
The maths behind Britain’s Huawei U-turn and pivot to the Indo-Pacific
- There is an upside for Britain in working more closely with its traditional allies – the US, Australia and Japan – in the region. Free-trade agreements with all three countries all hang in the balance
Britain’s ambitions are not just commercial. Its military presence in the Indo-Pacific has been minimal at best since 1971, when, the Hong Kong and Brunei garrisons aside, it withdrew most of its forces from East of Suez. Since the 1997 handover of Hong Kong, there have been scant British forces in the region.
None of this has gone unnoticed by Beijing.

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Commercial relations between Britain and China may suffer in the short term, but given that China exports more to Britain than it imports, trade is likely to continue despite any political sparring. As Alexander Downer, the former Australian high commissioner to Britain, recently noted about China’s relationship with his own country, China doesn’t trade out of generosity, but of need.

Not that Britain will take the benefits of Chinese trade for granted. The pandemic has strained the nation’s public finances, so losing a significant proportion of Britain’s US$30 billion export trade to China each year will not be welcome.
On the other hand, by making it clear that it favours deeper commercial and military alliances with the US, Japan and Australia, Britain is removing the threat with an even bigger downside than annoying Chinese President Xi Jinping.
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It is not just a matter of downside protection: there is an upside for Britain in working more closely with its traditional allies in the region. Trade with the Indo-Pacific (excluding China) has been underweight, and in most cases, declining for some time now: in 2000, Britain accounted for 5.97 per cent of India’s imports; in 2018, this had slumped to 1.38 per cent.

Then, of course, there are the enormous American and Japanese markets to consider. The free-trade deals, once agreed, should significantly boost British trade in goods and services, generating additional returns of up to US$38 billion, according to Britain’s Department for International Trade.
With all that has happened in the last few weeks, it looks like the British government, with Hong Kong and the fallout from Covid-19 fresh in the mind, has decided that the time has come to support its friends in the region at the expense of deeper ties with a cantankerous China.
Perhaps coincidentally, perhaps not, the announcement of the aircraft carrier’s deployment provides a relevant metaphor. Royal Navy aircraft carriers have a long tradition of sailing with a multinational escort. There are already strong indications that the Queen Elizabeth will be supported by ships and planes from America, Australia and Japan: a highly symbolic move that reflects the main thrust of Britain’s regional trade ambitions too.
Sam Olsen is the co-founder of the strategic consultancy MetisAsia and a commentator on Chinese-Western relations
