General

"There is no way to get rid of this situation. I raised my eyebrows, but my heart." Speaking of the United Kingdom, the distress of "Brexit" has only slightly eased, and the troubles have been added due to the decline in foreign trade and imports.

Preliminary data released by the UK National Bureau of Statistics show that in the first quarter of 2021, the UK's global merchandise exports excluding precious metals fell by 7 billion pounds month-on-month and 7.6 billion pounds year-on-year; imports fell by 14.5 billion pounds month-on-month and 5.4 billion pounds year-on-year. During the period, the merchandise trade deficit reached 30.6 billion pounds, an increase of 7.6 billion pounds from the previous month, and a year-on-year decrease of 2.1 billion pounds.

Reasons for the decline in foreign trade

The decline in the British foreign trade market is primarily due to the spread of the epidemic. As of now, the British epidemic is still in a state of anxiety. At the same time, the British domestic economy has basically had an impact on the foreign trade market. In 2020, the UK's GDP will fall by 10%, the largest decline among the seven major industrialized countries.

According to the British Broadcasting Corporation (BBC) report, on May 12, 2021 local time, the British government released data stating that the country’s economy shrank by 1.5% in the first quarter of 2021. The National Bureau of Statistics of the United Kingdom said that early in the first quarter, the epidemic caused school closures and a sharp drop in retail sales, which dragged down economic growth. According to reports, the current size of the British economy has dropped by 8.7% from before the outbreak.

Of course, the impact of "Brexit" on the UK foreign trade market cannot be evaded. January 2021 is the first month that the UK officially withdrew from the European single market and began to "Brexit" in a true sense. Although it is still in a transitional period, the impact of "Brexit" on bilateral trade has already become prominent. Data show that in January 2021, the UK's trade in goods with the EU has dropped significantly from the previous month, with exports to the EU falling by 40.7% and imports from the EU by 28.8%.

The United Kingdom and the European Union signed a Brexit agreement at the end of 2020. The agreement stipulates that both sides will continue to enjoy zero tariffs and zero quotas in merchandise trade, avoiding large-scale trade costs. However, the agreement also stipulates that the goods between the two parties must be inspected and a written application must be submitted. This makes the trade between Britain and Europe not as smooth as before.

According to a report released by the market research organization IHS Markit, due to the supply chain disruption, the UK's latest manufacturing purchasing managers index (PMI) fell to its lowest level in two and a half years. The agency also said that British manufacturers reported the largest increase in supplier delivery time, the reason being "Brexit" and the serious shortage of international transportation capacity. In this regard, the United Kingdom has categorically denied it.

Although the UK and the EU have reached a "Brexit" agreement, the two sides are still in a running-in period, involving trade and industrial chain adjustments. In addition, epidemic control has also largely affected bilateral economic and trade exchanges.

Sino-British trade grows against the trend

Although the UK's foreign trade volume showed an overall downward trend in the first quarter of 2021, the China-UK trade volume has grown against the trend.

According to the import and export data released by the UK Revenue and Customs Administration, in the first quarter of 2021, Sino-British trade performed brilliantly on the first "report card" of 2021.

In general, although the import and export volume of China and the UK fell for a while due to the epidemic in 2020, the first quarter of 2021 showed an astonishing momentum of recovery. Not only does China continue to maintain its position as the UK's largest import trading partner, but there are signs that China-UK trade volume will reach a new high in 2021.

Among the top ten countries with the most exports from the UK, in March 2021, the UK's total exports to China ranked seventh. Among them, British exports to China increased by 59.7% month-on-month, second only to the increase in exports to Switzerland. Compared with the same period in 2020, Britain’s exports to China have increased by 39.8%, ranking third in growth. The growth of British exports to China was mainly driven by products such as machinery and transportation equipment.

China also continues to maintain its position as the UK's largest import trading partner. For many years, Germany has been Britain's largest trading import partner, but in recent years it has been gradually surpassed by China.

