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8 July 2020updated 17 Jul 2020 1:25pm

Leader: The China problem

Britain assumed that economic liberalisation would lead to political liberalisation in China. This was a delusion.

By New Statesman

In September 2015, during a speech to the Shanghai Stock Exchange, George Osborne, a latter-day mercantilist, declared of the UK’s relationship with China: “Let’s stick together and create a golden decade for both of our countries.” This proposition has not aged well.

Five years after the former chancellor’s address, as Isabel Hilton writes, the UK and China have entered a new era of strife: China has breached its past promises to Britain through the imposition of a draconian new security law on Hong Kong, and Boris Johnson is poised to announce the exclusion of the tech giant Huawei from the UK’s 5G network. Added to this, China exacerbated the Covid-19 pandemic by suppressing initial reports of a new virus, and has detained one million Uighur people and other Muslim minorities in concentration camps in Xinjiang.

Britain’s Faustian pact with Beijing originated with the latter’s embrace of global markets. China – “the new workshop of the world” – was viewed as a means for suppressing both prices and wages as well as stimulating demand. It was assumed that economic liberalisation would lead to political liberalisation in China. This was a delusion.

In the event, economic liberalisation in China has been followed by increasing political centralisation. In 2018, President Xi Jinping abolished the 1982 constitutional amendment on presidential term limits, making himself the country’s most powerful leader since Mao Zedong.

But though China may self-identify as a “workers’ state”, it is far from a happy state for workers. As the Labour peer Maurice Glasman wrote in a recent essay published on newstatesman.com, “The International Labour Organisation has decades of examples of intimidation, violence and threats against those who tried to take industrial action in China. The use of the army against strikers is commonplace.”

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China’s remarkable economic growth (it now accounts for 19 per cent of global GDP) has had positive consequences, most notably the removal of as many as 850 million people from extreme poverty. But the West’s strategy must be shaped by more than utilitarian calculations.

Faced with internal party revolt, Mr Johnson is rushing to recalibrate the UK’s relations with China. As well as signalling Huawei will be excluded from the 5G network, he has offered citizenship to 350,000 British National (Overseas) passport holders in Hong Kong (with a further 2.6 million residents eligible). In response, Liu Xiaoming, the Chinese ambassador to the UK, warned: “If you want to make China a hostile country, you will have to bear the consequences.”

Britain should treat such threats with the contempt that they deserve. But the UK’s boldness should not be overstated. Despite China’s treatment of the Uighurs, the country’s officials were notably absent from the list of human rights abusers who the government announced on 6 July would face new targeted sanctions.

The truth is that the UK remains compromised by its excessive economic dependence on China. Only last November, on Mr Johnson’s watch, British Steel was sold to the Chinese firm Jingye for the paltry sum of £50m. The state-owned China General Nuclear Power Group is funding 33.5 per cent of the Hinkley Point C nuclear plant under construction in Somerset, while MTR, a Hong Kong company, operates South Western Railway, and China’s sovereign wealth fund owns a 10 per cent stake in Heathrow airport. No other major Western country has allowed so many of its strategic industries, assets and pre-eminent companies to fall into foreign ownership, as we have said before.

The tawdry age in which the UK has treated China as a buyer and investor of last resort must now end. Though Britain has left the EU – increasing its geopolitical vulnerability – it remains the sixth-largest economy in the world, a nuclear-armed power, and a leading member of the UN and Nato. Rather than selling its infrastructure with promiscuous abandon, the UK should invest in it and mitigate its insouciant embrace of globalisation. 

This article appears in the 08 Jul 2020 issue of the New Statesman, State of the nation