China, the UK, and the shifting geometry of global trade for manufacturers
Luke Morris, Corporate Finance Partner, looks at the impact of the relationship between China and the UK on East Anglia’s manufacturing businesses.
I recently spoke at an event where the theme was all things “China”. We discussed the Chinese economy, how global trade patterns are shifting and what that really means for businesses on the ground, particularly manufacturers and the logistics networks that support them. The conversations focused on four connected themes: China’s economic direction, the evolving UK–China relationship, how manufacturing supply chains are being re‑engineered, and what all of this means in practical terms for logistics and freight operators. What this means for the East of England’s freight, logistics and manufacturing sector China enters 2026 at a clear turning point. Once defined by relentless growth, industrial scale, and seemingly unlimited domestic demand, the world’s second‑largest economy is now operating under far more complex conditions. Consumption is weaker. Prices are under pressure. Demographics are moving decisively the wrong way. These issues do not stay neatly within China’s borders. They shape global manufacturing economics, squeeze margins, and force hard decisions about where things are made, assembled, and moved.
For manufacturers in the UK and across Europe, this matters because China remains deeply embedded in global production. It’s not just a supplier of finished goods, but a critical upstream provider of components, materials, and industrial capability. So, when China slows, shifts strategy, or exports deflation, it ripples straight through factory cost bases and supply chain planning. At the same time, the UK–China relationship is being recalibrated. Prime Minister Keir Starmer’s visit to Beijing in January 2026 was the first by a UK leader in eight years and signalled a deliberate attempt to stabilise relations after a prolonged period of tension. That does not mean a reset to the old model. Strategic competition, national security concerns, and political differences remain very real. But it does suggest a more pragmatic phase, particularly where trade, investment, and industrial cooperation are concerned. Against this backdrop, global manufacturers are continuing to rethink how and where they produce. “China+1” has quietly become “China+multiple”. Production is no longer being ripped out of China wholesale. Instead, manufacturers are spreading risk by keeping core capacity in China while adding assembly, finishing, or parallel supply lines in places like Vietnam, India, Eastern Europe, and Mexico.
This has direct consequences for freight, ports, and regional logistics hubs. Volumes fragment. Routes multiply. Reliability becomes as important as cost. For the East of England, sitting at the heart of the UK’s containerised trade, these changes create both opportunity and pressure. China’s 2026 outlook: Slower growth, softer demand, and manufacturing at the centre China is still growing, but it is no longer growing easily. Forecast growth of around 4.5 percent in 2026 sounds respectable until set against the scale of the economy and the expectations baked into global manufacturing planning over the last two decades. Growth is being propped up by state intervention and targeted stimulus, but the underlying picture is more fragile. Property remains weak, consumer confidence is subdued, and productivity gains are harder to come by. For manufacturers, the key point is not the headline growth rate. It is where that growth is coming from.
4 | SCRUTTON BLAND | MANUFACTURING AND ENGINEERING
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