According to The Guardian, as the current President Trump's global trade policies continue to take effect, a large number of cheap Chinese imported goods are flooding the UK market. Several mainstream economists point out that this trend is expected to become a key driver in cooling UK inflation.

The latest statement from the Bank of England shows that although the US high tariffs on China have led to a decline in China's exports to the US, China's trade surplus has broken through 1 trillion US dollars (approximately 75 billion pounds) for the first time, and the UK has become an important alternative export destination for Chinese goods.

Stephen Millard, vice director of the National Institute of Economic and Social Research, analyzed: "Given the high tariffs imposed by the US on China, it is widely expected that China will shift its trade flows to other regions, and the UK is one of the main beneficiaries."

Kathleen Mawdsley, an external member of the Bank of England's Monetary Policy Committee, revealed this month to the Treasury Committee that trade shifts have begun to have an initial impact on UK inflation. "Due to the appreciation of the pound and the spillover effects of Chinese goods avoiding US tariffs and shifting to other markets including the UK, import prices have started to slow down. Although the extent is not as expected, this trend does exist."

Official data shows that in order to avoid Trump's tariff policies, Chinese manufacturers have accelerated their expansion into non-US markets. Exports to the US dropped by 29% year-on-year in the first 11 months of this year, while exports to the EU increased by 15%, and exports to the UK also saw a 9% year-on-year increase.

The Bank of England's November monetary policy report clearly states that China's exports to the UK and Europe continue to grow, while exports to the US have sharply declined. The report emphasized: "Early evidence indicates that the impact of tariffs on global growth is limited, but through trade shifts, it has had a slight deflationary effect on the UK."

The current overall inflation rate in the UK is 3.2%, and the government expects it to approach 2% inflation target by mid-2026. Measures such as energy bill relief and fuel tax incentives introduced by Chancellor Rachel Reeves in the Autumn Budget are expected to further reduce the inflation rate by 0.5 percentage points.

Due to the easing of inflationary pressure, the Bank of England has cut the benchmark interest rate by 25 basis points to 3.75% this month. Financial markets predict that given weak economic growth and rising unemployment, the Bank of England may cut interest rates by at least 25 basis points in 2026.

China is the second-largest source of imports for the UK after Germany. In the first half of this year, the UK's imports from China reached 70 billion pounds, an increase of 4.1% year-on-year, with cars, telecommunications equipment, and audio equipment being the main import categories. Notably, the sales of Chinese cars in the UK have grown rapidly, with some domestic brands seeing increases of over 200% year-on-year, becoming a core driver of import growth.

Millard added that although the impact of Chinese imported goods on UK inflation would not be particularly significant, they would still help further slow down the inflation rate by 2026. "To expand the UK market share, Chinese goods may lower their pricing, which will have a positive impact on the UK import price index."

Jake Mallin, chief economist for the UK at Barclays, said that clear evidence of trade shifts is still limited, but due to the slowdown in global economic growth, UK import prices are likely to continue to moderately decline in 2026. "We forecast that core goods inflation will fall from 1.5% in 2025 to below 1% in 2026, partly due to global demand adjustments and partly due to the UK's open economy absorbing changes in the global trade landscape."

The influx of Chinese goods has also raised concerns among European manufacturers, who fear their products are being squeezed by low-price competition. This has put pressure on the EU and UK governments to take measures. In the UK, the government has pledged to protect domestic steel producers against the supply glut caused by subsidized Chinese steel in the global market.

However, for UK consumers and businesses, low-cost imported goods are undoubtedly a big plus, which could ease worries about future inflation rebounds. As the global trade pattern continues to adjust, the presence of Chinese goods in the UK market is likely to further increase, becoming an important external factor affecting UK price levels.

Original: toutiao.com/article/7589477750184952346/

Statement: This article represents the views of the author himself.