In the first three months of 2021, Britain’s imports from China reached 15.21 billion pounds, an increase of 62% over the same period in 2020. Not only has Britain's imports to China maintained a positive growth, but China has also experienced the largest increase in Britain's top ten import trading partners in the past year.

In order to further restore export competitiveness and promote exports to China and other countries, the United Kingdom announced a variety of new industry incentives in its spring budget in March 2021, including providing R&D tax credits for companies, Eight free ports will be built near the land channel.

These free ports will play the role of the UK's low tax and clean energy special economic zones in the future. The establishment of a free port in the United Kingdom is following the policy of China's special economic zones to provide impetus for the export-oriented growth of light industry in its coastal areas. It is expected that these new measures will not only expand the scale of British exports to China, but also promote British companies to enter the Chinese market.

It is worth noting that in recent years, the United Kingdom has acted as the "first follower" of the United States and joined the "anti-China chorus." However, regardless of previous suspicions, China repays grievances with morality, adheres to bilateral trade cooperation between China and Britain, respects the promise of the "Golden Decade" of China-UK relations, and abides by the principles of tolerance, mutual benefit, and win-win in China-UK trade, thus creating a new situation in China-UK trade. .

"Overcast to cloudy" or become the norm

Looking to the future of British foreign trade, "overcast to cloudy" may become the norm, and it is not much better or worse.

This is determined by Britain's international status. In the world, the United Kingdom is the first veteran capitalist country to enter modern society. From the very beginning, it established its status as a major country with a strong foreign trade. In history, Britain once became the maritime hegemon, leading global trade.

For hundreds of years, the British did not like to think of themselves as an ordinary country. The pride of "the sun never sets" is always on their faces, and they always feel that they are the head of the European continent, responsible for maintaining the balance of power in the European continent. Britain has long wanted to be the leader of Europe. When this wishful thinking fell through, Britain gradually moved away from Europe. Now Britain has tied itself to the United States again and has adopted an unfriendly attitude towards China.

In this way, Britain puts itself in an awkward position. It is a big country and a mediocre country with too small a structure, and it is difficult for it to do much in the field of foreign trade.

After Britain’s “Brexit”, everything in foreign trade must be rebuilt, standards revised, re-certified, and paths reopened. This tossing process will affect British foreign trade. On March 11, 2021, the United Kingdom announced that it will postpone the inspection of certain EU products entering the UK outside Northern Ireland after the original “Brexit”, so that companies affected by the epidemic have more time to adapt to the new rules.

At the end of 2020, the UK and the EU reached the EU-UK Trade and Cooperation Agreement on Brexit. The agreement was approved by the European Parliament and the Council of the European Union on April 28 and April 29, 2021, and was formally implemented on May 1. The President of the European Commission von der Lein said that the agreement is the basis for a strong and close partnership between the EU and the UK.

In this regard, the German media poured cold water, believing that Britain's decision to end the 47-year EU membership is harmful to both parties. From this point of view, Britain’s desire to obtain special offers from the European Union as before is already a sigh across the English Channel.

Looking at the epidemic situation again, at present, the number of newly diagnosed cases of new coronary pneumonia in the UK continues to decline, and the vaccine penetration rate is also rapidly increasing. According to the plan, the British government gradually liberalized social isolation measures, which greatly alleviated the impact of isolation measures on economic activities. Among them, England has lifted outdoor travel restrictions on May 5, 2021; restrictions in Scotland have been relaxed as early as April 26, 2021, and further deregulation is planned on May 17 and June 7 . According to the National Bureau of Statistics of the United Kingdom, as of the end of April 2021, the turnover of British companies that have resumed work and production has increased by 83%, which is expected to drive British GDP growth by at least 4% in the second quarter of 2021.

However, the mutated virus from India has brought serious uncertainty to the UK's epidemic prevention work. This of course will also affect the UK's foreign trade.