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Ballooning £40bn trade deficit with China raises fears of British dependency

China UK trade imports
China UK trade imports

Britain's trade deficit with China has more than tripled during the pandemic after successive lockdowns sparked a wave of spending on electronic goods.

The UK imported £40.5bn more from China than it exported to the country in the year to June 2021, according to data from the Department for International Trade, a huge increase from the £11.8bn deficit in the previous 12 months.

The imbalance was driven by a 38pc surge in goods imports from China, while UK exports also declined by 34pc.

The figures will raise concerns about China's growing influence in Britain amid fears over national security.

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Jonathan Ashworth, an expert on the Chinese economy at Fathom Consulting, said the Communist country's exports had boomed during the pandemic because of an uptick in demand for technology required to work from home and stay connected with family members online.

The British population has also been spending less in restaurants and shops on local high streets.

Mr Ashworth said: "UK goods imports have become much higher and I suspect one of the factors driving that is large spending on the types of electronic goods required in the ongoing pandemic. There has been less spending on services in the UK economy and more spending on goods.

"And that has been a phenomenon seen across a number of advanced economies, and it has really helped Chinese exports.

"UK exports to China have also fallen sharply. I suspect this is related to weakness in the Chinese economy, but also the spending of domestic Chinese consumers might be weighed towards the electronics and goods required to work from home."

He warned the Chinese economy would take a knock when the pandemic recedes.

Mr Ashworth said: "In general, there's no doubt China has had difficulties with supply chain issues and the difficulties sourcing materials."

"But from a Chinese perspective, the key positive is that for more than a year now there has been really strong spending on their goods from advanced economies. It would be a risk for the Chinese economy if we get the virus under control, and we get back to spending more on services in the UK."

Lord Purvis of Tweed, a Liberal Democrat spokesperson for international trade, said the surge in the trade deficit had weakened Britain's influence on human rights issues in China.

He said: "It's become apparent that the Government is taking us on a very worrying journey of becoming heavily dependent on China for trade in goods, and moving away from our nearest market in Europe.

"We are now very dependent on imports of goods from China over which we have no leverage whatsoever. In fact, quite the reverse.

"And therefore when it comes to debating issues such as human rights, our opportunity as the UK is considerably weaker. I think from the UK's point of view this is now a geopolitical issue that we need to be airing a lot more."

Prime Minister Boris Johnson raised concerns about alleged human rights abuses in the country's Xinjiang province in an October call with the Chinese President Xi Jinping.

It is thought that more than a million Uyghur Muslims have been interned in forced labour camps in the region. China has denied the claims.

A Government spokesman said: "The UK will pursue a positive trading relationship with China in non-strategic areas, ensuring that our national security, freedom and democracy are protected, and that China is held to account on its international commitments.

"We support the right kind of globalisation - one that generates economic value for all and is based on free enterprise, human rights and rule of law."