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Tens of thousands of jobs in high-growth sectors are feared to be at risk due to the UK’s trading reliance on China, researchers have warned.
The Institute for Public Policy Research (IPPR), a left-leaning think tank that has shared a close relationship with senior Labour figures, has warned that around 90,000 jobs are at the whim of geopolitical developments in China.
The research pinpointed clean energy and automotive sectors as being those at greatest risk from an “over-reliance” on the world’s second largest economy.
The report said 90,000 jobs in the UK, as well as the production of 580,000 electric vehicles essential to the government’s net zero targets, could be under threat due to disruptions in supply chains passing through China.
Battery and critical minerals sectors face the greatest risk of disruption from a breakdown in relations.
Such fallouts could have stark implications for UK energy prices and living standards, according to analysts.
Pranesh Narayanan, senior research fellow at the think tank, said President Trump’s trade war against China and the potential for breakdowns on diplomatic relations over conflicts could put the UK economy in harm’s way.
“These shocks ultimately hurt the UK economy because we rely so much on trade to source the essentials, including clean energy technologies,” Narayanan said.
“Rachel Reeves recognised this when she spoke about ‘securonomics’ and the need for resilience.”
Businesses sceptical of China
The report suggests the government has not set out a “clear position” on the terms of the UK’s trading relationship with China and willingness to boost inward investment from the country.
Stockpiling, investment partnerships and ‘keepshoring’, which involves the retention domestic production capacities in the face of changing conditions, are raised as potential solutions to safeguard UK businesses from suffering collateral damage to economic spats.
Fresh research will put pressure on the Labour government to take a stronger stance on China, with government officials insisting they can “co-operate” with the country despite raising the alarm on national security threats.
Keir Starmer is expected to be joined by business leaders later this month when he visits China, which is expected to come shortly after a full approval of China’s new “mega embassy” at the Royal Mint Court site near the City.
Foreign secretary Yvette Cooper has also confirmed she intends to visit Beijing, following trips made by her predecessor David Lammy as well as Reeves.
A recent survey conducted by Deloitte appeared to suggest business chiefs’ relative scepticism about building closer ties with China.
Nearly half (46 per cent) of respondents said they expected there to be more trade barriers with China over the next five years.
However, over half of businesses surveyed (51 per cent) favoured closer ties with China, with a similar portion of respondents claiming they expected the country to play a larger role in global supply chains.
