U.K. Does a U-Turn on China, Forced Into an Uneven Fight
U.K. Does a U-Turn on China, Forced Into an Uneven Fight
In 2015, Prime Minister David Cameron took China’s Xi Jinping for a beer in his local pub to mark a new “Golden Era” in the relationship between their two countries. The U.K., Cameron explained, would get Chinese investment, while China would enjoy access to “a leading member of the European Union.”
It hasn’t quite worked out that way.
It’s not simply that Britain has left the EU. In the ranks of the governing Conservative Party, there’s increasing hostility to China. Concerns about human rights, the treatment of Hong Kong and Beijing’s relationship with Huawei Technologies Co have been magnified by the coronavirus pandemic. The crisis has highlighted the dangers both in dealing with a country that has a culture of secrecy and in relying too much on one trade relationship.
Instead of opening up the U.K. to Chinese investment, the government is now looking at protecting critical companies from takeovers. Where the country used to welcome Chinese technology -- allowing Huawei to supply equipment for its 5G infrastructure at the start of the year -- it’s now looking at alternative suppliers.
“As a country, we’ve been complacent about the threat from China for too long,” said Bob Seely, a Conservative MP who sits on the parliament’s Foreign Affairs Committee. “There’s a growing realization that the China we wanted to see is not the China that has emerged.”
Mismatch
This is a clash where the two sides aren’t evenly matched. Britain may have once ruled over an empire that included Hong Kong but these days it’s a different story. Coronavirus has ravaged the U.K. economy and the country has yet to agree a new trading relationship with the EU to replace the one that ends on Dec. 31. China dwarfs it in size and geopolitical might, and as Canada can attest, has the tools to make life very difficult for leaders who cross it.
Ruan Zongze, a former Chinese diplomat to London, and now executive vice president at the Chinese Institute of International Studies, put it succintly: “The U.K. needs to get over the obsessions with its colonial past, and not let itself stand in the way.”
China’s willingness to do that has repercussions. Huawei, for instance, insists it is independent of the Chinese state. But the decisions by HSBC Holdings Plc and Standard Chartered Plc to back China’s actions in Hong Kong have raised questions about how independent any company operating in China’s sphere of influence can be. The dispute over whether SoftBank Group Corp.’s Arm Ltd. had in fact fired the CEO of its Chinese venture adds to those questions.
Over the last two decades, the U.K. sought a warm relationship with China, even when that was uncomfortable. The country’s leaders have been invited for state visits, including Xi’s in 2015, where Britain’s full pomp was deployed. Behind the scenes, tensions bubbled, for example over where human rights protesters would be allowed to stand during the various processions and whether journalists would be allowed to ask questions at joint news conferences, but the U.K.’s focus had always been on keeping such problems in the background.
Recent events in Hong Kong forced the U.K. government to take a side, and do what British diplomats most dislike: Make public criticism. On Tuesday, Foreign Secretary Dominic Raab tweeted his “deep concern” at China’s proposal to impose national security legislation in Hong Kong. China’s foreign minister, Wang Yi, told Raab his country was simply defending its national security.
“Britain’s got to lead on Hong Kong because there’s no other country that can; we’re the country that’s most involved,” said Labour’s Chris Bryant, who’s also on parliament’s Foreign Affairs Committee. He added that in Keir Starmer, Prime Minister Boris Johnson is under pressure from a credible opposition leader making an argument for human rights.
Johnson insisted Wednesday that his government is able to speak frankly to the Chinese. “I am a Sinophile and I believe we must continue to work with this great and rising power,” he told Parliament. “But when we have concerns over origins of Covid, or our critical national infrastructure or what’s happening in Hong Kong, we must feel free to raise those issues -- and that is what we plan to do.”
With Donald Trump’s administration openly and actively hostile to its warm approach, the U.K. found itself squeezed between two superpowers. That’s especially awkward for a country that remembers it was once a great power itself, able to tell China how to conduct its affairs.
The effect is to make the U.K. look to diversify away from China. After the crunch at the start of the year in supplies of protective equipment for health workers, as well as other goods, the government says it’s trying to build resilient supply chains. In particular, it has opened talks with an alternative technology supplier to Huawei.
On Tuesday, Business Secretary Alok Sharma said a forthcoming National Security and Investment Bill would look to “improve” rules on foreign investment to “protect our critical assets.”
It’s not clear what would be included in the definition of a “critical asset,” but it probably wouldn’t include a bar. Which might be just as well, because the year after Cameron took Xi for a pint, China’s SinoFortone Group was reported to have bought the pub where they drank.
©2020 Bloomberg L.P.