ritish companies scramble for serious economic ties with China in the wake of heightened political and security tensions between Beijing and the West, an industry leader has said.
The sudden restructuring of supply chains from China could also exacerbate the cost of living crisis, warned Tony Danker, director general of the Confederation of British Industry (CBI).
Speaking to FT Weekend, he said thousands of companies in the UK are currently rethinking supply chains in anticipation of hardening anti-Chinese political sentiment.
Mr Danker warned that the UK must find new trading partners and breathe new life into old ones, such as the EU, if China is to be removed. If not, corporate supply chains will be “more expensive and therefore inflationary” and Britain’s trade strategy will be redefined.
“If the political pundits and security experts are right, we will all have to become good friends again,” he told the newspaper.
“Every company I speak to right now is rethinking their supply chains… Because they expect our politicians to inevitably accelerate towards a decoupled world from China.”
The CBI chief said Britain needed “new strategic alliances in the world”. In Washington, he added, the need for companies to build “resilience” in preparation for a divorce from China was “all they’re talking about.”
“It doesn’t take a genius to think cheap goods and cheaper goods are a thing of the past,” said Mr Danker, warning that a price hike was inevitable.
The CBI chief’s warning about Britain’s economic dependence on China comes amid the conservative No. 10 candidate race, in which the issue of China played a major role.
Earlier in the week Liz Truss and Rishi Sunak clashed over who would take the toughest stance on China in the race to become the new prime minister.
Both contenders accused each other of pursuing closer ties with China while pledging to confront the superpower’s threat to Britain’s national security and economic security.
Ms Truss accused her rival of “pressing closer trade ties”, while Mr Sunak said “Liz has been on a journey” to get to a point where she opposes closer ties.
Commenting on China being such a focal point in the Tory race, Mr Danker told FT he was pleased to see that both candidates seemed to see the need for a positive business strategy.
However, he also expressed his concern that climate problems and opportunities for economic growth in the green sector are not taken seriously. The green agenda was derisively treated as an “awakened” problem, he said.
“The candidates have to be careful. I understand the politics, but being a green skeptic now erodes the platform you will have as Prime Minister for what we believe to be the UK’s biggest economic and business opportunity.