How strong are Britain and China's economic ties?
The economic relationship between the UK and China has grown significantly over the past two decades.
By Justin HarperBusiness reporter In 1999, China was the UK's 26th biggest export market. It now sits in sixth place. Trade between the two countries hit a record high last year, with large infrastructure projects and education playing major roles. But as tensions rise between London and Beijing - following the UK government's U-turn on using Huawei telecoms 5G equipment in the country's networks - the ties that have benefited both nations may now be under threat. Trade Last year, China was the UK's sixth largest export market, worth £30.7bn, according to the Office for National Statistics (ONS). This was a record high, up from £23.4bn in 2018, and the fourth year-on-year increase in a row. In the other direction, China was the UK's fourth largest source of imports, worth £49bn, also a record high. Leslie Young, Professor of Economics at the Cheung Kong Graduate School of Business in Beijing, told the BBC that in his view trade between the two countries would not be a victim of increased London-Beijing tensions. "The rising hostility between the UK and China is unlikely to have a strong effect on the leading components of their trade. The major effect is likely to be on UK higher education and the role of the UK as a hub for Chinese companies." Infrastructure China also plays an increasingly important role in the UK's infrastructure, including its nuclear power capabilities. China General Nuclear Power (CGN) is partly financing the building of the £20bn Hinkley Point nuclear power station in Somerset. The state-owned Chinese group also has an option to buy 20% of another planned plant, at Sizewell in Suffolk, and a majority stake in an entity looking into several more nuclear power projects. China's state-run sovereign wealth fund China Investment Corporation (CIC) has an 8.7% stake in Thames Water, along with a 10% stake in the firm that owns London's Heathrow Airport. China also has a stake in the UK's North Sea oil production via the China National Offshore Oil Corporation (CNOOC). Chinese students The number of Chinese students at UK universities has more than trebled since 2006, according to the National Institute of Economics and Social Research (NIESR). Tuition fees from Chinese students add up to at least £1.7bn a year across universities and independent schools. Experts have warned that UK universities will struggle financially if China imposes a ban on its students coming to Britain. "As Chinese students account for the largest body of foreign students, the financial impact would be large", said a spokesman for Shanghai-based market intelligence firm Emerging Strategy. "Universities will need to adjust their costs or find new ways to generate revenue." But the British Council has downplayed fears of a mass exodus of Chinese students. "Long-term planning to study abroad is unlikely to be affected by short-term political relations. The UK has always been one of the top destinations for Chinese students," a spokesman told the BBC. Takeovers China has been active in many high-profile acquisitions in the UK, resulting in billions of pounds flowing into Britain. In March, British Steel was taken over by China's Jingye Group in a move expected to save more than 3,000 jobs. The Chinese firm said it would invest more than £1bn to help modernise the steelworks. Other notable takeovers include black cab maker LTI, which was bought by Chinese carmaker Geely, and Wolverhampton Wanderers football club, which was taken over by Chinese conglomerate Fosun International. Technology Technology firm Huawei's investment in the UK is a high-profile and a long-standing one, dating back to 2005. While Huawei will no longer be involved in the rollout of new 5G equipment, it still has involvement in existing telecoms infrastructure. While much of the talk has been around Huawei, it's not the only technology company that the UK and China share links with. China's thirst for high tech UK companies saw it take over chipmaker Imagination Technologies in 2017. The vast majority of the cash for the purchase came from the Beijing-backed China Reform investment fund. UK businesses in China While most of the flow is money into the UK from Chinese companies and government-backed entities, there are some big UK firms doing business in China, a country of 1.4 billion people with rapidly-growing disposable incomes. Significant British companies are spread across sectors such as energy, car production, pharmaceuticals and financial services Last year, China's ambassador to Germany threatened "consequences" for its carmakers if Huawei was blocked from Germany's 5G networks, raising concerns that Beijing may use such tactics against other countries' interests. "Chinese citizens are prompt to follow boycotts based on national interests dictated by the party," said a Shanghai-based spokesman for market intelligence firm Emerging Strategy. But Steven Lynch, managing director of the British Chamber of Commerce in China told the BBC that he was optimistic that such a situation could be avoided. "We hope that British automotive manufacturers who both import vehicles into China and manufacture locally will not be targeted for the UK government's decision," he said. The pro-business group warned that British telecoms and IT companies could also potentially be at risk. But Mr Lynch added that the two countries should be able to "sustain robust trade and investment in the coming months despite the challenging political environment".