In a spectacle that blends geopolitical theatre with corporate diplomacy, Donald Trump played host to a delegation of Chinese CEOs in Washington this week. Yet for the British business community, the message was clear: the deals that really matter remain elusive. As the White House rolled out the red carpet for executives from Alibaba, Tencent, and others, UK firms that had hoped for a thaw in trade tensions found themselves nursing a familiar sense of disappointment. No major agreements were announced, and the optimism that briefly flickered in the City has been replaced by a dose of reality.
From the moment the first handshake was exchanged, the event was billed as a potential breakthrough in US-China relations. Trump, ever the showman, praised the Chinese business leaders as "some of the most brilliant in the world," while his trade advisors whispered of new opportunities in technology and finance. But for British observers, the substance was thin. A few memorandums of understanding here, some exploratory talks there, but nothing that would shift the needle on the UK's trade deficit with either China or the United States.
The reluctance of Chinese firms to commit to large-scale investments is telling. Since the trade war erupted in 2018, Chinese capital has been wary of political risk, and Trump's mercurial style has done little to reassure them. For British companies looking to piggyback on any US-China rapprochement, the cupboard remains bare. The expected wave of cross-border mergers and acquisitions has failed to materialise, and UK exports to China continue to lag behind those of Germany and France.
The contrast with Beijing's recent overtures to Europe is stark. While Chinese state-owned enterprises have been busy snapping up stakes in Italian ports and German technology firms, the UK has been left to watch from the sidelines. Brexit uncertainty has not helped; nor has the perception that London is too closely aligned with Washington on issues ranging from Huawei to Hong Kong. The message from Beijing is that access to Chinese markets comes at a price, and for now, the UK has been unwilling to pay it.
For the bond markets, the implications are clear. A lack of trade deals means a slower recovery for global demand, which in turn keeps a lid on inflation expectations. UK gilt yields have remained subdued, reflecting cautious positioning by investors. There is no sign of the capital flight that might accompany a full-blown tariff war, but neither is there the yield-seeking frenzy that would signal a major confidence boost. The Bank of England can afford to keep rates on hold for now, but the clock is ticking.
The real risk is that this inertia becomes chronic. If British firms cannot secure a foothold in China's post-Covid recovery, they will miss the biggest growth story of the decade. The dollar's strength is already squeezing margins for UK exporters to the US, and a failure to diversify into Asia could leave the UK economy dangerously dependent on a single market that is itself showing signs of strain.
In the end, Trump's charm offensive in Washington was a reminder of what might have been. The British business class, steeped in the pragmatism of the Square Mile, knows better than to take promises at face value. For now, the deals remain elusive, the yields remain flat, and the path ahead is as uncertain as ever. The City will be watching the next round of negotiations, but the mood is one of sceptical caution, not hope.
