UK ‘too dependent on China’ for critical goods

Influential report recommends that the five nations that make up ‘Five Eyes’ alliance should urgently prioritise ‘decoupling’ trade from China in goods linked to critical industries.

Britain is too dependent on China for imports that are key to critical national infrastructure and the economy, a think tank for the governing Conservative Party has concluded.

The Times reports that active pharmaceutical ingredients needed to make painkillers, antibiotics and anti-viral drugs are among the 71 critical goods for which the UK relies heavily on Beijing for supplies, according to the Henry Jackson Society. Industrial chemicals, metal products and consumer electronics including mobile phones and laptops are also on the list of items.

More than 20 Conservative MPs are seeking an amendment to the trade bill going through the House of Commons in the wake of the report’s findings, The Times reported. They have written to Liz Truss, the international trade secretary, calling on the government to conduct an annual audit of the imported goods for which it is strategically dependent on authoritarian states such as China, and to prioritise new trade deals that reduce this dependency, the newspaper noted.

The 22 MPs believe that the Covid-19 pandemic has prompted all nations to reassess their approach to trade and supply security. Britain is among those that have placed restrictions on the export of crucial goods, as it has struggled to source personal protective equipment and other kit.

The Henry Jackson Society, which has long taken a hawkish stance on China, said that the Chinese Communist Party’s handling of the coronavirus crisis, in which it has attempted “to avoid responsibility and accountability by deflecting blame and suppressing criticism”, should call into question the country’s reliability.

The think tank has analysed international trade data to identify the categories in which the UK is a net importer, relies on China for more than 50% of imports, and in which China has a greater than 30% market share of global trade.

The report claimed that Britain was “strategically dependent” on China in 289 categories of the internationally-recognised “harmonised system” of product classification. Of these, 71 were categories crucial to critical infrastructure and the economy. The think tank repeated the exercise for the US, Canada, Australia and New Zealand – the other nations in the so-called Five Eyes alliance, the closest intelligence-sharing group in the world. Collectively, the five powers were dependent on China in 5,910 categories of goods, of which 319 were essential for critical industries.

The think tank concluded that this left all of these states vulnerable to Beijing’s influence, as it accused China of increasingly resorting to “wolf warrior diplomacy” based on crude bullying and threats. The five nations should urgently prioritise “decoupling” trade from China in goods linked to critical industries, it said.

Source: Lloyd´s