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End of the Golden Decade

Driven by mercantilist ambitions, the Cameroons courted China. But now the Conservatives are turning against the rising superpower.

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When Boris Johnson became mayor of London, he abolished London’s representative office in Beijing with a stroke of the pen, loftily pronouncing it a “waste of money”. In October 2013, still mayor of London, Johnson joined a six-day trade mission to China where he articulated the opposite view with equal confidence. China’s economic growth, he said, was spectacular “and the opportunities that this presents for London are huge”.

It may not come as a surprise that serious, and informed, views on China are not Johnson’s strong suit. But what does get his attention are the views of his own back bench. It can be anticipated that his erratic ­position is about to change again: having surfed the Brexit referendum on the promise of fresh opportunities in Asia – and China in particular – Johnson is now preparing a U-turn that will lead to restrictions on Chinese investment in the UK and the cancellation of the contentious, high-profile promise to admit the Chinese telecoms giant ­Huawei to the UK’s 5G network. Other critical ­infrastructure investments, in particular in nuclear power, could be in doubt. ­Reciprocal opportunities for the UK in ­China, which have never been as big as the Brexiteers ­suggested, are shrinking by the day.

Two important developments have forced Johnson’s hand. The first, clearly visible even as he tossed out those Brexit promises, is the growing systemic competition between the US and China – a competition in which both superpowers will increasingly insist that smaller countries, such as the UK, take sides. The second is a startling reversal of attitudes to China within the Conservative Party. Its leaders, only a few years ago, declared undying friendship with the People’s Republic (a relationship that George Osborne embarrassingly titled as the “golden decade” of UK-China relations); now the party is settling into unremitting hostility.

The beginnings of this remarkable U-turn pre-date the pandemic. The process has been greatly reinforced, however, by Beijing’s early cover-up of Covid-19 and its subsequent aggressive propaganda, and by the imposition of a draconian security law on Hong Kong that effectively tears up China’s agreement with the UK to leave Hong Kong’s way of life unchanged for 50 years. The UK’s recent promise of a “pathway to citizenship” for Hong Kong citizens who hold British National (Overseas) passports – which was described by the Global Times, China’s ­nationalist mouthpiece, as a ­“rubber cheque” – provoked an angry ­response from Beijing, where the move was ­characterised as an ­imperial power trying to interfere in ­China’s internal affairs.

It is not just in Britain that China’s recent actions have provoked hostility: several EU member states and the ­European Commission have not hidden the ­tensions in their relationships with China. Canada and Australia, for different reasons, are locked into disputes with the People’s ­Republic, and all around the world relationships with the PRC are being re-examined and reset.

Within the parliamentary Conservative Party, these developments have allowed several disparate groups to cohere into a force large enough to influence Johnson’s decision over Huawei, and to oblige him to reset the broader relationship with China.

[See also: As globalisation fractures, the West must champion internationalism in the face of China]

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It was only in January that Johnson, following a protracted security review and a contentious cabinet meeting, made the long-anticipated an-nouncement that Huawei would be allowed to supply equipment to the periphery of 5G networks, provided its share did not exceed 35 per cent. The decision provoked a furious reaction from Donald Trump and a series of high-level visits to Downing Street by US officials, who at-tempted to cajole Johnson into changing his mind. (The decision was also ­believed to have been opposed by Johnson’s chief aide, Dominic Cummings.)

It also produced an angry response in his own party, led primarily by Iain Duncan Smith and Bob Seely, the relatively junior MP for the Isle of Wight. They mobilised a Huawei WhatsApp group to ­demand that the decision be reversed on security grounds and that Huawei’s existing ­involvement in UK telecoms networks be reduced to zero.

Duncan Smith and David Davis ­presented an amendment to the Telecommunications Infrastructure (Leasehold Property) Bill that would have banned the purchase of equipment from Huawei and another telecoms company, ZTE. When it was debated on 10 March, among those calling for Huawei to be banned was Liam Fox, who two years earlier had been cheerleading the idea that the UK’s fortunes would be made in China. The amendment was defeated by 306 votes to 282. Thirty-eight Tory MPs had rebelled.

