China has a strategy and Britain doesn’t

A roadmap to better relations requires realism. Beijing’s interests and goals are openly stated—if you know where to look

Charles Parton

Say what you like about George Osborne’s “Golden Era” (or Golden Error) of relations with China—and, yes, it was the Treasury, that repository of sinological expertise, that dictated policy—it was at least a strategy. Nowadays Whitehall gets huffy at accusations of not having a strategy. Push them and mandarins retreat to “Well, we have a roadmap.” But a roadmap is not much use if no one beyond a priesthood of security-cleared officials knows what it is.

Authoritarian, Leninist, different—China represents opportunities and challenges which we have not faced before. An open roadmap (of course certain sensitive aspects would have to remain confidential) would help academia, business, government departments, local authorities and others maximise opportunities and deal with challenges. It might even help avoid misunderstandings with the Chinese Communist Party (CCP), whose leadership has very definite intentions for which road we should follow.

But a proper roadmap requires realism about the destination, the terrain and the preparations needed before departure.

A “Golden Era” was always inadequate as a destination. Certainly, we want to maximise good relations and areas of common interest. But we also have to take account of the D word (“decoupling” or “divergence”, take your pick). Beijing has, whether in politics and security, economics and business, or values and human rights, its own interests. They are stated in black and white, if only we can be bothered to read what the Party says to itself, rather than just listen to the propaganda it puts out. As they say at Waterloo station: “Mind the gap.”

Here is the Chinese leader Xi Jinping in his very first speech to the politburo in early 2013, talking of a “long-term struggle between the two social systems”:

Most importantly, we must concentrate our efforts on . . . building a socialism that is superior to capitalism, and laying the foundation for a future where we will win the initiative and have the dominant position.

This view of a struggle extends beyond politics to the CCP’s industrial policy. We hear less these days of “Made in China 25”, under which by 2025 in 10 industries of the future 70 per cent of inputs are to be Chinese. That is because other countries were disturbed by Xi’s vision of industrial divergence. But the policy remains in place.

Divergence is also alive and kicking when it comes to values and human rights. A secret Party document (Document No. 9), leaked in mid 2013, declared war on seven areas (see below, “Seven Westly Sins”) which form the foundations of democracies’ values.

Since then repression has increased both in the offline world and online, where Xi moved quickly to decouple China from the rest of the internet with his “Great Firewall”.

We need a roadmap, because we are in new territory. During the cold war, we kept the USSR at arm’s length. Our economies were not interwoven with that of a Leninist party-state. Nor did we cooperate in scientific research with an authoritarian regime. In that area we have not worked out how to deal with China. Not playing by the rules of academic cooperation, the CCP is happy to make off with the fruits of research or use them in military applications. Furthermore, the world is experiencing a technology and data revolution, of which the Huawei saga (whether to use Chinese technology in next-generation mobile networks) is but a foretaste. The borders between civil and military applications are dissolving. Past transactions were paid in coin and once only; now a purchase is paid for continually, in data sent back to China. These data and metadata can be melted down and forged into instruments to give advantage. One small example of resistance to this was when the US stepped in to prevent the purchase by a Chinese company of Grindr, the gay dating app. The administration feared that the data could be used by the Chinese security services for blackmail.

If we need to be clearsighted on the roadmap’s destination, we should also recognise that the terrain is tough. China’s relations with other countries have moved steadily through assertive diplomacy to bullying, locking other countries in the diplomatic doghouse and even hostage diplomacy. The economic benefits of the Belt and Road Initiative—a multi-billion-dollar global infrastructure project—are yours, if you behave. But if, like Sweden, you protest when we kidnap and lock up one of your citizens (the bookseller Gui Minhai), our propaganda organs will shout at you and we will threaten you with sanctions; if your leaders meet the Dalai Lama (as the Czech Republic did in 2009, Britain in 2010 and Estonia in 2011) or give the Nobel Peace Prize to a Chinese human rights defender (as Norway did in 2010) we put you in the diplomatic doghouse. If like Canada you agree to hold extradition hearings for a director of the Huawei technology giant accused of breaking US law, then we will arrest and incarcerate your citizens (two Canadians have been detained in harsh conditions since 2018).

All this is accompanied by Rumpelstiltskin-like rages from Chinese ambassadors, who are instructed deliberately to turn the dial from charm to harm, because the CCP has worked out that Western politicians are thereby disquieted and distracted from dispassionate assessment. (Nevertheless, those who call for the removal of abusive ambassadors are wrong: the more undiplomatic and unpleasant they are, the more clearly they represent to us the nature of the regime they serve. We should view such ambassadors as national treasures—ours.)

The aim of CCP propaganda is to convince us that China’s rise is inevitable—and irresistible. It is the tide of history, says Xi (though he should remember that tides always recede too). Creating the perception of dependency allows threats to work. It fertilises the soil in which unacceptable behaviour and interference thrive. The result is that instead of prioritising our own national security, interests and values within the context of a mature, balanced relationship, we succumb to pressure when we hear that, if we do not allow Huawei into our 5G system, Chinese investment will be cut; or that if we remind China that the Hong Kong Joint Declaration is an international treaty registered at the UN and therefore to be honoured, our relations will suffer.

Which is where the roadmap metaphor runs out of tarmac. But here are five urgent pieces of research which the UK government needs to carry out before it can come up with a new China strategy.

