British-China relations: “Golden Age” at an end?

Mr and Mrs May on arrival at the Forbidden City in Beijing

Theresa May made her first official state visit to China last week, earning both plaudits on Chinese social media for her bravery in the cold and the affectionate nickname “Auntie May” across Chinese news reports. The two countries have been vocal about their current diplomatic relations enjoying a “golden age” since at least 2015. Yet the reception the British Prime Minister received over her 3-day state visit belies this rhetoric, as does the aftermath — usually leaders proclaim their victories and heap praise on one another, yet the summaries coming from both camps has been somewhat icy in comparison to previous visits. Whilst Xi Jinping had previously been given the honour of an address to Parliament in Westminster during his state visit, Mrs May was reduced to a 10 minute speech at the China-UK Business Forum in Shanghai. Whilst President Xi rode in a golden-carriage to Buckingham Palace and shown the cultural highlights of fish & chips and a pint with then PM David Cameron, Mrs May was presented with less fanfare in the form of a tea-ceremony. Whilst Mr Xi left the UK in the wake of £40bn worth of trade deals, Theresa May has left critics at home unimpressed with a vague and dubious figure of £9bn of secured deals. All at a time when the Prime Minister could surely use evidence of victories and of others’ confidence in her

I had written previously at the time of 19th Party Congress in October that the future of the golden era of bilateral relations looked likely to stay the course, and yet in the wake of this very public test, it would seem like the status has been cooled to a “bronze era” — at least according to Kerry Brown from King’s College. So this begs the question, just how much have relations between the two countries chilled, and what reasons could there be for this?

One glaring difference between Theresa May’s government and her predecessor David Cameron’s is their support of the Chinese Premier’s cardinal Belt & Roads Initiative (BRI) foreign policy programme. Ironically the stance of Cameron and then Chancellor Osborne aggravated European leaders, yet at this time of negotiating the exit from the EU, the British Prime Minister is more cautious about her support. In previous articles I have stated the importance that the government in Beijing places on this initiative that it believes will put China at the head of a new age of land and maritime trade, and that the government so prioritises it that any would-be trading partner needs to show willing at least in the form of outspoken support, if not tangible contributions. Mrs May’s hesitance in this matter will undoubtedly limit Chinese enthusiasm towards relations with Britain, especially as the prevailing view in both London and Beijing is that the UK would be a very useful partner to have on board. Indeed the British diplomatic representation stationed in Beijing are champions of the UK’s potential, increased involvement in the project. So the Chinese leadership considered the moment had arrived and had expected Mrs May on her visit to sign documents formally committing British involvement in the project. But the moment passed, frustratingly for the Chinese. The Prime Minister refrained from such commitments, despite declaring the UK to be “a natural partner” for the BRI, citing concerns regarding cyber-security, adverse environmental consequences, long-term financing, and possibly most importantly the political ambitions Beijing has for the project. This is stark departure from David Cameron signing the UK up to the Asia Infrastructure Bank, which was seen as paving the way for British involvement in the project — much to the annoyance of European leaders and their American counterparts in the USA. There could possibly be a victory for Mrs May in this regard, however understated, as one of the few outcomes of this visit was a promise of greater access to the Chinese market for British Financial Services companies. The UK sees one of the main reasons for getting involved in the BRI is the boost it would give to City of London finance companies that would be a logical choice when looking to solve the financing difficulties such a vast infrastructure project poses, particularly when trying to avoid the embitterment that has been seen in Uganda after the Chinese financed the building of a 50km stretch of motorway — the Mayor of Kampala has said that “children and grandchildren will have to shoulder this burden which is very, very unfortunate.” — so the potential experience these companies could gain might result in a greater guarantee of involvement if and when the UK does officially decide to cooperate more fully on this project. Mrs May might be thinking about the long-term in this matter, but short-term has decision to delay on pledging commitments will undoubtedly sour relations as Beijing seeks to expand the clout of its pet project almost on a daily basis.

“Global Britain” has now almost become the slogan for post-Brexit Britain. It is designed to reassure potential investors world-wide that the UK is not closing itself off, but instead is seeking to reposition itself away from a primarily European actor to one that seeks opportunity in every region of the world. Whilst this will hopefully be the case in future, it hasn’t curbed the need for caution in the meantime. If we continue this parallel of Chinese relations under Cameron and under May, then Brexit is perhaps ironically the biggest obstacle and will most likely remain so until the negotiations are over. Whilst Cameron displeased his colleagues around Europe with his support for the BRI, May needs to keep these leaders onside to an extent during negotiations to ensure a smooth exit from the EU. If Theresa May had become the first head of government from a G7 country to officially sign support for the BRI, then perhaps leaders would raise old grudges when the final terms of the UK’s exit are put to vote. The BRI is seeking European involvement and it is receiving it from Western European countries, but this is measured equally with scepticism about the nature of China’s expanding sphere of influence and the potential economic uncertainty it could bring in the future as the BRI undoubtedly looks to pivot world trading away from the West and back to the East. Whilst a huge slice of the BRI pie would make headlines and be jumped on a trade victory for May’s government, it could potentially derail the Brexit process. It seems Mrs May is confident that the attributes of British companies are sought after enough that they will still be in demand to play a role in the BRI once the UK fully completes its exit from the EU, so much so that she believes she can play the waiting game.