In the weeks that followed, the revolt gathered pace, and by early May Seely claimed that the Conservative Huawei ­Interest Group had 59 members, enough to block any Huawei-related legislation that Johnson might wish to introduce. No 10’s position began to collapse. By the end of May, Johnson had ordered ­officials to look for a way to remove Huawei entirely from UK telecoms networks. The only ­remaining question was: how to cover his retreat?

The Trump administration had obligingly offered an excuse to revisit the issue. In early May, Washington announced that fresh sanctions against Huawei would be introduced in September this year. These would deny the company access to the US semiconductors and software that it needs to build 5G equipment, creating new ­uncertainties about where Huawei would source key components.

The UK swiftly announced an emergency security review, which has come to the opposite conclusion from last year’s exercise – that the risks could be managed. The review cites the new risks of untested equipment in Huawei’s supply chain. This will allow Johnson to reverse course, giving his backbenchers what they want: the total removal of Huawei equipment by 2023. Neither side in this discussion has identified who will pay the estimated £7bn it will cost to rip out and replace the existing ­Huawei equipment on UK networks.

The Huawei decision should also calm the fury that has been simmering in Washington, DC since Johnson’s initial failure to fall in line. Yet this reversal will, inevitably, provoke ear-splitting volumes of complaint from the Chinese government, along with threats of a general retreat of Chinese investment from the UK and retaliation against UK companies and interests. British companies that depend on the Chinese market – such as the bank HSBC, which backed China’s new security laws in Hong Kong – should be nervous.

It will also bring discomfort to the many Tory MPs who have benefited from the largesse dispensed from Huawei’s UK headquarters: over the years, the company has sponsored MPs’ trips to China and regular breakfasts and briefings in the House of Commons, and made generous contributions to conference expenses. As Conservative Party opinion hardens on dealings with China, it seems that generosity has yielded thin returns.

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There will be concern, too, in the parliamentary group affiliated with the Conservative Friends of the Chinese, an ­organisation established with Johnson’s blessing, to strengthen party relationships with British Chinese communities. But despite any remaining sympathies for China or regrets for the lost opportunities, anti-Chinese sentiment continues to spread in the party.

In addition to the Conservative Huawei Interest Group, in recent weeks two further groups have been formed by MPs with the express intention of changing the UK approach to China. The China ­Research Group (CRG), announced in late April, is chaired by Tom Tugendhat and boasts a former adviser to George Osborne, Neil O’Brien, as its secretary, and Laura Trott, former special adviser to David Cameron, among its members. Conservative Party loyalists Dehenna Davison, Andrew Bowie and Anthony Browne, a prominent former aide to Johnson, are also members.

The CRG was followed by the creation of a cross-party and international initiative, the Inter-Parliamentary Alliance on China (IPAC), launched in early June. In the UK it is co-chaired by ­Duncan Smith and the Labour peer ­Helena Kennedy. From the US, the senator Marco ­Rubio is a member, and the alliance boasts others from Australia, Canada, Germany, Japan and the US. The alliance says its aim is to mobilise liberal democracies to a “common defence of our shared principles”.

To appreciate the speed and scale of the shift in Tory sentiment, it is helpful to recall that Cameron and Osborne had led the most uncritically favourable policy towards China since Edward Heath’s defence of the Tiananmen Massacre in 1989. Casting aside any reservations about values-based foreign policy, in 2015 Osborne visited Xinjiang, where today an estimated one million Muslim Uighurs are incarcerated in camps, and delivered a speech that touched only on business opportunities. It was a huge propaganda victory for Beijing, and won him grudging praise from the Global Times. “It should be diplomatic etiquette for foreign leaders not to confront China by raising the human rights issue,” the article said. “Keeping a modest manner is the correct ­attitude for a foreign minister visiting China to seek business opportunities.”

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Osborne responded to this authoritarian injunction by promising that UK-China relations were ­entering a “golden decade”, and that Britain aspired to be ­China’s best friend in the West. Now, former key aides to both Cameron and Osborne have signed up to an initiative that seeks to ­curtail UK-China ties. The golden decade lasted barely four years.

