What Britain needs is a ‘grown-up’ relationship with China

The Intelligence and Security Committee of Parliament has criticised the UK government for lacking a China strategy. The glib response is that it does have a strategy: Washington’s. A more generous response is that it is complicated, balancing threats and opportunities, partnership and competition. Staying “frenemies”, if you will.

The tension between threats and opportunities is understood by our American allies and reflected in recent exchanges between Treasury secretary Janet Yellen, who emphasises economic opportunities and the need for cooperation on international public concerns like climate change, and national security adviser, Jake Sullivan, who sees the geo-politics and little else.

Past British governments have focused on opportunities presented by China’s emergence as an economic superpower.  The Chinese economy is now roughly the economic size of the USA (measures differ). But no one ever imagined that China was just a scaled-up version of Denmark or New Zealand. It is fiercely mercantilist, export-led and technology-hungry: a scaled-up version of South Korea (and, before that, Japan), with the added twist that its (so far) successful version of state capitalism is overseen by the Chinese Communist Party.

Nonetheless, it is surely not a coincidence that the world’s most valuable companies – Apple and Tesla – and some of our leading companies – Jaguar Land Rover, AstraZeneca, Shell – as well as our services exporters (financial services and universities) have prospered in China along with German car companies and French luxury brands.

China’s neighbours have benefited too. They worry about China’s military strength (and, rather more, the wildly unpredictable Little Rocket Man in North Korea). But Japan, South Korea – and especially Taiwan – want not only security guarantees, but also to maintain and maximise their mutually beneficial economic entanglement with China, even to the extent of resisting American “decoupling”.

Alongside economic engagement is security. We must obviously heed the advice of our security services if there are cyberattacks or espionage directed at British armed forces, companies or government from any source including China. But we should be very wary of those looking for Chinese spies hidden under every bed (or inside every laptop and security camera).  There is a spectrum of security awareness from prudence to paranoia, and we are in danger of disappearing off the paranoid end.

Of course, China also does paranoia. They are more paranoid than even we are. And that is all the more reason not to feed the cycle of suspicion.

The telecommunications company Huawei provides a good example of this. I dealt with Huawei as part of my cabinet responsibilities. I checked out the security issues, and was always told by people who should know that the relationship was safely managed and gave Britain access to frontier technology. I believe Theresa May’s government was told the same, leading to a prudent compromise around 5G. But the UK effectively kicked Huawei out when America waved a red flag seemingly for both commercial and security reasons.

Security concerns have almost certainly killed off Chinese participation in the civil nuclear power industry. This despite the fact that, beyond vague ideas of James Bond villainy, it was never clear what the concerns were that could not be managed. The result is that, unless Rolls-Royce comes up trumps with modular reactors, the industry will die since private investors and British and French taxpayers will not salvage it.

Under the government’s new security law to screen investment for national security risks, 40 per cent of the 65 transactions called in by ministers were – indeed – Chinese. But 20 per cent were American, and a third British!

Current aversion to China has less to do with security than political discomfort (though political discomfort is not a new sensation for those who promoted British interests kow-towing to the House of Saud and other nasty regimes). China’s government is unapologetically authoritarian; but that isn’t new. Its concept of human rights excludes the freedoms we value, but its emphasis on poverty reduction and personal security resonates elsewhere. The “friendship without limits” with Putin jars badly in Europe, but is severely limited.

The most serious source of discomfort has been the brutal over-reaction to Islamic terrorism in Xinjiang, regarded by some as genocide.  It is, however, an uncomfortable reality that the latest edition of Genocide Watch has among its top 10 offenders Turkey, a Nato ally, and India, apparently the West’s best friend.

The best way to avoid such discomfort is to integrate with countries which share our values and standards.  But the UK has left the most powerful alliance of that sort: the EU. Post-Brexit, Britain is left earning its bread in the nastier world outside. Ironically, one of the few tangible fruits of Brexit is British membership of the Asia-Pacific trade group, CPTPP. China is next in line to join that very group and if – or when – it does, its economic weight will dominate (the USA declines to join).

Perversely, British standards may in future be aligned with Beijing rather than Brussels. Maybe that is what is meant by having a “China Strategy”?

Vince Cable was leader of the Liberal Democrats from 2017 to 2019. He is also the former secretary of state for business and trade