Trade war tension, Wang Yi in London and medicine prices declining

Welcome to China in 5, from the British Chamber of Commerce in China.

Each week, we bring you up to speed with what’s caught our eye in the China-sphere in five(ish) minutes.?Grab a coffee, take a break, and dive in!

US and China teeter on edge of trade war

What’s the background? President Donald Trump announced an additional 10% tariff on Chinese goods last week, urging China to curb fentanyl-related exports to the US and Mexico. When the US tariffs took effect three days later, Beijing immediately retaliated by imposing additional 10–15% duties on US energy exports and farm equipment. China’s duties are expected to come into effect on Monday, allowing time for potential negotiations. Analysts warn of the negative consequences if the trade war continues to escalate. Despite the potential escalation, some analysts see room for negotiation given China’s limited retaliation scope, including an antitrust investigation into Google and Nvidia and targeting a narrower range of goods than US levies. However, experts suggest Trump might demand cooperation on other fronts, such as pressuring Russia regarding its invasion of Ukraine or forcing the sale of TikTok to an American buyer. It remains unclear if the two will reach an agreement soon.

Fact 1: The White House suspended tariff exemptions on low-cost shipments (de minimis exemptions) from China, which had provided relief to US households, small businesses, and firms like Shein and Temu.

Fact 2: Trump and Xi were expected to hold talks last week, but Trump started on Tuesday he was in “no rush” to negotiate following China’s retaliation? ?

Fact 3: ?Compared to Trump’s previous term, China is better prepared to tolerate tariffs as exports to the US now account for a smaller share of overall trade (15% last year).

After implementing aggressive tariffs on Canada and Mexico, the Trump administration has now escalated the trade war with China. Since the new administration’s inauguration, global observers have closely monitored his protectionist policies, particularly tariffs. The UK, for instance, also faces risks to its steel industry from potential US tariffs on “any steel entering the United States.” While it remains to be seen if Trump and Xi agree on terms before Monday, close watch on the two largest economies in the world remains critical. Etsuka Tomonaga Policy Associate, British Chamber of Commerce in China (BritCham China)

Chinese FM Wang Yi to visit London tomorrow

What’s the background? After meeting Foreign Secretary David Lammy in October last year, Chinese Foreign Minister Wang Yi will return the favour and visit London tomorrow, Thursday 13th February.

Fact 1: Lammy and Wang will restart the UK-China Strategic Dialogue, discussing key issues such as the war in Ukraine and broader international security challenges. This is the 10th such dialogue and the first since 2018.

Fact 2: Wang’s trip to Europe will also see him visiting Tánaiste Simon Harris in Dublin, as well as giving a speech at the Munich Security Conference early next week.

Fact 3: He’ll then travel on to the G20 Foreign Ministers’ Meeting in South Africa on 20th February.

This is the second high-level dialogue between UK and China in as many months, with Chancellor Rachel Reeves’s Economic and Financial Dialogue in Beijing last month. This time, the two leaders look set to discuss key multilateral issues like the conflicts between Ukraine and Russia, and Israel and Hamas. This Strategic Dialogue was a regular initiative between the two governments but was paused by the then-Conservative government in 2020, citing crackdowns on freedoms in Hong Kong and worries around Chinese investments in sensitive areas. Expect human rights to be brought up by Lammy – as was done when he visited Beijing last year – but most of the focus to be on meaty multilateral issues. Challenges over China’s new embassy in London also remain, with contention over the size and scope of plans for China’s proposed new development at the old Royal Mint site. Jack Allen , Events and Communications Executive, British Chamber of Commerce in China (BritCham China)

Coffee break read: China's rock bottom drug prices

Why we like it: The piece explores Chinese medicine pricing since 2018, with the government working to lower the cost of medicines through a policy that negotiates lower prices for drugs in the public healthcare system. It discusses how drug prices have been slashed by more than 70%, raising concerns about potential impacts on quality. Worries about the effect of cheaper drugs on quality, especially for conditions like high blood pressure and diabetes, are also highlighted. For British businesses in the pharmaceutical industry, this is important to monitor, as cheaper local drugs often replace more expensive imported ones. In this year’s Sentiment Survey, 48% of British healthcare company respondents reported finding business more difficult in 2025, a figure lower than the average.

Podcast of the Week: Fentanyl, the trade war and what happens next

Why we like it: The Times revisits its March podcast on the fentanyl crisis, now resurfacing as Trump cites it to justify new tariffs on Mexico, Canada, and China. The episode, hosted by Manveen Rana with correspondents Stephen Gibbs and Keiran Southern, traces the journey of precursor chemicals—many legally produced in China—through Mexican ports to the US. Whilst China plays a complex role in this supply chain, efforts under the Biden administration, including direct talks with Xi Jinping, aimed to curb the export of these chemicals. Even with Xi’s promise of a crackdown, challenges remain in monitoring shipments, with corruption and limited enforcement hampering efforts at key Mexican ports. The podcast highlights the intricate dynamics of this global issue, with the US pushing for stricter controls on chemical exports while confronting the broader difficulties of enforcement across borders.

...and finally...

Chinese pop sensation Eason Chan is due to visit London again in April for a concert at the O2 Arena. The singer was the first Chinese artist to perform at the venue in 2012, when he sold the venue in 20 minutes. Chan was born in Hong Kong and went to school in the UK before going to Kingston University. His 2023 album “Chin Up!” was a reference to one of his favourite British phrases.