Chatham House Warns Chinese Competition Could Erase UK Industrial Base Within Five Years

British industries including electric vehicles, machine tools, wind turbines and pharmaceuticals face the risk of being overtaken by Chinese competitors within five years, Chatham House warned on September 30, 2026. "There is a real possibility that over the next five years, Europe will lose much of its industrial base to Chinese competition," said James Kynge, a Chatham House fellow and author of the report. He cited China's economies of scale, world-class universities and generous state subsidies as key advantages. The report found China can conduct clinical drug development at three times Europe's pace for half the cost, warning that outsourcing to Chinese firms risks eroding the UK's own innovation capacity. Britain posted a £52.5bn goods trade deficit with China in the 12 months to end-March, with imports rising 2.4pc to £71bn as exports fell 0.5pc to £18.5bn.