If at this current moment Theresa May’s government is not in a position to make a paradigm altering shift towards China and the east because of the ongoing difficulties associated with Brexit, then it is also worth noting the current climate west of Britain. The current administration in the White House, if the recent State of the Union address from President Trump and his words in Davos are anything to go by, is sticking to its guns and basing it’s trade activity on the policy of ‘America First’, with President Trump reiterating his point at every turn that any trade deals and bilateral deals will only be met with approval if they are considered reciprocal and in the best interests of the USA. Whilst this will surely resonate with his voter base, and whilst certain examples are proving that it is working — Japanese car manufacturing plants opening, and more notably a Chinese solar panel manufacturer announcing plans to open a plant in the wake of tariffs imposed on imports from China — it has left many governments unsure of their standing with the Trump administration, and this includes the ‘special relationship’ between the USA and the UK. Ties between the two countries are somewhat uneasy, unexpectedly so. Although the US President has backtracked and offered an apology after the stir caused by his war of words over twitter with Theresa May after retweeting far-right videos, the relationship between London and Washington is still a little frosty. The President declined to attend the opening ceremony of a new US embassy in London and the status of his potential state-visit is still unclear. The White House has said repeatedly that the UK will still be at the ‘front of the queue’ for trade deal talks from the moment the UK is in a position to after leaving the EU. However the current rhetoric coming from the US seems to have very little room for soft spots for old friends amid criticism of NATO allies. In this case, any potential post-Brexit trade deal won’t be decided by previous good-will but on current actions of governments, then certainly Mrs May is not in a position to be seen as realigning British interests and allegiances further in the direction of a country that Washington is now explicitly referring to as a ‘geo-political rival’. In a sense it could simply be that the friendliness and depth of Sino-British relations has reached something of a plateau. The UK even without the uncertainty of Brexit would surely never undertake the kind of reassessment of it’s international positioning that snubbing Washington in favour of Beijing requires. Whilst Theresa May has received praise for side-stepping questions on human rights at a press conference during the trip, particularly useful in a host nation with such a culture of face, she did press the Chinese leadership on issues surrounding Hong Kong and human rights, and steel dumping, suggesting that returning to London with a list of secured trade deals was not her only priority for this trip and that she is not yet ready to surrender to the economic lure of total cooperation with Beijing. The UK wants to be a more nimble trading nation in the future, being a champion for global trade as well a liberal democracy. To do this it needs friendship in equal measures from around the world, souring old allegiances in this instance is not the right path, especially not to chase the pot of gold of your ally’s rival. Whilst Trump’s approach to trade has its critics, it is still currently the policy of the United States, and as such leaves Prime Minister May with little choice but to pay close attention.

Diplomacy is very much about sending messages regarding the immediate situation. The government in Beijing are currently uncertain about what the future holds for the UK as a trading partner and so felt little need to woo the British delegation, expecting a signature on the BRI documents as certain. Had this state visit taken place in 2 years after the Brexit process was over and the terms and conditions were there for all to see we might have seen a more ceremonial reception befitting of 2 states supposedly in a ‘golden era’ of relations. It is perhaps fitting that the most prominent moment of the visit was Mrs May’s appearance at the business forum in Shanghai rather than at any grand ceremonies in Beijing, as for the British Prime Minister this trip was all about business as usual rather than any great diplomatic posturing. In this regards she did have some success, I refer back to my previous ‘plateau’ comment. After such waves and flurries of bilateral investment, there will surely be more subtle plot developments outside of the big action set pieces in this drama, and the £9bn secured investments is in key areas such as greater imports of British luxury products — the British car industry has seen dramatically increasing numbers in the Chinese market so any further expansion will be a big boost — and agricultural goods, which have previously not been subject to import by the Chinese, not to mention the potential new opportunities for the food and drinks sector as well as the financial services companies that have been looking for reasons to keep London as a base since the uncertainty of Brexit roused concerns.

Whilst the fallout from this low-key state visit would suggest a cooling in relations and an abrupt end to the ‘golden era’, the signs are there that this is nothing but a temporary dip for two states that have other priorities right now. The most promising sign here is the creation of the “trade and investment review” which looks to further open trade between the UK and China by reviewing current barriers with a view to removing them. This suggests an element of planning for the future involved in this visit, perhaps potentially confirming that the Prime Minister sees a need to somewhat play the waiting game with her eyes set on a return to the golden era style fanfare of recent times in the near future. Equally the uncertainty that has led to the supposed ‘cooling’ is coming from the still unsettled Brexit question, this uncertainty won’t last forever. Once the process is closer to a conclusion the desire for deeper cooperation will again present itself, both sets of leadership seem confident enough of this to still insist on using the ‘golden era’ phrasing that has been used so freely recently. Just as the UK’s top priority is currently occupied by Brexit, so too the Chinese leadership are most concerned with their BRI project. The fact that the UK continues to be a vocal supporter of the project suggests that there is still a role for the UK to play in the development of this project once concerns can be eased and kinks can be worked out. If the Mrs May does in the future sign the UK up formally to the BRI then the golden age will be there in black and white for all to see.

Personal observations