With political tensions continuing to rise between China and the west, business leaders say British firms are racing to cut their economic ties with Beijing – even if it means passing on greater costs to consumers.
Tony Danker, director-general of the Confederation of British Industry (CBI), warned that thousands of companies in the UK are restructuring their supply chains anticipating growing anti-China political sentiment.
“Every company that I speak to at the moment is engaged in rethinking their supply chains… Because they anticipate that our politicians will inevitably accelerate towards a decoupled world from China,” he told the Financial Times.
He said that the need for Britian is to develop “new strategic alliances in the world”.
He added that in Washington too the need for companies to build “resilience” in preparation for a divorce from China was “all they are talking about”.
The move could also exacerbate the cost-of-living crisis in the UK, he said.
“It doesn’t take a genius to think cheap goods and cheaper goods may be a thing of the past,” Mr Danker said.
Excluding China from supply chains “will be more expensive and thus inflationary and will redefine the trade strategy for Britain . . . it’ll be no longer who we sell to but where we source from,” he added.
Earlier this week China featured heavily in the leadership debate between Liz Truss and Rishi Sunak as part of the race for No 10.
The former chancellor accused Ms Truss of pursuing a closer relationship with China.
Mr Sunak said: “There was a time when Liz was talking about having a golden era of relationships with China and the mission there was talking about having deeper collaboration with things like food security and technology.
“But what we do need to do is acknowledge that China is a threat to our national security, it’s a threat to our economic security.”
Ms Truss on the other hand accused Mr Sunak’s former department, the Treasury, of harbouring a desire for “closer economic relations” with China.
She said that the Foreign Office meanwhile has taken “the toughest stance” with the country including by “being clear that Taiwan should be able to defend itself”.
The CBI has not endorsed either of the candidates in the race for the Tory leadership.
Mr Danker said that he is happy that the two are discussing positive business strategy.
