China’s big spending middle class fuels North West export boom

The emergence of China’s middle class is a primary driver behind a recovery in exports, according to analysis from the China Britain Business Council (CBBC).

The China Trade Tracker, a new quarterly publication offering expert insight into UK-China trade, found that exports to China grew 3.2% last year – despite the COVID-19 pandemic – while exports to Europe and US fell.

The North West has benefited from higher Chinese demand over the past two years. Between the first quarter of 2019 and quarter one in 2021, goods exports to China soared 83%.

The biggest beneficiaries were car manufacturers (+53.4% YoY, worth £230.7m) as well as producers of chemicals (+79.1% YoY, worth £16.15m) and plastics in primary form (+74.1% YoY worth £13.17m).

Also, North West exporters of electrical machinery, apps and appliances enjoyed a 24% increase in business, worth £16.44m, and non-ferrous metals exporters saw volumes rise by 14% to £6.9m. The non-ferrous metals market experienced the biggest increase in exports to China between 2015 and 2020, with business rising by 293.9%, which was worth £50.816m.

Between 2010 and 2019, UK exports to China more than tripled to more than £30bn, making China the UK’s third largest trading partner.

Looking ahead, China will account for two thirds of the growth in the global middle class in the next decade, equivalent to around 400million people, according to recent findings from the DIT.

Looking at all regions of the UK, the report illustrates a shift of key exports over recent years, highlighting the emergence of new export markets which have shown significant growth since 2015.

Showing the top 10 exports for each region, examples include a growth of more than 650% of metals in the North East, with a value of in excess of £180m, and an increase of more than 840% of meat and meat preparations in Yorkshire and the Humber, worth almost £68m.

The report brings together official HMT and ONS data with CBBC expert analysis to highlight key trends and themes of the UK’s trading relationship with China, nationally, across regions and key sectors.

The CBBC says at a time when many UK companies are facing tough trading conditions at home and internationally, the China opportunity is more important than ever for UK businesses and jobs especially in relation to the UK’s post-COVID recovery.

Its report highlights the benefits to the UK economy of a healthy trade and investment relationship with China, which is expected to be the world’s largest economy by 2030.

Andrew Seaton, CBBC chief executive, said: “British businesses are increasingly taking advantage of the opportunity of the fast growing and dynamic Asian markets.

Andrew Seaton

“The growth of China’s middle class by over 400 million in the coming decade is at the heart of this opportunity. It Is vital for the health of the UK economy that UK business does not miss out on this.”

He added: “Our new China Trade Tracker has illustrated that this growth of the middle class has already led to new opportunities for high quality UK goods and services over the past decade and during the pandemic, making a vital contribution to local economies across all regions of the UK.

“China, as well as being the world’s second largest economy, is the UK’s third largest goods trading partner. It has never been more important to recognise the importance of the trading relationship with China in supporting British businesses, jobs and livelihoods across all sectors and regions of the UK.”