Both the IPAC and the CRG contain members whose views on other key policies and the UK’s position in the world are very different. Dean Godson, director of the right-leaning think tank Policy Exchange, identified a variety of distinct Tory anti-China rebels in a taxonomy posted on the Policy Exchange website.

Pro-Brexit Atlanticists such as Duncan Smith and Owen Paterson sit alongside Remainers, such as William Hague and Tugendhat, concerned about China’s encroachment on liberal democratic values. Others, such as David Davis, are there for the civil liberties ques-tions, and human rights advocates such as Fiona Bruce, the MP for Congleton, and the activist Benedict Rogers, who runs the Conservative Human Rights Commission and is a co-founder of Hong Kong Watch, form another sub-set. A further group comprises those who fear the economic impacts of Chinese trade practices, and long-standing China sceptics such as Nick Timothy, Theresa May’s former aide and occasional New Statesman essayist.

While diversity of motives may add to the numbers that block Huawei from the UK’s 5G infrastructure, it could become problematic as Johnson’s government seeks to recalibrate its relationship with China without falling into the trap of Trump’s trade war.

One litmus test is the call to force China to pay reparations for the pandemic – a right-wing policy from the US that has been championed by the London-based Henry Jackson Society. Leaving aside the absurdity of a former colonial power making a claim for compensation from its former colony (or in this case, semi-colony), it is a position that achieves little beyond further narrowing the ground for any future relationship. It also ensures that China will have no interest in cooperating in a much-needed investigation into the origins of the pandemic.

Johnson has also ordered a review of the UK-China relationship that aims to reduce the UK’s dependence on China for ­essential imports, and to tighten the rules on ­foreign takeovers in order to stop Chinese firms from ­buying up British intellectual property. The prospects for cooperation on other matters already seem slim.

That may be the desired result for the US’s far right, where the idea of a coming conflict with China is gaining ground, but it seems less desirable for a post-Brexit UK in need of business, let alone one about to host a climate conference that urgently needs a good outcome.

For now, the main locus of resistance to Johnson’s China U-turn is in the Treasury: the Chancellor Rishi Sunak and the ­Business Secretary Alok Sharma reportedly fear that drawing thick red lines across the relationship risks cutting off the economic and trade opportunities that the UK will need to recover from the pandemic.

But Britain is launching its frail canoe into the middle of a protracted battle between the US and China. Neither will be disposed to make the UK position easy.

Take, for example, Article 32.10 of the US Mexico Canada Agreement (USMCA), the new version of North American Free Trade Agreement, which was ­ratified by US Congress and came into force on 1 July. The agreement has few ­dramatic differences to its predecessor, but Article 32.10 is both new and noteworthy. Tucked away under “exceptions and general provisions”, it effectively nullifies the USMCA should any of the signatories strike a trade deal with a country that “at least one party has determined to be a non-market economy for purposes of its trade remedy laws”. This is a barely disguised ­reference to China.

Steve Mnuchin, Trump’s ­treasury ­secretary, confirmed on a recent visit to ­London that it was his firm intention to ­insert this “poison pill clause” into all ­future trade deals, including with the UK. If Britain were to reach an arrangement with China that was not to the US’s liking, the US could walk away from its bilateral trade deal with the UK.

How far China will really punish the UK remains to be seen. The UK-China trade relationship has grown rapidly in the past decade, but it still represents only a small percentage of the UK’s overall trade and it is heavily skewed in China’s favour. And while the UK has received substantial Chinese investment, much of it is in property and some in the kind of high-tech companies that the UK is now seeking to protect.

Britain’s chaotic political behaviour since 2016 has been noted with some bemusement in China. Today, China’s ­international ­relations scholars describe a weakened UK unable to withstand US ­pressure, while also noting that in the long run the UK’s need for the economic ­benefits China offers will prevent it from fully aligning with the US. Huawei is an early skirmish in what is set to be a long campaign.

Isabel Hilton is the editor of chinadialogue.net 

This article appears in the 10 July 2020 issue of the New Statesman, State of the nation