With Great Pandering Comes Great Responsibility
Britain’s big deals with Beijing are smart business, but can David Cameron’s government afford to estrange its Western allies?
How should foreign nations handle economic relations with China? Should the partnership encompass issues such as human rights, environmental standards, and cybergovernance? Or should both sides practice benign indifference — don’t poke your nose in our (non-economic) business, and we won’t poke ours into yours? These questions spring to mind as China’s President Xi Jinping goes through the pomp and the formality of his state visit to the United Kingdom, the first for a Chinese leader in a decade.
Compare the splendid choreography and pageantry in London — the opportunity to stay in Buckingham Palace and ride in a golden carriage with Queen Elizabeth II, for example — to Xi’s rather frosty September visit to the United States. London’s extra efforts have not gone unnoticed by Beijing. The United Kingdom has made “a visionary and strategic choice” to become the Western country most open to China, Xi said before his four-day trip, which ends on Oct. 23.
In exchange for being China’s best friend in the West, Prime Minister David Cameron’s government has a list of goals: It hopes to get contracts for British companies, expand trade with China (currently the United Kingdom lags behind the United States, Germany, and France), become the largest Chinese currency trading center outside Asia, and attract significant Chinese investment. And London is opening doors: It invited the large state-owned enterprises China General Nuclear Power Group and China National Nuclear Corporation to invest in a $37.9 billion nuclear plant, for example. Even for a nation with a long tradition of openness to trade and investment, that seems exceedingly liberal.
But playing with new friends can be problematic if old friends feel excluded. The Obama administration has shown its unhappiness with its British allies growing too close to Beijing — especially since it’s such a change from London’s tough attitude toward Beijing earlier this century. Washington complained when the United Kingdom joined the China-led Asian Infrastructure Investment Bank in early 2015. And U.S. officials are complaining now, albeit privately, that London is being excessively hospitable towards Xi. It is indeed a risky strategy, as it may alienate the United Kingdom’s key trade partners, the United States and Germany — respectively the first and second destinations for British exports, and the first and fourth sources of foreign direct investment projects.
And yet, though it may hurt London’s reputation now, it could be a smart long-term strategy.
The share of U.K. exports to China has grown strongly since 2013, and it is now roughly 4 percent. China is a large market and is of particular interest for a services-led economy like the United Kingdom — especially in professional and financial services. If Beijing succeeds in rebalancing away from exports and manufacturing to private consumption and services, then the United Kingdom is correct to bet on tightening the commercial link with a more dynamic economy than its current key partners. In addition, China’s new “One Belt, One Road” strategy — a massive infrastructure plan to connect China and Europe — promises large contracts for European and especially U.K. engineering and construction companies.
Managing a relationship with China is not just a question for London. Can other European governments ignore the opportunities for economic growth and job creation that Beijing offers? With the European Union’s GDP estimated to grow by only 1.9 percent in 2015 and 2016, and the prospect of many more years of mediocre growth, the answer to that question is no. And for the United Kingdom, given its problematic relationship with the rest of the EU and the prospect of a 2017 referendum on its EU membership, strengthening the partnership with China is even more critical.
Perhaps, in this case, London is making the right move. But with great pandering comes great responsibility. Friends of Beijing do not publicly criticize nor do they raise difficult questions, especially about human rights. The British, said Liu Xiaoming, the Chinese ambassador to the United Kingdom, are “gentlemen, very smart. They know how to behave on occasions like this.”
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