The UK auto industry trade association SMMT and its Chinese equivalent, the China Association of Automobile Manufacturers (CAAM), have signed a co-operation agreement 'designed to help develop mutual understanding and co-operation between both automotive industries to create new business opportunities'.

The two associations said the opportunities for growth are clear, built on mutual trust and a desire to develop the 'trading relationship between China and the UK that goes back decades'. British investment into the Chinese automotive sector started in the eighties, with GKN the first western company to invest in the country's component industry in 1988. Today it has some 19 manufacturing locations across China employing more than 8,000 people. Meanwhile, British car manufacturers including Aston Martin, Bentley and McLaren have all established dealer networks across China with Jaguar Land Rover producing cars in the country since 2014.

Meanwhile, Chinese investment in the UK automotive industry has ramped up considerably in recent years. Milestones include Shanghai Automotive Industry Corporation (SAIC) establishing its Technical Centre in the country in 2005 to support product development at the MG brand and Changan Automobile setting up its UK R&D centre in 2010, dedicated to powertrain development. More recently Geely announced a significant investment in British sports car manufacturer Lotus in 2017 following on from its successful development of LEVC, and BYD will this summer roll out fully electric double deck buses on the streets of London in partnership with British manufacturer Alexander Dennis.

The SMMT noted that future challenges to the automotive industry are no longer local issues – they are shared across global borders. Addressing air pollution and climate change, the rapid shift to electric and alternatively fueled vehicles and the rise of increasingly connected and autonomous cars – all seismic issues the sector is confronting here and abroad.

Mike Hawes, SMMT Chief Executive, said: "The UK's doors are well and truly open for business with key global partners such as China. Both nations have leading reputations in automotive engineering and production and this agreement builds on an already strong relationship with scope to open up new business opportunities in both markets. In a period of unprecedented change for the automotive sector, and bearing in mind the scale of investments needed to drive this change, close collaboration between nations will be essential if shared ambitions are to be met."

Fu Bingfeng, Executive Vice Chairman and Secretary General of CAAM, said: "China and the UK have a long history of co-operation in the automotive industry, which has yielded fruitful results and established a profound friendship. Our new co-operation with SMMT is helpful so we can learn from each other and expand investment and collaboration in a wide range of areas based on existing joint projects. With the revolution of intelligence and electrification underway, it's crucial to promote the healthy development of the Sino-UK automotive industries."