 |
| U.S. Treasury Secretary Scott Bessent (center left) and Chinese Vice Premier He Lifeng (center right) pose for a group photo during trade discussions at the Lancaster House in London on June 9, 2025. (Photo: Li Ying/Xinhua) |
The two delegations were meeting in an ornately decorated building – one endowed with rich cultural capital, historical legacy, and symbolic significance, located right in the center of London. This was Lancaster House, June 10th, 2025. One side comprised an insider from his leader's inner court, a seasoned banker who has been promoted to serve as the top trade official in one of the least predictable administrations on record. On the other stood a tough economic policy czar who had the ears of his own leader, flanked by a team of experienced technocrats, including a Cambridge Economics PhD graduate.
U.S. Commerce Secretary Howard Lutnick and Chinese Vice Premier He Lifeng led their respective teams to the second round of high-level bilateral trade negotiations within a month. Capitalising upon the momentum garnered from Presidents Xi and Trump's phone call the week prior, the two teams agreed upon the following: American tariffs on China would be maintained at 51% (21% under Biden + 30% additional tariff imposed by Trump); Beijing would expedite the resumption of rare earth exports to the U.S., in exchange for Trump's concessions on re-admitting Chinese citizenship-holding university students into the country.
Yet what was particularly striking was not so much the specific outcomes arising from the bilateral negotiations – which merely affirmed the observation that media-savvy Trump would always settle for low hanging-fruits that can be spun into a “win” as a part of his “dealmaking” brand. Instead, it was the fact that these talks took place in London, as opposed to Geneva, Singapore, or Anchorage – long-standing “favourites” by leaders of China and the U.S. to meet.
The choice of location plausibly spoke to the intention – and partial success thus far – on the part of Prime Minister Sir Keir Starmer's administration, to position the U.K. as a pragmatically multi-aligned interlocutor who can engage with both China and the U.S..
The considerably warmer and more pro-engagement stance of the Labour government towards Beijing, is perhaps best explained by the significant domestic economic pressures that the U.K. now faces. Whilst the economy grew more than expected in the first quarter of 2025, initial estimates for April suggested that the economy shrank by 0.3%, the steepest decline since October 2023. Many have attributed this to the deleterious impacts of Trump's mercurial tariff regime on the global macro-environment, which has dampened broader investor sentiments. Given China's immense (albeit hitherto untapped) potential as a consumer market and significant technological advantages in areas such as robotics and renewable energy, it would make economic sense for Starmer to pursue a more balanced China policy than his predecessor.
Britain's Fledgling Multi-aligned Diplomacy
We should not construe the entente between China and the U.K. as signs of the latter's fundamentally pivoting away from the U.S.. Indeed, at the recently concluded G7 summit in Canada, Trump and Starmer officially signed off their trade deal, with Trump declaring that the U.K. would be immune from future tariffs, “because I like them.”
Much hard work went into this deal, which was the first agreed upon by the U.S. and another prominent power in the world (amongst the top 10 economies in the world by total GDP size). It took an official visit by Starmer, coupled with a cordial letter from the King, as well as acquiescence by London on its steel sector (slapped with 25% tariffs by the U.S.), in order for Trump to recognise and affirm the value within the “Special Relationship.” Much of the special-ness probably came down to the effervescent and suave rhetoric with which Starmer courted Trump, as opposed to any substantive contribution that Britain would make towards Trump's economic agenda.
The product of the negotiations could have been much worse for Brits. Tariffs have decreased from 27.5% to 10% on U.K. car exports to the U.S. – its largest export. The British aerospace sector was exempted altogether from the baseline 10% tariffs. Yet the biggest winner from these negotiations was plausibly the beleaguered Starmer administration. Whilst the U.K. remains an important financial, technological, and intelligence partner for the U.S., Starmer needed the negotiations to be swift and apparently successful, in order to clinch a crucial PR victory against an onslaught of unfavourable domestic political setbacks.
