In 2003, the British Cabinet Office decided to allow Chinese state-backed Huawei Technologies to start supplying British multinational telecommunications company BT Group for the first time. Nobody bothered to put a note on the security implications into the red box of the then-British secretary of state for trade and industry Patrica Hewitt. A minor discussion, solely on the competition implications, did take place.
Then-MI6 chief Richard Dearlove, used to daily cooperation with BT to secure wire taps, was shocked and concerned when he heard of the plan, but was told: “It is nothing to do with you. These are issues we can control.”
The path was set fair for the open trading relationship with China, which reached its zenith with then-British chancellor of the exchequer George Osborne and then-British prime minister David Cameron in 2015.
Illustration: Yusha
“No economy in the world is as open to Chinese investment as the UK,” Osborne said on a five-day visit to China in September that year.
In a speech to the Shanghai Stock Exchange, he vowed that London would act as China’s bridge to European financial markets.
“Whatever the headlines … we shouldn’t be running away from China,” he said. “Through the ups and downs, let’s stick together.”
Osborne knew he was taking a risky bet and the UK, against vehement US objections, joined the Asian Infrastructure Investment Bank.
UK trade with China is worth approximately ￡7 billion (US$9.3 billion), making it Britain’s fourth-largest trading partner, the sixth-largest export market and the third-largest import market.
By comparison, in 1999, China was the UK’s 26th-largest export market and 15th-largest source of imports.
However, Britain is now veering away from China, despite Osborne’s pledge.
It has moved from being China’s greatest advocate in Europe, a wide open door for Chinese investment, into one of its sternest critics.
Overall, it represents as swift and complete a reversal in foreign policy as the UK’s shift from treating Russia as an ally in 1945 to foe in 1946.
Yet how this course correction happened, the extent to which it was internally driven, or imposed on the UK by the administration of US President Donald Trump, and whether its limits have been finally set remains largely unresolved.
In the last fortnight alone, two major British government bills have been published, one aimed primarily at screening out Chinese investment from 17 UK strategic industries, and another cutting Huawei out of the UK telecommunications network entirely from 2027. This reverses the decision taken — in defiance of the US — at the start of the year to give Huawei limited access.
A third bill, in front of the British House of Lords, has been amended in an attempt to prevent any UK trade deals with China if its human rights record is found wanting.
The government’s integrated foreign and security policy review, due in the new year, is to contain a British tilt to the Indo-Pacific, shorthand for greater political and military support for the forces of democracy in the South China Sea.
On the Conservative Party benches, the intellectual commanding heights are now dominated by China critics, so much so, it is said, that Sino-skepticism is the New Euro-skepticism.
There is probably no more active group of parliamentarians than the Conservatives’ China Research Group, set up in January. The group, established by British Chair of the Foreign Affairs Select Committee Tom Tugendhat and Neil O’Brien, now chairman of the Conservative Party’s Policy Board, were instrumental in March in mounting the rebellion of 40 lawmakers who pushed to have Huawei excluded.
Across the Tory think tanks that matter — Policy Exchange, the Legatum Institute and the Henry Jackson Society — hostility to the Chinese Communist Party (CCP) is unanimous.
The Labour Party, committed to human rights, takes a similar view.
It is British human rights barrister Rodney Dixon who is leading the claim that China can be taken to the international criminal court over its treatment of Uighur Muslims.
Hong Kong Watch is one of the most active pressure groups defending the steady stream of jailed activists. The UK has become a safe harbor for the exiles, and nearly 60,000 British National (Overseas) passports were handed out to Hong Kongers in September alone.
By contrast, the business lobbies, especially finance capital that previously worked assiduously to secure deals with China, have fallen silent, or found themselves struggling for a hearing.
British board members on Huawei such as John Browne have resigned. Other former advocates for Huawei such as former Australian high commissioner to London Alexander Downer have long converted, urging the UK to engage with the geopolitical threat posed by China and “not just see the country as a place to sell Land Rovers and Jaguars.”
Huawei’s own warnings about the potential cost to the UK economy of delaying 5G have been ignored.
It can be argued that when the facts change, it is advisable to change your mind. The destruction of Hong Kong’s freedoms, China’s secretive mishandling of the COVID-19 outbreak, its wolf-warrior diplomacy, the revelations about its treatment of the Uighur people, the wholesale theft of intellectual property and the bullying of one of the UK’s natural partners, Australia, has ended illusions about China.
In July, former M16 chief John Sawers wrote that the past six months had “revealed more about China under [Chinese] President Xi Jinping (習近平) than the previous six years.”
“China has broken a lot of our beliefs about how we thought about things for 200 years. For 200 years there seemed to be a connection between economic growth and liberal democracy. Many, many people thought 20 years ago it was almost inevitable China would move in a liberal, democratic way,” former British minister of state for the Foreign and Commonwealth Office Rory Stewart said. “Today we are in a much more gloomy place.”
China’s entry into the WTO in December 2001 proved not to be a prelude to the country opening up, but instead a high-water mark.
Yet these views are now being wrapped in an ideological perception of China as an imperialist power intent on dominating the West technologically, politically and militarily, a view enshrined in a 70-page US Department of State policy paper titled “Elements of the China Challenge” published this month.
The paper says that the West utterly misconstrued China as a fledgling economic super power with no imperial ambitions, when in reality “it is determined fundamentally to revise the world order, placing the People’s Republic of China at the center and serving Beijing’s authoritarian goals and hegemonic ambitions.”
