British Prime Minister Theresa May makes her first official visit to China from today to Friday to help deepen the bilateral strategic partnership. The visit, which comes hot on the heels of last month’s UK-China Economic and Financial Dialogue summit, will seek to build on the momentum of Chinese President Xi Jinping’s (習近平) London visit in 2015, which saw relations enter a “golden era.”
Since that landmark trip, the 2016 Brexit vote has only increased the emphasis London is putting on consolidating ties with key non-EU nations with its EU exit on the horizon. Through this Brexit lens, by far the most important element of the bilateral relationship with Beijing is economics.
The UK already receives the largest amount of Chinese foreign direct investment of any EU country and is Beijing’s second-largest trade partner in Europe after Germany.
Meanwhile, China is the UK’s second-largest non-EU trade partner. The pre-eminence of economics in bilateral ties will be heavily underscored in May’s trip to Beijing, Shanghai and Wuhan. This will build on British Chancellor of the Exchequer Philip Hammond’s visit to the country last month to work out final preparations for a “stock connect” linking the London and Shanghai exchanges, in which both parties agreed to examine the possibility of connecting their bond markets as well.
Representatives of more than 40 companies, universities and trade associations will travel with May as she seeks to demonstrate that the UK will be able to boost post-Brexit trade ties with Beijing from infrastructure and “green finance” to technological innovation.
Take the example of UK energy and technology businesses, which are eager to gain market opportunities in the massive Chinese market, and where the UK is well positioned as a leader in key subsectors, including energy management systems, offshore wind and tackling air pollution.
The potential opening here is huge given that China faces serious air and water pollution, and it is more reliant on imports of oil than the US. Moreover, Beijing is committed to moving its economy away from energy-intensive, inefficient industries toward cleaner energy and greater energy independence.
The planned Chinese domestic investments in these areas are huge and include potentially about 50 trillion yuan (US$7.9 trillion) between now and 2020 for enabling urbanization, with a focus on efficient, clean and low-carbon infrastructure, as well as an expected 2 trillion to 3 trillion yuan in renewable energy over the next 10 years, about 466 billion yuan in ultra-high-voltage transmission and 3.8 trillion yuan on “smart” grids.
Outside of the economic realm, after last year’s 45th anniversary of the China-UK diplomatic relationship, there will also be discussion on security issues, too. China last year tried to expand military cooperation with the UK, including for the first time last year sending warships to London for a tour.
For many, it might appear that the bilateral relationship is overwhelmingly one-way traffic, especially given that the Chinese economy is now a multiple of that of Britain’s. However, for all that Beijing might be the more powerful partner, it is grateful to the UK government for ratcheting down, in public at least, human rights concerns about China, especially after bilateral relations temporarily went into a deep freeze in 2012 when then-British prime minister David Cameron met with the Dalai Lama.
While this stance is certainly not without controversy — including with Labour Party leader Jeremy Corbyn, who raised human rights issue with Xi in 2015 in London — Brexit means that the May team increasingly sees that enhancing ties with Beijing, albeit not in an unqualified way, is in the UK’s national interest.
Xi could be in power until the early 2020s, and, especially with Brexit, it is widely viewed in London that there is an opportunity to develop a relationship that could make a significant contribution to UK prosperity for a generation to come.
In this context, Washington has previously raised concerns about the degree to which London is perceived to be cozying up to Beijing, especially under Cameron’s previous government, when then-British chancellor of the exchequer George Osborne pledged to make the UK “China’s best partner in the West.”
This ruffled the feathers of the administration of former US president Barack Obama following the UK’s decision to become a founding member of the Asian Infrastructure Investment Bank (AIIB), which is being championed by Beijing as a potential alternative to the World Bank.
An unnamed senior Obama administration official was widely quoted in March 2015 to be “wary about a trend toward constant [UK] accommodation of Beijing, which is not the best way to engage a rising power.” An official White House statement urged London to “use its voice [in the AIIB] to push for adoption of high standards.”
Taken overall, the UK government’s desire to warm ties further is not with controversy, both domestically and internationally. However, May’s visit is likely to prove a success and will reinforce the dominance of economics in bilateral relations, with a series of trade and financial deals announced.
Andrew Hammond is an associate at the London School of Economics’ LSE IDEAS think tank.
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