By Millie Turner
Severing ties with Chinese business risks weighing on the UK’s cost of living crisis, the boss of the Confederation of British Industry (CBI) has cautioned today.
Worsening relations between Beijing and the West has piled scrutiny onto Chinese businesses and investments, including the move in 2020 to remove Shenzhen-based Huawei from UK 5G infrastructure, and this year’s move to trawl a part-Chinese takeover of a British semiconductor firm through a rigorous inquiry.
Thousands of British businesses, through their own accord and via government intervention, have been cutting economic ties with China in recent years.
Tony Danker, director general of the CBI, told the FT Weekend that the UK will need to build relations with new trade partners and reignite old ones with the European Union, if the country is going to successfully navigate a trembling economy.
The US is already doing this, Danker added. After state-side and Japanese officials yesterday agreed to work on the next-generation of computer chips together, as it sought to cut out China for pushing “countries into choices that comprise their security, their intellectual property, their economic independence,” secretary of state Antony Blinken said.
Bosses of British technology firms said at the beginning of the month that the US government’s approach to business is outpacing the UK in ways that could see companies moving operations across the pond.
Conservative leadership candidates Liz Truss and Rishi Sunak have made tough stances against China part of their campaigns.
“If the political experts and security experts are right, we are all going to need to be good friends again,” Danker said.
“Every company that I speak to at the moment is engaged in rethinking their supply chains,” he added. “Because they anticipate that our politicians will inevitably accelerate towards a decoupled world from China.”
Danker also warned that prices rises were inevitable, saying: “It doesn’t take a genius to think cheap goods and cheaper goods may be a thing of the past.”
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