Sino-British relations to worsen with new Prime Minister

August 01, 2022 08:51
Photo: Reuters

In October 2015, British Prime Minister David Cameron declared a “golden era” in his country’s relations with China. Now, not seven years later, the two people campaigning to become the next Prime Minister are competing with each other to attack China.

“China and the Chinese Communist Party represent the largest threat to Britain and the world’s security and prosperity this century,” declared Rishi Sunak, the Chancellor of the Exchequer in the cabinet of Boris Johnson before he resigned on July 5. “I would close all 30 of China’s Confucius Institutes in the UK, the largest (number) in the world.”

His opponent, Foreign Secretary Liz Truss, said that she would clamp down on Chinese-owned companies such as social media giant Tok Tok. “The government absolutely should be cracking down on those types of companies and limit technology exports to authoritarian regimes,” she said.

The hostility of both candidates has shocked China and the business world. In an interview with the Financial Times published on Saturday, the director-general of the Confederation of British Industry that thousands of British firms were cutting economic ties with China.

“Chief executives are increasingly switching business links from China to other countries in anticipation of a further deterioration in relations between Beijing and the West,” said Tony Danker. “Every company that I speak to at the moment is engaged in rethinking their supply chains. They anticipate that our politicians will inevitably accelerate towards a decoupled world from China.”

According to British government figures, last year China was the UK's largest import partner and sixth-largest export partner for goods. The UK imported £63.6 billion of goods from China in 2021, 13.3 per cent of all goods imports to the UK, and exported £18.8 billion of goods, 5.8 per cent of all goods exports from the UK.

Britain is one of the top three destinations in Europe for Chinese investment. In 2021, despite Covid, the total value of disclosed deals involving Chinese investment in the UK was £3.59 billion, with the number of Chinese-owned firms filing an audited revenue figure in the last two financial years increasing to 845 and employing 61,000 people, according to the British magazine Accountancy Today.

In addition, in 2020-21, 144,000 Chinese were studying at UK universities, compared to 96,000 in 2016-17, according to data from the British Higher Education Statistics Agency. They accounted for 32 per cent of all non-EU international students.

According to British government figures, the outward stock of foreign direct investment (FDI) from the UK in China in 2020 was £12.9 billion accounting for 0.8% of the total UK outward FDI stock.

China has reacted to the debate with anger and disgust. “The reality is that the UK is China’s third largest trading partner, with bilateral trade surging 22 per cent last year, despite the US blocking and the Covid-19 pandemic. The two countries are committed to build a global comprehensive strategic partnership for the 21st century,” the China Daily said in an editorial on July 26.

On the 28th, its editorial said that the anti-China plans of the two candidates were “equally absurd … Over the last seven years, the U.K. has been sinking into the morass of its self-inflicted sufferings. It has been completely enthralled by the U.S. The UK has paid a heavy price for this in terms of its previously flourishing relationship with China,” it said.

Sunak and Truss reflect the great change in the British view of China during the second term of President Xi Jinping. Addressing the Aspen Security Forum in Colorado on July 21, Richard Moore, Britain’s spy chief said that China was now the top intelligence priority for the Secret Intelligence Service (SIS), known as MI6, surpassing counter-terrorism.

"If you go beneath that strategy in terms of how they implement, how they organise, what their tactical intent is, and then what are the capabilities they're building up -- that's a black box," Moore said.

Other factors behind the change are British criticism of the National Security Law in Hong Kong and China’s support for Vladimir Putin’s invasion of Ukraine and suppression of Uyghurs in Xinjiang. “I will protect key British assets,” said Sunak. “That means examining the need to prevent Chinese acquisitions of key British assets including strategically sensitive tech firms,”

All this is bad news for Beijing. It had seen Britain as its bridgehead in Europe. It saw it as weaker for having left the European Union and more in need of bilateral trade and investment agreements with non-European countries, of which China is the most important.

Thanks to the tens of thousands of Chinese who have studied and worked there and because it uses English, Britain is the country in Europe with whom Chinese companies and institutions are most familiar.

That is why Beijing in 2018 spent 250 million pounds to buy the former Royal Mint in the centre of London as its new embassy, its largest in Europe and almost a third bigger than London’s new U.S. embassy four miles away.

But such is the groundswell of local opposition that, in 2021, politicians for Tower Hamlets borough, where the Royal Mint is situated, passed a cross-party motion to rename nearby roads “Tiananmen Square, Hong Kong Road, Uyghur Court and Tibet Hill.”

How far away are David Cameron and his “golden era”. Whether Sunak or Truss follow him into 10 Downing Street, that era will not return.

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A Hong Kong-based writer, teacher and speaker.