Europe has shown little interest to get involved in the global power struggles between Beijing and Washington. Most European governments take a more nuanced view of the China challenge. They share US concerns about the direction of the Middle Kingdom under President Xi Jinping, including domestic market access and unfair competition from state-owned and backed Chinese companies in China and globally.
Yet, the Europeans seem long troubled by internal divisions on how Brussels and national capital of members states shall deal with China. Given their limited security interests in the Asia-Pacific and far larger economic interests in China, Europeans principally fear the impacts of China’s rise on the international rule of law and democratic norms of governance.
In recent months, the EU is also under Increasing pressure to comply with the demands from the United States to treat the Huawei 5G network with extra caution. And the ongoing controversies over other Chinese investments also have also added extra uncertainties on the Sino-European relationship.
Amidst the Brexit proceeding and China’s fractious relations with Washington, Beijing will undoubtedly adjust its bilateral relations with the UK and reassess the value of its partnerships with other EU member states and Brussels. The current state of UK-China relations has become somewhat a captivating illustration of all those uncertainties among Beijing, Brussels and Washington.
Beijing was perplexed by UK’s vote to divorce with the EU. The Chinese leaders were embarrassed by having hailed the so-called “Golden Era” of their bilateral relations only to see it veer off in a totally new direction without, apparently, a clear agenda. All their suspicions about the dangers of Western democracy have been confirmed in spades. A more pointed lesson for the Chinese Communist party is the danger of externalising internal party conflicts as the British Tory party has done with Brexit. The defining emotion is confusion, the direction nebulous.
China, meanwhile, is very clear on what to ask from the current British government.
Firstly, Chinese companies continue to look to the UK continues to provide a secure home for investment; providing opportunities for them to enhance their global brand value or for new acquisitions, without the fierce resistance encountered in continental Europe and the US.
Secondly, Beijing found itself fighting an economic slowdown coupled with an unexpected and enduring trade war with its most important economic and strategic partner – the United States. Those two difficulties are intrinsically intertwined. As a result, it is looking to build alliances with Western powers committed to the principles of free trade and globalization, like the UK (though not at the expense of relations with the EU).
Thirdly, Beijing is eager to be recognised by established economies, and has high hopes of the UK acting as a cheerleader for China’s global ambitions as George Osbourne did with the UK’s membership of Asia Infrastructure Investment Bank. All three could theoretically be one of China’s prized ‘win-win’ outcomes, perhaps also benefit the British economy.
It is also important to remember why China intended to prioritize the relationship with the UK over other major European economies. While British media often focus on China’s interest in education and tourism connections, Beijing has long admired the British expertise in financial and corporate governance. As far back as the 1950s, Mao Zedong was championing the desire to become more like Britain’s developed economy.
As the 70th anniversary of the People's Republic approaches later this year, China is asking itself where it might be heading. Beijing rightly recognizes that the unprecedented economic miracle created by Deng Xiaoping's reforms has come at the expense of huge wealth inequality and severe environmental damage. The situation is so extreme that it could challenge the very survival of the Party leadership.
Today, while France and Germany have been important for providing manufacturing technologies, the UK is a more useful partner for the next stage of Chinese development: a shift to a service-based economy; the move to currency convertibility via renminbi trading in the City of London; and a welcoming and absorbing of Chinese investment abroad.
The British Defence Secretary Gavin Williamson’s recent remark he would send a warship to the Pacific could cost the British government more than just its reputation as a serious player on the international stage. His colleague Chancellor Philip Hammond has to bear the misfortune to cancel a trip to Beijing and put the plans to greatly increase the Sino-British cooperation in other areas of banking and finance to boost the role of the City on hold following Williamson’s comments.
From Beijing’s perspective, Williamson’s intervention jeopardizes these economic possibilities by challenging a key element of the Chinese Communist Party’s legitimacy: a resurgent Chinese nationalism. The party has strongly promoted the idea that its leadership has ended over 150 years of foreign bullying of China and helped the country regain its rightful place at the centre of world affairs. Some parts of the world do not understand the sense of humiliation today’s Chinese feel when they look back on the past, at least in the version that is popularly presented domestically.
So it is no wonder that Williamson’s comments have sparked rage in Beijing. The UK is traditionally viewed by the Chinese as a former colonial power which inflicted humiliation on China in the Opium Wars. Seen in this light, the government must show its people that it can stand up to strong words from Britain.
To build a better relationship with China, the British government must better understand how these strands of the relationship are connected and become more skillful at interacting along both lines. China would appear an indispensable partner if a post-Brexit ‘Global Britain’ is to succeed. To nurture that partnership, London will have to balance mitigating its security concerns with realism about how much it can change the Chinese government’s outlook and political choices. And it will have to accept that it cannot divorce its security stance from its hopes for a profitable economic relationship.