Business and Trade Committee
19 May 2026
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Business and Trade Committee House of Commons
00:06 - 00:38
Speaker 12
Order. Order. Welcome to today's session of the Business and Trade Select Committee as we commence our second session looking at The UK China economic relationship. Thank you so much to our witnesses for joining us today. George Magnus, I'm gonna start with you, if I may.
In policy land, we now talk about China shock two point o. Could you just sort of give us a sense from your point of view? What what are the kind of threats to The UK economy from China shock two point o?
00:39 - 03:03
Speaker 9
Bush, where to begin, which is presumably why we're all here. Well, just to start off, I mean, the primary distinction, I think, between the first China shock, which is, you know, two thousand to ten, fifty years after that. I mean, that was that was essentially, as I think we all remember, about China's integration into coming in from the cold, basically, into the global economy, taking its part in the global system, and utilizing its innate resources of, you know, plentiful cheap labor to manufacture low value products, which we were very happy to outsource to to China and so on. But essentially, it was a one off in the in that that once that adjustment had happened, it wasn't gonna happen a second time. So the reason that I think the authors of China shock originally came up with the new recalibrated version of two point zero was because this is something quite different.
It's enduring probab I mean, permanent in the sense that nobody can actually see at the junk at this juncture how it's going to be ended or or how it's going to resolve itself. But it's really about building an industrial ecosystem, the kind of the raw, details of which, actually, you can see in the fifteenth five year plan, which was recently approved at the National People's Congress in March, which is not just about being the factory to the world, but actually being kind of the brains, as it were, of an industrial ecosystem, which begins really with raw materials, resources, inputs, software, semiconductors, all the stuff that's in the the kind of the upstream level of the global supply chain, so to speak, and is much further removed from the consumer, from the downstream areas, which were the the principal areas of activity in the first China shock. And I think that the reason that we need to be kind of anxious about this and certainly scrutinize what it actually means and what the implications might be for this country and for British businesses is because it obviously confers a huge amount of leverage and coercive power to the Chinese state.
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