On the other hand, as I have argued previously, there is every reason to think that the incumbent administration is sincere about re-engaging – sans the illusion of resetting relations with – Beijing. Chinese Foreign Minister Wang Yi visited the U.K. in February this year, to re-initiate the U.K.-China Strategic Dialogue with British Foreign Secretary David Lammy. Chancellor of the Exchequer Rachel Reeves and Energy Security and Net Zero Secretary (and erstwhile Labour leader) Ed Miliband have also undertaken visits to China and met with their respective Chinese counterparts, as well as more senior officials in the leadership.
These talks, whilst moderately productive on the policy front in delineating clear agenda items for prospective collaboration and alignment, were fundamentally important for a different reason – they proved to normalise long-forsake direct communications between cabinet members in London, and high-level interlocutors in China. They also paved the way for a surge in working-level dialogues between more junior ministers and civil servants, as well as track-1.5 and track-2 engagement behind closed doors.
Thus far, however, the much-touted influx of Chinese investment into the U.K. had yet to materialise – perhaps this would change upon the settlement of the ongoing disputes concerning the approval of the new Chinese “super-embassy” in London.
It would be erroneous to read too much into the apparently two-faceted approach by London to Sino-American relations. There is no diplomatic “Grand Strategy” at play. The foreign policy of the Labour Party, under Starmer, is rooted in a pragmatic yearning for optical (and perhaps economic) returns. A case in point would be the “landmark deal” heralded by Starmer between the U.K. and the E.U., which promised – yet would perhaps struggle – to cut the red tape that had emerged post-Brexit. The U.K. would once again sign up to European single-market regulation on animal and plant health – a major concession in the eyes of hard-lined Brexiteers who asserted that Britain could “take back control” upon leaving the formidable economic bloc. What mattered was that a deal was done – the intricacies of the deal, on the other hand, was to be revised, re-examined, and re-revised down the road.
Three Key Challenges for the Sino-U.S. Balancing Act
On his tactical balancing act between China and the U.S., Starmer must contend with three sets of distinct challenges. The first consists of the inevitable tendency of Washington to seek to scuttle and thwart any potentially “strategically sensitive” (namely, security-adjacent) acquisitions by Chinese capital. The recent fracas involving the decision by Chinese firm Jingye Group-owned British Steel to close its Scunthorpe plant, reveals fully the political sensitivities and geopolitically imposed limits that Chinese investment must now navigate in Britain. As it turns out, the “poison pill” clause embedded in the U.S.-U.K. agreement could well be invoked by the relevant agencies in Washington to put an end to Sino-U.K. ventures deemed to sabotage American economic, technological, and financial interests.
The second comprises the ever-present pressures from select segments of the British electorate – namely, a burgeoning population of new immigrants from Hong Kong and ideologically doctrinaire skeptics about the Chinese state – to press for a hardening stance from London on China. From allegations of espionage and interference with British politics, to criticisms over its domestic human and political rights record, there exist plenty of politically utile talking points with which Sino-skeptical voices can and have stoked animosity towards Beijing. The Labour Party leadership must contend with not just objections from the Conservatives, Liberal Democrats, or the Reform Party, but also backbenchers who have a considerably more cynical and disapproving view of the current amelioration of Sino-British relations.
The third is the perils of “looking over one's shoulders.” When navigating its relationship with the U.S., it is likely that China features as one amongst a slew of secondary considerations for the foreign policy establishment. In contrast, when British diplomats deal with China, they must fend for their own country's strategic autonomy whilst concurrently bearing the risk of alienating a powerful, revanchist, and unforgivingly interventionist ally in the U.S., upon which Britain is significantly more dependent than on China. This is not to say there exists no agency or maneuvering room for London – but that the paranoid security-defence establishment in Washington would always dangle like a Damocles' Sword – especially over Britain's posture on issues of contention in the Indo-Pacific, e.g. Taiwan and the South China Seas.
With that said, British re-engagement with China is by no means a lost cause. With the recent (tragic) escalation in the Middle East, and a blatantly transactional Trump administration that has signalled a keenness to do away with value-centric diplomacy that had long undergirded American foreign policy post-World War 2, the White House could well be increasingly open to turning a blind eye to realism-fueled “deals” between long-standing allies and strategic rivals – so long as the President's core political, economic, and business interests are not undermined.