The first is “Does the UK benefit from Chinese investment?”, the title of a paper by a Beijing-based American scholar, Michael Pettis. He looks at possible benefits and concludes that none apply. Intuitively that seems correct. We do not gain new technology or management skills; the flow is the other way. It is difficult to think of a Chinese greenfield investment similar to Honda or Nissan which brings employment. Capital is cheap and does not have to come from China. But the UK government should not take Pettis’s word for it. It should verify his analysis through commissioning independent research.

The second question is: do exports suffer when a country is in the diplomatic doghouse? The answer appears to be no. Whether it was the UK (2010-12), Norway (2010-16), South Korea (2016-7, over its deployment of the THAAD anti-ballistic missile system), and more recently Sweden, Canada and Australia—in all cases exports to China rose in all years. It is true that the CCP targets individual, often symbolic, industries—those which generate maximum political noise—but, overall, trade rose. Norway’s salmon was targeted, but globally its fish exports rose in each year before its unnecessary capitulation. The block on Canadian pork and beef was soon raised, because China has a food deficit. Such short-term economic aggression can be countered with, for example, temporary support for farmers. The government should research this history, as well as forming a view on possible losses incurred by delayed investment and free trade agreements.

Our solipsistic politicians should realise that China needs liberal democracies as much as they need China. What does suffer under doghouse diplomacy are ministerial visits. Ministers, of course, see their visits as vital to relations. Ambassadorial sycophancy does not help: I have never seen a report of a ministerial visit which has not started: “Minister, your visit has taken relations between Britain and Mordor to a new height . . . X agreements were signed and contracts worth £X billion . . . ” Never mind that those billions are made up of contracts already agreed or included MOUs (memoranda of understanding) which never translate into contracts. Meanwhile, outside the ministerial world, business is busy, students study, tourists tour and real life goes on. Our politicians are not without value, but they are icing, not cake.

Third, we need an objective assessment of how much the City of London stands to benefit from China and how much Chinese business might be lost if the Party directed it elsewhere (and probably not to the US, given current tensions). The City of London Corporation co-authors reports with the People’s Bank of China, but one wonders whether they are less co- and more authored. The PBOC is certainly Party-pris. And perhaps China needs the City more than the City needs China.

Fourth, how vulnerable is our academic sector to CCP threats? We have become over-reliant on Chinese students. But the Chinese middle classes want their child educated abroad, and overwhelmingly in an English-speaking country. That means one of the Five Eyes countries: the USA, the UK, Australia, Canada or New Zealand. Xi Jinping is unlikely to risk upsetting the Chinese middle classes by banning overseas study. Currently all but New Zealand and the UK are in the doghouse. If we stick together, where will the students go?

Fifth, should we fear China turning off its tourist tap? Again, the answer appears to be no. Recent examples of weaponising tourism may not apply. The Philippines, South Korea and Taiwan have been targeted. But geography is a factor: their visitors are largely on cheap packages, ours are not. Nor have the losses been great. In Taiwan’s case, much of the small profits accrued to the mainland companies that organised the tours. Participants were bussed around and spent little. In any case, Taiwan successfully replaced Chinese tourists with higher spending Asians. The CCP has less control over individual and higher-end tourists.

It is also worth noting that one effect of the Covid-19 epidemic is to bring home the need to diversify. Whether that is industry and supply chains, or students, or tourists, reliance on one source is unhealthy. We should also avoid the dangerous presumption that China’s rise is indeed inevitable (see Emily Lau, “Letter from Hong Kong”).

These five areas of research would enable our government to construct a China strategy based upon reality and not upon the CCP’s “community of shared future for mankind”, a facile slogan designed to distract from Xi Jinping’s belief in an existential struggle. Let us not prejudge the outcome, but base it upon solid research. It may be that George Osborne’s strategy of pre-emptive kowtow was the correct one. Or it may be that in the face of the Chinese ambassador’s threats of withholding investment or whatever, our correct answer is “Boo, Ambassador.” And “boo” is how (“no”) is pronounced in Mandarin Chinese. 


Seven Westly sins: the CCP’s targets

Titled “A briefing on the current situation in the ideological realm”, but usually known simply as “Document No. 9”, it was issued by the CCP Central Committee General Office. The seven perils it highlights are the promotion of:

1. Western-style constitutional democracy, meaning a separation of powers, a multi-party system, contested national elections and an independent judiciary. This is an attempt to undermine the CCP leadership and its “socialism with Chinese characteristics” governance system.

2. Western values, claiming to be “universal”. This is an attempt to weaken the CCP’s theoretical foundations.

3. Civil society, and the idea that individual rights must be respected by the state. This is an attempt to dismantle the CCP’s social foundations.

4. Neoliberalism, meaning unrestrained freemarket economics, total privatisation and liberalisation. This is an attempt to change China’s economic system.

5. Western-style journalism, challenging CCP discipline in media and publishing.

6. Historical nihilism, for example denying the value of Mao’s legacy; and

7.  Questioning the regime’s socialist credentials.

The Chinese dissident journalist Gao Yu, now aged 76, was sentenced to a seven-year jail term in April 2015 for breaching official-secrets laws, apparently for sending this document to a foreign news organisation. Since 2016 she has been serving her sentence under house arrest. 

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