Rain Newton-Smith, head of the UK’s leading business group, will urge the government to ignore the “siren call of protectionism” amid mounting tensions in the global economy.
In a speech set to be delivered later today, the chief executive of the Confederation of British Industry (CBI), will call on the government to forge deeper ties with all of the world’s major economic blocs, including China.
“There may be tension between the established big blocs – the US, the EU and China. There may be pressure to fall in behind one or more. But we must not,” she will say.
“Engagement is always better than protectionism – or sticking our heads in the sand.
“So when it comes to China, we must be practical. Yes, let’s recognise the security concerns. But full decoupling from China is not realistic and it is not right. It does not sit with our commitment to free and fair trade. And it does not sit with our need to answer the global challenges of 2025.”
The speech comes just days after Donald Trump imposed 10 per cent tariffs on China, signalling an escalation in the economic dispute between the two largest economies in the world.
Trump’s tariffs prompted the Chinese government to announce a range of retaliatory measures, including new duties on a range of US products and antitrust investigations into Google and Nvidia.
Mexico and Canada were also due to face 25 per cent tariffs on their goods exports to the US, but these were delayed by a month following last ditch talks.
Trump has signalled that the European Union will be his next target, which will almost certainly prompt retaliatory measures from the bloc.
Keir Starmer’s government has attempted to steer a narrow path on trade between the world’s competing powers.
Rachel Reeves visited China last month to foster closer ties between the two countries, arguing that not engaging with the world’s second largest economy was “simply not an option”.
And speaking yesterday, Starmer insisted he was “not choosing” between the US and EU as European leaders brace for Trump’s tariffs.
On trade with Britain, Trump said: “The UK is out of line. But I’m sure that one, I think that one, can be worked out.”
Conservative grandee, Sir Iain Duncan Smith, who has been sanctioned by the Chinese government, commented: “This is a classic case of a business leader being myopic and naive when it comes to the real threats that we face. She talks as if though China is another business partner.
“This is a country that trashed the Sino British agreement, arrests thousands of democracy campaigners from Hong Kong, is committing genocide in Xinjiang and uses slave labour to undercut markets, invaded the south China seas (against the UN’s judgement), continues to threaten war against Taiwan and undercuts the WTO rules for global trade by subsiding companies seeking contacts in western countries. What free and fair trade are we doing with China today when this brutal behaviour of China makes a mockery of the idea of balanced partnership”.