The prominence of China in the global economy has changed markedly over the last 20 years. China’s GDP (Gross Domestic Product) has been growing by around 10% a year between 1993 and 2013, compared with the global average of 2.8%. The GDP of China has increased from $0.44 trillion to $9.24 trillion in 2013.
China has become the world's second largest economy as a proportion of global GDP
Its share of global GDP rose from 1.7% to 12.2% between 1993 and 2013. The US is still the world’s largest economy but its share of the global economy has fallen, along with Europe’s. Over this period of growth, it’s important to consider how key is China as a trading partner to the UK today?
Proportion of world GDP by selected parts of the world, 2004 to 2013
China is the UK’s second largest non-EU import partner, just behind America
The importance of China to the UK economy as a trading partner has increased consistently since 2004, with both imports and exports increasing. China has become the UK’s second largest non-EU import partner behind America, accounting for 7% of UK imports in 2014 compared with 3.3% in 2004. Trade in goods dominates UK trade with China, which has accounted for over 95% of all UK trade imports from China per year since 2004.
Imports from China up £26.3 billion in the past decade
Goods and services exports and imports with China, 2004 to 2014
Imports of goods and services from China have grown from £11.3 billion in 2004 to £37.7 billion in 2014. Exports have grown at a slower rate, from £4.0 billion to £18.2 billion, but still accounted for 3.6% of UK exports. Due to imports growing at faster rate than exports, the UK’s trade deficit with China has also grown. Our trade deficit stood at £19.5 billion in 2014, the second highest behind Germany.
China is now the UK’s 6th biggest destination for UK goods exports
Percentage of UK total goods exports by selected country, 2004 to 2014
China’s economy has had a notable impact on UK exports and imports over the past 20 years. Our trade is typically heavily dominated by the US and a range of European countries, where the UK has always had strong political and geographical links. However, in the past 20 years China has to become our 6th biggest destination for UK goods exports.
2.8% of UK business abroad operated in China
In 2012, there were 654 UK owned businesses operating in China. These UK owned businesses employed 148,822 people and had a turnover of £13.4 billion. Of this, £6.0 billion came from manufacturing and £6.7 billion from services, of which £3.9 billion was financial and insurance activities. These businesses account for 2.8% of UK owned enterprises abroad, 1.1% of the turnover, and 3.0% of the employment.
UK citizens invested £6 billion in China in 2013
UK citizens invested £6.0 billion in China in 2013, up from £1.9 billion in 2004. In comparison, Chinese citizens invested significantly less in the UK, £950 million in 2014, up from £119 million in 2004. However, China only account for a small amount on inward (0.1%) and outward (0.6%) investment, compared with Europe and the US. The US and Europe account for 74.4% of the UK’s outward investment and 83.1% of the UK’s inward investment.