In a lecture given to the think tank Policy Exchange, US Deputy National Security Adviser Matthew Pottinger drew a sinister portrait.
“The party’s overseas propaganda has two consistent themes: ‘We own the future, so make your adjustments now,’ and: ‘We’re just like you, so try not to worry.’ Together, these assertions form the elaborate con at the heart of all Leninist movements,” he said.
It is this kind of thinking deep in the Trump administration that led to the remorseless commercial and political pressure on the UK this summer to change its mind over Huawei.
There are distinctions between the US and British process of disillusionment, according to Sophie Gaston, managing director of the non-profit British Foreign Policy Group.
The US came at the China issue via trade and the loss of manufacturing jobs, while the UK came at it primarily through the lens of human rights and national security.
However, the two views have now blended into a melange of concern about human rights, the race for quantum supremacy and protection of national infrastructure ranging from power stations to university freedom.
For Martin Jacques, former British editor of Marxism Today and enthusiastic chronicler of China’s rise, the UK has been gripped by a form of paranoia — reds under the bed replaced by reds under the hard drive.
“What’s happening is a very serious regression in the mentality in the UK toward China. It reminds me very much of the Cold War. In fact, the thinking is cold war thinking: China is just the evil enemy that has to be rejected. The right-wing reduces China to the communist regime, the communist threat, and the whole Chinese history is lost in the process,” Jacques said. “So they have no understanding whatsoever of China really. They’ve just got this extraordinary backward view of China, which is just, frankly, plain ignorant, but it’s making the running.”
Another surprising figure despairing at the trend is former Liberal Democrats leader Vince Cable.
He was the British secretary of state for business, innovation and skills in the Osborne era and bemoans “the unholy alliance” of Trumpists, neocons, British Conservatives and Labour opposition who, he says, are blowing apart the government’s strategy to invest in China after the UK leaves the EU.
However, Dearlove said that there is something sinister about China’s methods.
He cites three Chinese maxims: “Kill with a borrowed sword” — that is, get what you can; “Loot a burning house” — bear that in mind in terms of taking advantage of the current pandemic; and “Hide a knife behind a smile.”
China assembled an influence network in the UK, he said.
It “recruited a whole group of leading British business and political figures into that group who were designated cheerleaders for a burgeoning relationship with China. Huawei was an important part of that. The composition — the British membership of the Huawei board — was a very impressive lineup of people who were there to persuade us to drop our guard,” Dearlove said.
Quite how far the UK, mired in recession, would go in specific policy terms to distance itself from China, and how China would react, is in question.
The China Research Group in its recent manifesto stops short of Trumpian decoupling of the West from China’s economy, but backs measures including sanctions on UK finance houses operating in Hong Kong that extend the reach of the CCP, a ban on Chinese state-owned enterprises investing in UK critical infrastructure, and a ban on UK firms exporting goods and services that are used to abuse human rights. Tariffs are mentioned only as a last resort.
Some of this is enough to make British Minister of State for Investment Gerald Grimstone, the former head of Standard Chartered, blanch.
The new China-Britain Business Council chairman, and head of public affairs at HSBC, Sherard Cowper-Coles, has also been leading a discreet fightback, saying that after the UK leaves the EU, it needs to insert itself into the Asian-Pacific growth area.
China, after all, is the economy taking the world out of recession.
So far, the British elite have managed to keep Chinese Ambassador to the UK Liu Xiaoming (劉曉明) onside.
Despite smarting from the Huawei 5G ban, he has not descended into the name-calling disfiguring Chinese relations with Australia. He has not, for instance, like his colleague in Canberra, sent a 14-point checklist of mistakes that the UK must correct.
Instead, he spoke last month to the third China-UK Economic Forum about the continued chances for synergy with UK business. Ahead of the forum, a survey showed continued Chinese enthusiasm to invest in the UK, despite a fall-back in investment due to COVID-19.
The British Foreign, Commonwealth and Development Office is clearly nervous of being cast in a vanguard role, while Japan and Germany, for instance, allow Huawei into its 5G networks.
The UK has not yet sanctioned anyone over Hong Kong, only provided safe haven. The Trump administration by contrast has sanctioned 14 Chinese officials specifically over Hong Kong, including Hong Kong Chief Executive Carrie Lam (林鄭月娥).
The UK is also likely to be cautious because it does not want to be left beached on the high tide of Trumpian anti-Chinese rhetoric only to find that that tide goes out with US president-elect Joe Biden. Biden is, at a minimum, likely to take a less aggressive unilateral sanctions-based approach to trade, and it is not yet clear if his planned alliance of democratic nations would be explicitly anti-Chinese.
If the Biden administration is interested in restabilizing the US-China relationship, the UK would likely want to be in the slipstream of the process, probably using the climate change agenda as a way back in.
After all, the advocates of pragmatic British engagement have not gone away, just gone quiet.
Charles Powell, former chairman of the China-Britain Business Council and former British private secretary for foreign affairs to the prime minister, put it succinctly in a lecture last year.
“I have to admit when visiting China, as a I frequently do, I never get the sense that parliamentary democracy is anything like the highest priority for most people. At least at this stage in the country’s development, their priority is material progress, even if it comes at the price of freedom,” he said.
“I know pragmatism is a dirty word in any discussion of ethical values, but when the other guy — in this case China — indisputably has the stronger hand, it is prudent not to provoke unwinnable fights,” he added.
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