According to the chairman of the Confederation of British Industry (CBI), British businesses are abandoning links with China out of fear of rising political tensions, which are expected to fuel inflationary pressures (Jul 30).

As per CBI Director-General Tony Danker, "Every company that I speak to at the moment is engaged in rethinking their supply chains ... because they anticipate that our politicians will inevitably accelerate towards a decoupled world from China."

Based on official trade figures from the United Kingdom, China was the sixth-largest export market for products in 2021 and the country's largest source of imports, accounting for 13% of all imports.

But in recent years, tensions with China over Hong Kong and other areas have increased British security concerns. Richard Moore, the director of the British government's foreign intelligence service, declared last week that China has replaced counterterrorism as his top concern. On the basis of national security, Britain has also increasingly obstructed Chinese takeovers of businesses.

In 1997, Hong Kong, a former British colony, was returned to China. However, the UK and China agreed to implement "one country, two systems" before Hong Kong was given back. The 1984 agreement was intended to endure until 2047. The Joint Declaration, however, is allegedly in jeopardy as a result of a recent law passed in the territory that grants China extensive new power over Hong Kong's residents, according to the UK.

The UK has been accused of "brutal meddling" in Chinese domestic issues, according to the Chinese government. The passport offer, according to a spokesman for the Chinese embassy in London, meant that the UK was breaking both its own promises and international law.

"The UK government keeps making irresponsible remarks on Hong Kong affairs," ambassador Liu Xiaoming said. "We want to be your friend. We want to be your partner. But if you want to make China a hostile country, you will have to bear the consequences."

Foreign Secretary Liz Truss and former Finance Minister Rishi Sunak, the two surviving candidates in the Conservative Party leadership race, have both stated they aim to adopt a stronger stance on China.

Danker claimed that as American concerns about China have grown, so had British companies' reliance on Chinese suppliers. He added that switching suppliers would be "more expensive and thus inflationary." He added, "it doesn't take a genius to think cheap goods and cheaper goods may be a thing of the past."

Last month, British inflation reached a 40-year high of 9.4%, in part due to the spike in energy costs brought on by Russia's invasion of Ukraine.