U.K. Moves Closer to China with Major Deals as U.S. Faces Trade Challenges

TLDR

• Britain seeks to strengthen ties with China through business deals, including a $15 billion investment by AstraZeneca.
• China agreed to halve tariffs on Scotch whisky, benefiting Scottish distillers, and visa-free travel was granted for British travelers.
• Earlier, the European Union paused its trade deal with the U.S. amid escalating tariff threats from President Trump.
• India and the European Union finalized a major trade deal after two decades of negotiations, improving economic relations.
• Canada has eased tariffs on Chinese electric vehicles, signaling a shift in its trade policy toward China.

The relationship between Britain and China is improving, as U.K. Prime Minister Keir Starmer visits China for the first time in eight years. While no major trade agreements were made, several business deals were announced, signaling a shift in Britain’s foreign policy.

Focus on Trade with China

During his visit, Prime Minister Starmer emphasized business over politics, aligning with Britain’s economic needs. With both economies under pressure, Britain seeks to revive its economy by forging stronger ties with China. AstraZeneca announced a $15 billion investment in China, its largest ever there.

British energy firm Octopus Energy also confirmed its entry into the Chinese market, marking its first expansion into the country. In addition to these deals, China agreed to halve tariffs on Scotch whisky, benefiting Scottish distillers. Moreover, British travelers will now enjoy visa-free travel to China for 30 days. These measures aim to stabilize economic relations, especially as the U.S. continues to reshape global trade.

Prime Minister Starmer and his government have framed this new phase of relations as a way to support domestic growth while managing geopolitical risks. The U.K. insists it does not need to choose between its relationship with the U.S. and China, viewing both as essential to its future prosperity.

Is the U.S. Losing Ground as Countries Forge New Trade Ties?

As reported earlier by Blockonomi, the European Union has paused the approval process for its trade deal with the U.S. following President Donald Trump’s escalating tariff threats. The U.S. had warned that it would impose tariffs on several European countries unless it gained control over Greenland.

Bernd Lange, Chairman of the European Parliament’s international trade committee, said the EU had “no alternative but to suspend work” on the deal due to the tariff threats. The deal, which was supposed to cap U.S. tariffs on most EU products at 15%, now faces uncertainty.

In another business-related development, India and the European Union have finalized a major trade agreement after nearly two decades of negotiations. Prime Minister Narendra Modi confirmed the deal during a speech, calling it a “turning point” for bilateral relations. On the other hand, Canada has taken a different approach to trade policy, easing tariffs on Chinese electric vehicles.

China vs. U.S.: The Ongoing Economic Power Struggle

According to a World Bank report, the U.S. and China remain the two largest global economies, dominating both nominal GDP and purchasing power parity (PPP). The U.S. leads in nominal terms, while China has been at the top of PPP since 2014.

As of last year, the U.S. economy is projected to be worth $30,507 billion, ahead of China’s $19,232 billion in nominal GDP. In PPP terms, China’s economy is forecasted to surpass the U.S., with China’s GDP valued at $40,716 billion compared to the U.S. at $30,507 billion.

Despite the disparity in per capita income, the competition between the U.S. and China for global economic leadership is intensifying. Both countries’ GDP growth rates have fluctuated over the years, with China showing higher growth in recent decades.

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