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UK government’s vaunted China deals don’t add up


Tom Bergin -

Each aluminium Land Rover body that rolls along the production line at Solihull carries a lengthy sheet of paper giving the vehicle’s specifications. At the top of the “build card” is the name of the country for which the vehicle is destined.

In recent years around one in five of the cards has had “China” printed on it.

“I often think ‘how rich are the people in China?’ They buy so many,” said line worker George Baker, amid a cacophony of forklift horns, beeping machinery and trumpeting line stoppage alarms.

Jaguar Land Rover (JLR), owned by India’s Tata Motors, increased sales to China from around £250 million in its 2009 financial year to almost £8 billion in 2014-2015, allowing it to more than double its UK workforce.

Jaguar’s success, and deals to export other British goods and services worth billions of pounds, are cited as examples of the opportunities for selling into China and of how the government can help “open the door for British companies”.

Exploiting those opportunities is especially urgent since Britain voted last year to leave the European Union, a fact well understood by Prime Minister Theresa May, who needs fast-growing markets like China to make up the numbers that may be missing soon from its European trade.

But the impressive deals touted by the government are not quite what they seem, a Reuters analysis of the figures shows.

The value of announced deals to export British goods and services to China since 2010 adds up to £36 billion, according to official government releases over the period, often issued around the time of ministerial visits to Beijing.

However, an examination of company statements, corporate filings and interviews with executives shows the value of actual exports from those deals have totalled less than £6 billion.

The upshot: government figures are giving an overly rosy picture of the state of UK-China trade, economists said.

“If you look at these headline deals and they have a big number on them, I think that’s not really very informative,” said Holger Breinlich, professor of international economics at the University of Nottingham.

“You have to look at the small print and what’s being spent in the UK.”

The analysis highlights the challenges British companies face in China, with whom the United Kingdom has a ballooning deficit, and how even a post-Brexit free trade deal may fail to accelerate exports. — Reuters

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