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Britain's Prime Minister Boris Johnson speaks during a press conference at 10 Downing Street in May. Photo: 10 Downing Street via AFP

Politico | Britain toughens stance on China as it eyes US

  • Concerns about alleged espionage by Chinese firms and human rights abuses have given rise to demands for complete rethink of UK’s position
  • Beijing might put London in ‘diplomatic doghouse’ after expected 5G ban on telecoms giant Huawei
Huawei

This story is published in a content partnership with POLITICO. It was originally reported by Charlie Cooper on politico.com on July 12, 2020.

Forget a post-Brexit trade deal with China – some now think a trade war is more likely.

The “golden era” in UK-China relations heralded by former Chancellor George Osborne in 2015 remained a go-to sound bite during the Theresa May era.

Mired in talks with Brussels on the UK’s extraction from the EU, the optics of post-Brexit Britain reaching out to the world’s great rising power was invoked by the former prime minister to help London burnish its new “global” credentials.

01:38

UK offers Hongkongers with BN(O) passports path to citizenship after new national security law

UK offers Hongkongers with BN(O) passports path to citizenship after new national security law

But since Boris Johnson took power, mounting concerns about alleged espionage by Chinese firms, human rights abuses and protectionist trade practices have given rise to increasingly urgent demands for a complete rethink of the UK’s stance.

Johnson’s decision earlier this month to grant new visa rights to millions of Hongkongers, in retaliation for draconian anti-protest laws China imposed on the city, has infuriated Beijing and led to warnings of repercussions. Now in play: £68 billion (US$86 billion) of annual UK-China trade and billions more in Chinese inward investment.

A widely expected government U-turn on Chinese tech giant Huawei’s role in supplying the UK’s 5G network – forced by US sanctions on the firm – will anger Beijing even further, experts say.

“I think we’re in for some pretty severe turbulence … what might be described as a perfect storm,” said Charles Parton, associate director at the RUSI think tank and a former diplomat with 22 years of experience working on China, Hong Kong and Taiwan.

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China would, he predicted, put the UK in the “diplomatic doghouse,” threatening to squeeze investment, UK exports, tourism and even the number of students coming to British universities. London should also brace for an uptick in cyberattacks, he said.

The question for Johnson: can he maintain fruitful economic ties with the rising superpower while showing the world post-Brexit UK stands up for democratic values and will protect its own domestic security from potential foreign threats?

His own MPs are watching closely.

“This is a pivotal moment – a moment that is overdue – for us to recalibrate our stance, our geostrategic position with China,” Tobias Ellwood, chair of the House of Commons defence committee, told POLITICO, echoing the views of many on the backbenches. “We are heading into a cold war, there’s no doubt about it.”

Our way or the Huawei

In some respects, the government’s tone on China was beginning to change even before the Hong Kong decision and the expected Huawei U-turn.

In January 2018, from a plane en route to Wuhan, May told reporters, “China is a country that we want to do a trade deal with.” Two and a half years on, the Department for International Trade declined to confirm on the record whether the UK was still pursuing such a deal.

The cooling of enthusiasm, however, has as much to do with Donald Trump’s China strategy as it does Johnson’s.

The UK – determined to secure a quick post-Brexit trade deal with the US – has been put under pressure by Washington’s negotiators to pull away from Beijing.

02:31

Which country dares to use Huawei in their 5G infrastructure?

Which country dares to use Huawei in their 5G infrastructure?

US Trade Representative Robert Lighthizer has repeatedly said the new United States-Mexico-Canada Agreement will be a template for future US trade deals, and that includes a clause that empowers Washington to review or effectively reject any trade deal Mexico or Canada does with a “non-market economy”, which would include China. Analysts expect US negotiators to want a similar provision in any deal with Britain.

Likewise, the UK government’s review of Huawei’s role in supplying Britain’s 5G network, officials said, was prompted by and is focused on the complicating factor of US sanctions on the firm, which target its ability to use US-made semiconductors.

Details of the UK’s decision are expected on Tuesday following a review by the government’s National Cyber Security Centre, with most expecting Huawei’s role in the network to be curtailed. The decision’s symbolic force could be just as great as its practical effect.

Rana Mitter, director of the University of Oxford’s China Centre, agreed with Parton that a UK reversal on Huawei, coming hot on the heels of the Hong Kong citizens decision, would prompt a “very, very strong” reaction from Beijing in terms of rhetoric.

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Since the Hong Kong decision, the UK has been a target of the new, robust diplomatic style emanating from Chinese embassies known as “Wolf Warrior diplomacy” (named after the series of blockbuster Chinese action films). It deploys Trump-like threats and makes greater use of Twitter to hammer home the message.

But Mitter questioned how far Beijing would really be willing to translate threats into action on the economic front.

“In the end, there are aspects of the trading relationship between [the UK and China] that will be very difficult to replace,” Mitter said, citing the importance to China of the City of London and London’s legal service sector, as well as the Chinese middle class’ addiction to British universities.

“If we’re talking about the overall panorama of [economic] relations – which are very much related to services – I don’t see that going in the way of disengagement as some of the rhetoric might suggest.”

Despite the diplomatic bust-ups, the UK government has shown no appetite for following more hawkish MPs down the path of economic disengagement from China. Foreign Secretary Dominic Raab has made a point, even when condemning Beijing over Hong Kong, of talking up trade ties, and the pattern is likely to continue, even as London braces for any Chinese response in the weeks and months ahead.

