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Time to talk UK China economic relations. Lots being written, but stark realities remain - like knowing what we want to achieve, and if that is China following the rules then there's going to need to wide consensus on what they are... (thread) 1/ https://www.ft.com/content/4fe3a612-f430-43dd-ad89-8f319ca80e8b?emailId=5f02a21bdf96aa00043a2faa&segmentId=22011ee7-896a-8c4c-22a0-7603348b7f22
Let's start with some numbers - China is our 5th largest individual country trading partner, our 3rd largest goods export market, 2nd largest goods import market, though only 14th for services exports. Important then. 2/
Then there's investment. A good article yesterday in the Sunday Times on Chinese investment in the UK. But there's also substantial UK investment in China (for example this story from 2018 https://www.china-briefing.com/news/brexit-britain-already-massively-increasing-investment-china/) 3/
The UK-China economic relationship then is one that matters to us. Particularly as we are also about to increase trade barriers to eight of our top ten trade partners. (Incidentally Hong Kong is our 13th largest trade partner). 4/
So what's the plan for UK-China relations? This report suggests "decoupling" and working with 'five eyes' particularly in the area of strategic dependency. Economically in effect means state directed control over more of the economy. 5/ https://henryjacksonsociety.org/publications/breaking-the-china-supply-chain-how-the-five-eyes-can-decouple-from-strategic-dependency/
There are many suggestions of working with intelligence partners 'five eyes' (US, Canada, Australia, New Zealand) on China. Understandable but one of those is rather larger than the others and has shown signs of only caring about their own interests... 6/ https://www.reuters.com/article/us-usa-trade-china-details-factbox/whats-in-the-us-china-phase-1-trade-deal-idUSKBN1ZE2IF
So what's the aim of UK policy towards China? Are we hoping it changes in some way, or wanting permanent world split? One has to assume the former, in which case towards what, and how much economic pain are we prepared to accept for that? 7/
Which brings us to the difficult question of which rules we'd like China to follow. I was struck by this recent report by ECIPE colleagues on world trade, suggesting that needed to be a US, EU, Japan agreement. Which seems right to me. https://ecipe.org/publications/learning-to-love-trade-again/ 8/
Leading to the gigantic elephant in the room when thinking of UK-China relations - namely the EU. Five eyes isn't enough. Simply put, unless the US and EU can put aside their differences on global economics and work together, you can't have common rules against China. 9/
Being blunt about the UK's position, we're divorcing from one powerful bloc, threatening a powerful country, and therefore overly dependent on another, which isn't terribly faithful to us. That isn't a strong position in anyone's terms. 10/
Realistically the only possible answer on UK-China, and its been the UK's answer for at least 75 years, has been to support and promote global institutions and rules, and particularly not to have to choose between the EU and the US. 11/
Personally I'm also not overly keen on loosening UK-China economic ties, as I'm not a fan of trade barriers. But perhaps that is the cost of a wider strategy. But pointless unless part of a realistic wider strategy. 12/ end
