UK select committee faults Starmer government’s China strategy

Committee proposes Chinese-investment zones and preparations for possible EV tariffs

The Commons business, innovation, science and trade select committee said on November 2 that work on a new China strategy should be combined with official preparations for new trade remedies against unfair competition, including potential tariffs on electric vehicles. Downing Street had not ruled out such tariffs. Calling for “clear new rules of the game,” the report recommended designating a “red zone” for industries off-limits to Chinese investment and a “green zone,” where trade should be encouraged.

The government rejected the report’s conclusion. “We recognise the committee’s work on this report, but we disagree with its conclusion,” a government spokesperson said. The spokesperson described the approach as “consistent,” saying the government cooperated where it could and challenged where it must. “Our trade strategy makes clear that we will capitalise on every opportunity to grow our economy while never compromising on our national security, and our increased discussions with China allows us to directly raise concerns where they arise,” the spokesperson said.

The committee said Labour’s failure to formulate a coherent strategy since 2024 had “combined the worst of both worlds,” leaving the government unable either to deliver commercial opportunities to British businesses or control the “increasing exposure to unquantified, managed risk” in relations with China. The report said: “In 2024, the new government promised a strategic, long-term, consistent UK approach to China. It has not delivered on this.” It warned: “Britain must shape its own relationship with China or risk having that relationship shaped for us in Washington or Beijing.”

Byrne sharply criticised the government’s piecemeal approach. “Britain’s businesses cannot plan for the future when the government keeps making up its China policy as it goes along,” he said. “Ministers promised clarity and consistency. Instead, we have opportunities missed, risks unmanaged and decisions left until the 11th hour.”

Labour MP and committee chair Liam Byrne warned that the UK’s policy on China was also endangering Britain’s business with the EU, with the risk of being “cut off” from major manufacturing contracts. Byrne said a China strategy was an urgent concern as “Europe is changing fast” and “proposing new trade protections as it gets bolder with Beijing and warier of Washington”. The new laws “may trap Britain outside EU trade walls, cutting us off from our largest market”.

Byrne said the government “should be prepared to consider dynamic alignment” with the EU, including tariffs on EVs, “as the price of securing British firms a place in the EU’s Made in Europe project” and to help guard against China dominance.

The committee cited the government’s March decision to block the Chinese firm Ming Yang from building a £1.5bn wind energy plant in Scotland after years of negotiation because of unspecified security risks. Scotland’s first minister, John Swinney, called on Andy Burnham to reconsider Starmer’s decision. The report grouped that choice with the emergency takeover of British Steel from its Chinese owners, saying both had been “characterised by reactivity, inconsistency and opacity.”

The MPs acknowledged the advantages of trading with Beijing. They noted that British businesses have profitable operations in China and “are ambitious to grow” and learn from the country’s “world-leading” innovations. At the same time, consumers benefit from low-cost imports when household incomes are squeezed, with electric vehicles serving as a case in point.

The UK’s relationship with China had been marked by a lack of engagement over the previous 10 years. Keir Starmer’s January official visit was the first by a British prime minister since Theresa May travelled there in 2018. The trip was billed as an effort to end the “diplomatic ice age.” Since 2018, China had benefited from an export boom that was fuelling fears of deindustrialisation and adding to existing concerns about cyber espionage and national security.

The UK was already under pressure to align with the EU on tariffs for EVs, but business secretary Jonathan Reynolds said he would make a decision in the best interests of the UK. The EU had already imposed tariffs on Chinese EVs, capped the number of hybrid cars that can be imported from China and was considering a Franco-German proposal for a “kill switch” to block imports if China weaponised trade, as it did the previous year with curbs on exports of rare-earth minerals and chips. The report said: “The UK’s partners are moving further and faster.”

China was on track to surpass the previous year’s record $1.19tn trade surplus with the rest of the world. Its latest five-year plan, covering 2026 to 2030, prioritised the strategic expansion of high-value green exports such as EVs, batteries, wind turbines, hydrogen and solar panels.

The government therefore still faces the committee’s calls for a coherent China strategy, a Chinese-investment red zone and official preparations for possible EV tariffs, while maintaining that its existing approach is consistent.