Britain’s dependence on China and other Asian countries for manufacturing, which could be threatened by disruption to global supply chains caused by conflict in the Indo-Pacific, is an “economic-strategic vulnerability”, the research by think tank Policy Exchange says.
It would aim to brace the country for renewed tensions between the US and China, instability between Europe and Russia over Ukraine, and the impact of Trump administration tariffs on Beijing and other major exporters to the UK.
Xi Jinping, China’s President, has said reunification with Taiwan is inevitable (Photo: Qilai Shen/Bloomberg)
This should include stockpiling of critical materials that could sustain the UK population for three months, the report says – including pain and anti-inflammatory medicine, critical minerals, semiconductors and microchip materials.
In a foreword, the UK’s former chief trade negotiation adviser, Sir Crawford Falconer says: “These developments have brought home the essential fragility of international supply chains particularly evident in such sectors as food, pharmaceuticals, industrial manufacturing and energy technology.”
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Policy Exchange argues: “The Second Trump administration has already signalled a significantly more aggressive trade policy that integrates tariffs into broader political moves.”
“The danger, however, is that absent proper preparation, a significant depression would be the least of British issues.
The report says the over-reliance of the UK on Chinese manufacturing, together with a “limited labour force capable of populating a revitalised manufacturing sector, makes it unlikely that the UK can shift entire sectors”.
The UK should also address the supply of tools needed for British manufacturing and repair – which are currently largely produced or sourced via Asia.
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In the foreword, Falconer adds: “Major global trade disruptions have occurred at an accelerating rate over the last half-decade. The Covid-19 pandemic derailed the global economy for two years.
“The Houthis continue to menace global shipping in the Red Sea. Europe is under pressure, facing an energy crunch on the continent, and trade frictions are intensifying.
As well as creating emergency stockpiles, the government should create a supply chain cell inside the Cabinet Office which can cut across several Whitehall departments, Policy Exchange suggests.
The Government should also explore the potential for a central and eastern European supply chain corridor that would include Finland, the Baltic States, Poland, Romania, Bulgaria and post-war Ukraine, the report adds.
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