When George Osborne toured China last month, few appreciated how British foreign policy had been radically realigned. But after the UK unfurled “the reddest of carpets” (in the words of the Chinese Global Times) for President Xi Jinping, the shift was unmistakable. David Cameron’s pledge to make Britain “China’s best partner in the west” could be one of the most consequential acts of his premiership.
Until recently, the UK’s relationship with the world’s second-largest economy was most notable for its lukewarm nature. In contrast to France and Germany, Britain had never made a sustained attempt to court China. Tony Blair visited just three times during his decade in office; Gordon Brown went once. Cameron aspired to shift relations into a different gear but was frozen out after meeting the Dalai Lama in 2012. The Prime Minister scorned those Foreign Office officials who had assured him that there would be no significant blowback. “This is ridiculous,” he exclaimed after a year in exile. “I’ve got to go to China!” It was only after No 10 briefed that Cameron had “no plans” to meet the Dalai Lama again that the rapprochement began.
Like a runner who stumbles at the starting line, the UK is now hurrying to catch up with the pack. Osborne’s aim is for China to become Britain’s second-biggest export market, rather than its sixth, within the next ten years. The Chancellor has unashamedly wagered that the potential gains far outweigh the risks. “No economy in the world is as open to Chinese investment as the UK,” he said during his visit. At a moment when some believe that China is destined for a hard landing, Britain is ratcheting up its exposure.
The extent to which the two countries’ fortunes are becoming intertwined is remarkable. China has taken a stake of one-third in Hinkley Point C, the UK’s first new nuclear power station for decades, and may build and design its own plant in Bradwell, Essex. Few of those not obliged to defend the deal regard it as economically prudent. “Hinkley is on course to become the most expensive power station ever built anywhere in the world,” Lisa Nandy, the shadow energy secretary, told me. “Bill payers could be paying over the odds for decades.”
Among those who agree, awkwardly for Osborne, is his father-in-law. The former energy minister David Howell has described the project as “one of the worst deals ever” for British consumers and industry. The concurrent steel crisis has heightened the charge of a government not protecting the national interest. Having tolerated the loss of thousands of jobs in Redcar, the UK is aiding China in “dumping” its subsidised stock on the market.
Britain’s dependence on the country for infrastructure investment (forecast to reach £105bn by 2025) is a product of its self-imposed fiscal rectitude. Osborne’s new budgetary charter, recently approved by MPs but opposed by Labour, commits the government to running a surplus by 2019-20 and outlaws borrowing in “normal” economic times (when growth is above 1 per cent). Just as Gordon Brown used the private finance initiative to keep investment off the public balance sheet, so Osborne is using China to mask the UK’s potential future liabilities.
Some who accept the Chancellor’s fiscal logic question the engagement on national security grounds. China’s military build-up across the Taiwan Strait, its cyber-attacks on western firms and its burgeoning alliance with Russia alarm Tory sceptics.
For others, it is the undisguised downgrading of human rights that is most galling. “This is a mercantilist approach,” Mike Gapes, the Labour MP and foreign affairs select committee member, told me. “They’re interested in trade and they’re interested in investment and they’re not interested any more in raising issues of human rights or international law with foreign governments – or at least [they do so] selectively.” Simon McDonald, the most senior Foreign Office civil servant, has bluntly admitted that human rights is “not one of our top priorities . . . The prosperity agenda is higher up the list.” In 2009, the department’s annual human rights report began the section on China by warning that its record “remained a serious cause for concern”. By contrast, the 2014 version begins: “China’s economic growth continued in 2014, leading to further improvements in the social and economic rights of many of its citizens.” It then modestly notes: “Civil and political rights remained subject to tight restrictions.”
It was such kowtowing that led John Bercow, the Speaker, to praise Aung San Suu Kyi (a “democracy champion”) and to call for China to be a “moral inspiration” to the world when introducing Xi at parliament. One of those present told me there were “audible gasps” from ministers at his words.
The Tories’ rapid pivot towards China has ensured that their stance is finally being debated. A new fault line has opened up in British politics: in future years, we might speak of Sinophiles and Sinophobes as we do now of Europhiles and Europhobes.
The divide cuts across left and right. One of the most vociferous critics of the government’s stance is Steve Hilton, Cameron’s former director of strategy. Conversely, John Ross, Ken Livingstone’s former economic adviser and a Jeremy Corbyn supporter, declared that not only the Labour leader “but the world should rejoice to see that China has been able to take the greatest step forward for real human rights of any country” (in reference to the 728 million people lifted out of poverty).
Osborne and Cameron speak hopefully – some fear with hubris – of a “golden era” of relations with China. The variables are too great to know whether it will be golden. But a new era it most certainly is.
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This article appears in the 21 Oct 2015 issue of the New Statesman, The 18th-century Prime Minister