Economic partnerships and trade agreements between countries often change the direction of trade and investment between them. In most cases, this leads to business expansion, increased foreign direct investment and better market access across all sectors.
In January 2026, British Prime Minister Keir Starmer visited China to restart trade relations between the two countries that have been strained for years.
The visit also aimed to stimulate economic growth and explore new global power dynamics between the two nations. This was the first visit by a British Prime Minister to China in eight years. However, beyond the agreement, partnership and memorandum of understanding, new trade cooperation initiatives raise questions about how the UK-China trade agreement in 2026 could positively impact companies operating in the UK.
For British companies, it’s not just about export opportunities. It is also about access to investment, talent, supply chains and regulatory cooperation. Chinese business owners wishing to relocate their businesses to the UK must comply with the UK business sponsor license requirements.
If you, as a business owner, meet the requirements for a sponsorship license in the UK, you will be eligible to obtain a sponsorship license which will allow you to recruit foreign workers. If you are a UK-based entrepreneur, you may want to understand how strengthened trade ties between the UK and China in 2026 could impact your business’s growth strategies.
Business perspective of the UK-China trade agreement
Keir Starmer’s visit to Beijing in January resulted in a series of targeted agreements aimed at reducing friction and laying the foundation for future trade. While the UK is the second largest exporter of services, China is the world’s second largest economy and also the UK’s third largest trading partner.
The trade agreement is of great benefit to both countries. Key strategic trade cooperation and Memorandum of Understanding (MOU) documents between the UK and China include:
Bilateral Trade Services Partnership
The UK and China committed to working together to improve market access for UK service companies in areas such as law, finance, education and digital services. This includes supporting Renminbi (RMB) trading, promoting fintech and making it easier for British companies to enter China.
Joint feasibility study
Both the UK and China agreed to explore the potential for a formal, legally binding agreement on trade in services. This would provide greater certainty for British exporters in the future.
Reduced rates
China has committed to reducing the tariff on Scotch whiskey from 10% to 5%. It is estimated that this ground-breaking move will bring over £250 million to the UK in five years.
Visa-free travel
The Chinese government has committed to allowing British citizens to enter China visa-free for up to 30 days. China introduced this 30-day visa-free regime for British citizens from February 17, 2026 to December 31, 2026. This helps British citizens expedite business transactions and travel to China for tourism and family visits.
Impact of the UK-China trade deal on SMEs
The realignment of trade relations between the UK and China in January 2026 will have a significant impact on small and medium-sized enterprises (SMEs). While the potential for increased exports is clearly there, there are several opportunities available to UK SMEs including:
Targeted industry growth
Several sectors in the UK are well placed to benefit from the revitalized UK-China trade deal. Opportunities for UK SMEs arise from financial services, clean energy technologies, advanced manufacturing, creative industries and life sciences. UK companies operating in these areas could benefit from increased demand for expertise, innovation partnerships and exportable products.
Digital and technological collaboration
Technology partnerships could become more important as the UK-China bilateral trade deal evolves. UK SMEs in artificial intelligence (AI), financial technology (fintech) and biotechnology could explore joint research, investment or product development opportunities with Chinese companies. Additionally, London’s established role as an offshore RMB trading center and global financial center could also support cross-border digital finance initiatives.
Market access
Due to the economic partnership between Great Britain and China, market access for British exporters is expanding. UK SMEs producing high-quality food, drink and agricultural products could benefit from growing demand from Chinese consumers for high-quality imported goods. As this bilateral trade agreement is expected to reduce trade barriers, smaller UK manufacturers could have greater opportunities to distribute their products through Chinese retail networks and e-commerce platforms.
Investments from China are expected to boost business activities in Great Britain
Following the UK-China trade deal, some Chinese investment can significantly boost business activity in the UK. Several foreign companies, particularly Chinese firms, have expressed interest in investing in the UK. These developments highlight how expanding economic ties between the UK and China can boost business activity. These economic relationships also attract foreign direct investment and create employment opportunities across multiple sectors of the UK economy.
Various companies have already announced investment projects that could contribute to local economic development. Energy storage manufacturer HiTHIUM, for example, has announced plans to invest around £200 million in the UK. The project is expected to create around 300 jobs while supporting the UK’s transition to a more resilient and sustainable energy network. These investments are in line with the UK’s wider goals to expand renewable energy infrastructure and strengthen energy security.
In the transport and manufacturing sector, Cheryl Commercial Vehicles has announced plans to establish its European headquarters in Liverpool. This move is expected to support the development of the local green automotive supply chain. This will strengthen Liverpool’s position as a center for advanced vehicle technologies.
Consumer and retail investment is also emerging. Chinese entertainment and collectibles brand Pop Mart plans to develop London into its European hub. It proposes opening seven UK retail stores and creating more than 150 jobs.
Meanwhile, pharmaceutical and life sciences company Asymchem is expanding its operations in the UK. The expansion could create up to 150 highly qualified positions in research and manufacturing over the next five years. This significantly further strengthens the UK’s reputation as a leading European center for life sciences innovation.
Key insights
The reset in the bilateral trade relationship between the UK and China presents opportunities and considerations for both British and Chinese businesses. Although this trade agreement offers opportunities for investment, exports and sectoral collaboration, UK businesses still need to assess market conditions and their long-term strategic objectives. This opportunity will enable UK businesses to grow through international partnerships and increased market access.
Likewise, Chinese business owners wishing to relocate to the UK have the opportunity to invest and sponsor foreign workers, provided they meet sponsorship licensing requirements in the UK. To clarify business travel from the UK to China and vice versa, it is advisable to consult an immigration consultant about your visa options. Additionally, it is advisable to contact an immigration attorney to help you meet visa requirements, gather necessary documents, and stay abreast of the latest immigration updates, which can be overwhelming.
Chinese companies wishing to recruit their non-UK workforce in the UK must sponsor them, and this is only possible if they meet the UK sponsor license requirements. In general, UK and Chinese businesses that remain informed, adaptable and strategically prepared to adapt to immigration rules will be able to benefit from any developments in the UK-China trade deal.
