics, in April the total value of UK imports from China climbed to £6 billion (34.675 billion ringgit), an 11% year-on-year increase and the highest level in more than two years. Unadjusted data from Beijing also show that the value of exports to the UK in May reached its highest level since mid-2022, and was above the normal level for this time of year.
Bloomberg quoted Deutsche Bank’s chief UK economist Sanjay Raja as saying that the above data may “have a significant impact on inflation, as trade diversion to the UK could put downward pressure on core goods.”
He added: “Naturally, we think there will be some dumping in Europe, especially in home goods, clothing, and leisure goods.”