How services are powering China-UK cooperation

Visitors watch a show at the booth of Britain during the 2023 China International Fair for Trade in Services (CIFTIS) at China National Convention Center in Beijing, capital of China, Sept. 4, 2023. [Photo/Xinhua]

Britain and China have just enjoyed their best year of economic cooperation in nearly a decade. The past year has seen a flurry of activity, including ministerial visits, trade missions, the relaunch of frozen dialogues and a general warming of tone from London. But beneath the handshakes, a deeper structural shift is quietly taking shape.

When Britons think about trade with China, they picture container ships stacked with goods. And, specifically, that the U.K. imports more than it exports, which is often assumed to be a bad thing. That framing dominates the headlines, but it misses what matters most for Britain.

For the most part, the U.K. doesn't export manufactured goods. It exports services: law, finance, consulting – services Chinese companies are increasingly buying as they expand internationally. On goods, Britain runs a deficit with China. On services, it runs a surplus that is growing fast, up 17% to 9.7 billion pounds ($13 billion) in the year to mid-2025.

Behind this lies a policy alignment that has gone largely unnoticed. Last summer, the Labour government published a trade strategy putting services at the center of Britain's export ambitions. Weeks later, Beijing's recommendations for formulating the country's 15th Five-Year Plan committed to further opening China's services sector to foreign competition. Put simply, Beijing and London have complementary priorities. Britain wants to sell. China says it's buying.

Let's start with why this surplus is a big deal for Britain. The U.K. is among the most service-oriented countries on Earth with services accounting for about 80% of its entire economy. It's the world's second-largest services exporter, running a 194 billion pound global surplus in 2024 – the largest of any nation.

And unlike goods, perpetually vulnerable to tariff shocks and the supply chain chaos that has so far defined the 2020s, Britain's services trade rests on structural advantages: the English language, the global use of English law, and London's financial infrastructure. Since 2010, despite Brexit, the pandemic and geopolitical ruptures, U.K. services exports have grown every single year.

It should be no surprise, then, that Westminster has emphasized exporting Britain's "world-beating services" as key to reviving the sluggish U.K. economy.

"Instead of seeing the services trade as an 'invisible' add-on to the Balance of Payments, we must herald it as the indispensable core of the U.K.'s contemporary export earnings," wrote the U.K. government in its 2025 trade policy framework. "The U.K.'s services sectors are the most powerful engine of our growth and prosperity."

China is proving the point. U.K. services exports to China rose 11.2% to 20.2 billion pounds in the four quarters to end-June 2025, according to data from the China-Britain Business Council. That represents roughly 6%-8% of Britain's total services surplus.

Chinese students and tourists still account for the largest slice, at 6.8 billion pounds, according to official U.K. statistics. Britain remains the top study destination for Chinese students, with 183,560 from the mainland and Hong Kong enrolled at U.K. universities in 2023-24.

But the fastest growth came in precisely the sectors where British expertise is helping Chinese companies go global: Professional services jumped 27.1%, intellectual property services 29%.

This growth has fueled record post-COVID optimism among British firms in China. According to the latest sentiment survey by the British Chamber of Commerce in China, 63% of services-sector respondents reported a positive outlook for 2026.

Legal services firms showed the strongest optimism at 85%, followed by financial services at 68%. The sentiment is backed by revenue: Half of financial services firms reported higher earnings, while 42% of legal services companies did so, up from 33% the prior year.

London's role as a renminbi hub has strengthened alongside the services boom. The city handles 22% of global offshore renminbi trading, just behind Hong Kong at 28%. In 2024, daily foreign exchange trading volume reached 172.7 billion pounds, a 43% year-on-year increase.

Britain also serves as the sole offshore listing venue for Chinese sovereign green bonds, with 6 billion yuan ($856 million) issued in April 2025. Each transaction generates fees, commissions and jobs for British professionals.

Behind the growth lies a stronger economic relationship than most Britons appreciate. Chinese-owned firms across services, manufacturing and energy employed over 57,000 people in the U.K. and generated 98.7 billion pounds in revenue in 2024. More than 350,000 U.K. jobs depend indirectly on trade with China.

But why is service growth accelerating now? Three reasons.

First, British businesses are benefiting from growing momentum in Chinese outward investment.

"British law firms, financial institutions and other professional services companies are providing consulting and advisory support to a growing number of Chinese private companies as they expand into the U.K. and other international markets," noted the chairs of the British chambers of commerce in China.

Deloitte alone assisted more than 2,000 Chinese companies in expanding their businesses across 96 countries in 2024. Some 35% of British businesses in China now cite "assisting Chinese companies going global" as their biggest growth prospect, second only to expanding services within China itself. Among legal services firms, 85% flagged this as a key opportunity, alongside 71% of professional services firms and 58% of financial services firms.

Second, China's strategic priorities are playing well to British strengths. The recommendations for formulating the 15th Five-Year Plan (2026-2030) explicitly prioritizes "expand[ing] market access and open[ing] up more areas, in particular in the service sector," alongside developing technology finance, green finance and digital trade. These are all areas where the U.K. has established global expertise.

Third, there's a friendlier environment from the top. Years of political dysfunction in Westminster following the Brexit vote left Britain's China policy adrift. Prime Minister Keir Starmer recently called his predecessors' approach to China a "dereliction of duty," opting for "engagement" over "confrontation."

Both sides have been busy over the past year. Chancellor Rachel Reeves visited Beijing in January, while Vice Premier He Lifeng traveled to London in June. In March, delegations from Manchester, Liverpool and London journeyed to Shenzhen, Chongqing and Chengdu on a weeklong trade mission.

The U.K.-China Joint Economic and Trade Commission – the main ministerial forum for bilateral economic relations – relaunched in 2025 after a six-year freeze, with services trade identified as a priority.

British missions on the ground are supporting this focus. For instance, BritCham South China, with government backing, has been organizing "Go Global" events to connect U.K. firms in finance, technology and legal services with Chinese companies pursuing international expansion.

Will the momentum carry into 2026? Two challenges stand out.

The first is focus. British professional firms need to remain the go-to partners for Chinese companies expanding abroad. That means keeping the diplomatic momentum going: ministerial visits, trade delegations, regulatory alignment. But distractions loom: A populist surge in the upcoming May elections could trigger a Labour leadership challenge, and political bandwidth is finite.

The second is distribution. The economic benefits of the U.K.'s services trade are real, but they're not evenly felt. Professional services jobs are clustered in London and a handful of other cities. If you live in a northern town that used to make things, news that KPMG is doing well in Shanghai doesn't pay your bills.

This is the deeper problem. Despite everything I've written here, there's a profound pessimism about the British economy right now. In December, just 7% of Britons said they expect the economy to improve over the next 12 months, while 73% expect it to worsen. People aren't feeling the gains because, for many of them, there aren't any to feel.

If Labour wants to build a political constituency for its "services superpower" vision, it can't just celebrate export numbers. It has to find ways to get the proceeds into working people's pockets.

Still, the foundation is strong. Services are what Britain actually sells to the world, and China is an increasingly willing buyer.

Jay Ian Birbeck is a freelance writer based in Guangzhou.

Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.