SINCE the UK voted to opt out of the European Union, trade relations has come centre stage in our negotiation with our EU exit and future relationship with the free trade area, single market and customs union uppermost on the agenda.
So much so that “it’s trade, stupid!” comes easily to mind, in much the same way as “it’s the economy, stupid!” comes to mind from Clinton days.
After last week, who would you trust between the two biggest economies in the world to develop new trade deals with the UK after our EU exit?
US President Donald Trump’s boisterous inauguration speech stated quite clearly that America comes first in trade, as buying and hiring American becomes his primary trade goals, indicating protectionism and isolationism ahead from the US.
While Xi Jinping, President of the People’s Republic of China, in Davos defended globalisation, stating there will not be any winners in a trade war. He said: “Pursuing protectionism is like locking yourself up in a dark room. Wind and rain may be kept outside but also the light and air.”
The contrast cannot be more stark between the two visions for the immediate future.
On top of these differences, we had the first ever direct freight train from China to the UK arriving to a fanfare in Barking, East London last Friday.
It covered over 7,000 miles to get to London across the whole of Eurasia. That is across several countries and through the Channel Tunnel to reach London. It must be a logistical miracle to get to our shores as differing rail gauges in different countries mean no single train can travel the whole route and the containers have to be reloaded at various stages.
The freight train, which carried millions of pounds worth of socks, cloth, bags and household goods, set off 18 days earlier from the manufacturing city of Yiwu. The new weekly service is thought to be quicker than a container ship and half the price of air freight, while London becomes the 15th European city to be served by freight trains from China. If you wanted evidence of China being open for trade with Europe these trains show us this in the UK.
The 34-carriage train, which reportedly contained £4 million of commodities coming directly from the factory floors of Yiwu, also offers an opportunity to take goods from London to China.
So, while President Trump settles into office, what does he offer?
Well, one of his first executive orders is the US opting out of the Trans Pacific Trade Agreement (TPTA) that Obama had set up. Not surprising China is now offering bilateral trade deals to all the Pacific countries let down by Trump’s protectionist and isolationist instincts, and making up for the gap left in trade in the Pacific by the US. China can only gain by this stance taken by the President.
So, in the Year of the Rooster, we can expect China to be open for trade while the US will be a lot more closed as Trump puts his priorities in place.
Happy Chinese New Year everybody!
This blog piece was first published in the West End Extra of the 27th of January 2017.