AGAINST stiff competition, perhaps the single most disappointing aspect of the British economy in recent years has been its export performance. Although sterling is 25% cheaper on a trade-weighted basis than it was in 2008, the trade deficit was £36 billion ($55 billion) last year, over 2% of GDP. A colossal opportunity is now arising in East Asia. But Britain’s politicians may help the country miss it.

Although Britain exports much more to China than it did a few years ago, it trails France and Germany (see charts). Its trade deficit with the country is fully £20 billion a year. This is partly the result of a fundamental economic mismatch. Britain’s strength is in services; China’s hunger is for raw materials and machine tools. China seized 80% of metals supply last year, boosting exports from Australia. The odd British firm, such as Rio Tinto, a mining company, has cashed in. But countries like Germany, whose firms sell kit used in Chinese factories, have done much better.

Yet China’s economy is changing in a way that ought to suit British firms. Beijing has called time on industrial excess, ordering banks to stop funnelling cash towards pointless building schemes. The drive is now to “rebalance” by moving away from investment and towards consumption. Meanwhile state-provided safety nets to protect against illness or old-age poverty are improving. Once Chinese workers can rely on this social insurance, the country’s high private saving rate may fall, and the low share of consumption in GDP may start to rise. This rebalancing could slow China’s growth rate and raise its imports of consumer goods at the same time. And Britain is better at luxury than machine parts. Jaguar Land Rover, an Indian-owned firm that still makes most of its cars in Britain, now sells more vehicles in China than at home. Burberry has been trading in China for 20 years, and its sales are up by 20% in the past year alone. Its coats, still made in Yorkshire, will appear in three new stores in Shanghai this year. Church’s, a Northamptonshire shoemaker owned by Prada, set up its first shops in China in May.

Britain’s real strength is in financial and business services. It is already the third biggest exporter of these to China. HSBC has been banking in China for over 140 years; Standard Chartered has been around even longer and generates 10% of its income there. But big domestic players still dominate the market, says Duncan Clark, chairman of BDA, a consultancy. The foothold of British banks is narrow: they offer only basic banking products and have limited branch networks. HSBC has just 141 outlets (it has over 100 in Wales alone) and makes just 2.8% of its loans in China.

Sod this, I’m getting a Jag Prospects for cultural exports are brighter. As Chinese workers’ wages rise, and as companies both domestic and foreign seek to sell to them, a market has developed in which Britain is a world beater: television formats. In 2011 Britain’s global exports of formats—excitements like “Strictly Come Dancing” and “MasterChef”—were worth £1.5 billion. Until recently Chinese channels aired low-quality clones of British shows. But more ad money and competition between broadcasters means they are willing to pay for the expertise needed to produce the real thing, says Richard Bradley, who runs Lion Television. He is helping to launch a Chinese version of “Cash Cab”, a game show already running in 38 countries. All this is encouraging. But other countries appear to be taking better advantage of the shifts in China’s economy. Take higher education, another important British product. In 2011-12 almost 79,000 Chinese students studied in Britain, up almost 60% on five years ago. Yet other English-speaking countries are doing better. The number of Chinese students in Australia has risen by 124% in the past five years. In America it is up 187%. In 2012 a visa scheme that allowed foreign students to work in Britain once their studies were over was closed to new applicants, shutting the door on highly trained migrants.

Rolling up the welcome mat

Britain goes out of its way to establish a reputation as a country hostile to visitors and immigrants (see article). Visa-processing has improved, but is still slower than for the EU. As a result, London loses out to Paris as the place where wealthy Chinese like to go to shop. Visa restrictions hold back exports in more subtle ways, too: Britain’s architectural practices, for example, often want to hire staff from the countries where they plan to bid for work.

In 2011 David Cameron proclaimed he wanted to double trade with China by 2015. But this was a vision rather than a plan, and the gains that have been made are small. A much touted 2011 trade pact with China covered £1.4 billion in goods, a puny 3% of the existing commerce between the two countries. Germany and China agreed on a deal ten times bigger. Mr Cameron’s target looks likely to be missed, with exports to China up 35% between the first quarters of 2011 and 2013. A warm public welcome for the Dalai Lama last year did not help matters.

A clutch of public bodies manage Britain’s overseas relationships. Only one, UKTI, has an explicit commercial focus. It helps support exports, recently setting up a CEO forum to link Chinese and British firms. But whereas Mr Cameron has a network of trade envoys covering emerging and developing economies including Azerbaijan, Indonesia and Mexico, there is no envoy for China. This reflects the low profile of Britain’s China strategy, charges Liam Byrne, a Labour MP who recently published a book on the subject.

A new, high-profile China trade envoy who could lobby for Chinese visas and push trade in goods would be a useful start. But the real prize would be improved access for British services. A new currency-swap agreement between the two countries’ central banks should start to lower financial barriers. There could be huge gains, and not just for Britain’s banks. Even a rebalanced China will still be a huge source of savings. If other parts of British finance—pensions and insurance—could seize this chance, Britain might export its way to growth after all.