It's made worse by other factors:
1. The Universal Postal Union terminal dues system, initially set up in the late 19th century (yep, 19th, "19th" is not a typo), slightly amended since including 2019. That system gives Chinese sellers an unfair advantage in the UK (and other original/early signatory countries) as regards much cheaper shipping and much lower postal rates.
2. China Post, China's state-owned postal service, receives large government subsidies, which means Chinese sellers pay very low international shipping rates.
3. Royal Mail has reciprocal agreements with postal services of other countries, including China, to deliver incoming international mail. This means Royal Mail delivers packages from China within the UK at no additional cost to the sender.
4. Many Chinese sellers use bulk shipping methods to reduce costs, only using individual parcel delivery for the final leg within Britain.
Individually and together, these advantages for Chinese sellers mean that even if eBay decided to banish all Chinese sellers located in Britain (and any who might somehow manage to look like they are) then Chinese sellers still have big advantages over British sellers. It seems unfair solely at that - after all, British sellers would, you'd think, be entitled to have advantages over foreign sellers but instead it's the other way round.
Maybe worth looking up about the UPU terminal dues system (it's quite involved/lengthy) - that aspect alone is obviously unjust in today's modern global e-commerce. The China of today is far from being the poor emerging country of the 19th century.
British sellers need the government to deal with the UPU and Royal Mail, as they can't stop China Post's subsidies. Maybe the government could invest in British sellers and British goods by giving Royal Mail subsidies to give a trading advantage to British sellers to compensate China Post's subsidies.
I believe eBay can and should impose measures on Chinese sellers, e.g. higher fees, more/cheaper advertising for British sellers, otherwise it won't be long before it's mostly or wholly a Chinese site. I believe it's in eBay's interest to do it too, which might be the only reason they might do it.
I have total sympathy for British sellers trying to compete against these disadvantages.
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