Beef with China

While the next few weeks and months could be stormy for UK-China relations, London has more room to “tough it out” than might be obvious.

China may well seek to weaponise its young people, Parton said, preying on a UK higher education sector already sapped by Brexit, crippled by the pandemic and heavily dependent on fees paid by overseas students.

Beijing has form in this area, last month cautioning its students to reconsider study in Australia, in a move widely seen as retaliation for Canberra’s push for an independent inquiry into the origins of the coronavirus.

But Mitter said there was “a lot more rhetoric than reality” to the threats.

01:49

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Australia suspends extradition treaty with Hong Kong, offers residency pathway for Hongkongers

“There’s still a very strong stress on internationalisation as part of China’s global ambition,” he said. “That means being able to operate comfortably in English-speaking environments, [so] I think the likelihood in practice that they would organise a boycott of the English-language-speaking higher education sector is very low.”

Similarly on trade, the UK can draw some comfort from China’s record in recent diplomatic spats.

In disputes with smaller countries, Beijing has tended to target symbolic, headline-grabbing imports, before quickly relenting, Parton said. When Canada arrested Huawei executive Meng Wanzhou in 2018, China banned pork and beef imports, only to lift the restriction a few months later.

In the UK’s case, British beef has only recently been allowed back into China more than 20 years after it was banned in the wake of the UK’s BSE outbreak and would be an easy target if Beijing wants to make an example of London. “I think they may well [reimpose the ban on British beef] but it won’t last long because they need the food,” Parton said.

The Huawei decision itself, however, would not be uncomplicated. Philip Jansen, the chief executive of BT, the UK’s main mobile service provider, said on Monday the firm had been “in the telecoms infrastructure for about 20 years” and that removing it in any less than 10 years would be “impossible.”

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“If we get in a situation where things need to go very fast, then we go into a situation where service for 24 million BT Group mobile customers is put into question – outages would be possible,” he told BBC Radio 4’s Today programme on Monday.

China’s deeply entrenched role in other key parts of UK infrastructure, such as nuclear power, cannot be reversed overnight either.

Some question the extent of the security threat posed by Beijing and ask whether the UK placing itself at loggerheads with China – alongside the US – is worth the potential economic pain.

Others fear the Huawei decision marks the start of a “slow slide towards protectionism,” as Nick Macpherson, formerly the top official in the UK’s Treasury under Osborne and two previous chancellors, put it.

“This has little to do with national security and everything to do with the forthcoming lopsided US-UK trade deal,” he said.

Pacific alliance?

The growing Sino-sceptic caucus in the Tory Party sees things very differently, though. Whatever Beijing throws at the UK, Johnson should be prepared to weather it, said Ellwood, the defence committee chair.

“As soon as you dare to criticise China there will be repercussions. Therefore, a foreign policy advance on China must come with the recognition that there will be an economic hit,” he said.

More broadly, Conservative MPs like Ellwood and foreign affairs committee chair Tom Tugendhat want to see a more joined-up China policy across government departments, including trade.

“China’s Achilles' heel is that its growth is absolutely dependent on global trade,” Ellwood said. “But we’re still allowing them to call the shots; we’re allowing them to change the rules or bend the rules.”

Chinese President Xi Jinping and Britain's Queen Elizabeth attend a state banquet at Buckingham Palace in October 2010. Photo: AP

The UK alone – despite its strength in some specialised areas – has nowhere near the clout required to persuade China to liberalise its practices, experts said. But attention is beginning to turn in Whitehall to a club of countries that might stand more of a chance: those in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, to which the UK is seeking accession.

A successor to the US-driven Trans-Pacific Partnership (though without the US), the alliance of 11 countries including Japan, Canada and Australia is seen by some in Westminster as a means for the UK to engage with China from a stronger position.

International Trade Secretary Liz Truss, while not naming China, said earlier this month that the benefit of the CPTPP was not just economic. “I see it as a geostrategic benefit and also a signal of the kind of modern free-trade area that the UK wants to be part of,” she told the Policy Exchange think tank earlier this month.

Many Conservative MPs will hope it is a sign that a department which – since the Brexit vote – has been more likely to put out a press release about selling tea to China than produce a coherent trade strategy toward China, is starting to grow up.

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“I don’t think there’s any harm in pursuing trade with China – but it must be on equal terms,” said Ellwood. “We still remain in a strong position, but only if we operate collectively, internationally, in unison.”

Parton, of the RUSI think tank, agreed. “We’ve got to get much closer to like-minded countries and present a united front … not in a hostile way, but [in a way that says] these are the ways in which we like to do business and if you want to do business with us you are going to have to accommodate yourselves to it. Standing together on this one, we’d be a lot more strong.”

However, a comprehensive UK-China policy remains elusive, Parton added. This is something he – along with Ellwood and his allies on the backbenches – believe will have to change quickly as relations become more stormy.

“These things are connected,” Parton said. “The way you deal in the trade area connects to the way you deal in [other areas]. The Chinese are very happy to use things from one area as leverage for another. So you better consider it in the same way: all interconnected.”

This article appeared in the South China Morning Post print edition as: u.k. toughens stance on China as it eyes U.S.
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