Transatlantic Take

China-U.K. Relations: Come What May

August 31, 2016


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WASHINGTON — New British Prime Minister Theresa May’s first visit to China for the G20 this weekend marks the start of a soberer phase in relations between Beijing and London. China’s involvement in the U.K.’s nuclear energy sector, which is now under review, is the symbolic test case for this rebalancing of the British approach. The Chinese ambassador to Britain, Liu Xiaoming, has warned that the pending decision on the Hinkley Point power plant leaves the relationship at a “crucial historical juncture.” But regardless of where the review comes out, the exuberance of the “golden era” overseen by May’s predecessor David Cameron, and instigated by then-Chancellor George Osborne, is likely over.   

Reports from May’s former coalition colleagues describe her as expressing “in several different contexts, severe reservations about China getting too close to the U.K.” Her chief of staff wrote a critique ahead of Chinese President Xi Jinping’s state visit to Britain complaining that “rational concerns about national security are being swept aside because of the desperate desire for Chinese trade and investment.” But, there is no need for Downing Street tea-leaf reading to discern the parameters of future British policy. Cameron and Osborne were always out on a limb in their handling of ties with Beijing, and they would have needed a longer period of time in office to entrench an approach that commanded very little support inside or outside government.

The objections were as much about tone as about specific policy decisions. The U.K.’s openness to investment long predates China’s overseas spending spree. Another British government would almost certainly have joined the Chinese-led Asia Infrastructure Investment Bank (AIIB) too, albeit in a different manner. In that sense, there will be no dramatic shifts under May. But there was a clear sense among critics that on values issues – Hong Kong, human rights – and even, to a lesser extent, on the South China Sea, the U.K. was taking an unnecessarily pusillanimous stance. In recent years, Germany has consistently demonstrated the capacity for a European power to combine a robust economic relationship with clear language on points of principle. And during a critical phase for the west in navigating China’s rise, the value of some degree of discreet coordination among other leading powers has been increasingly apparent. Cameron, by contrast, was an outlier during private exchanges about China among leaders at the G7, and it was Osborne’s unwillingness to consult and inform partners adequately over the AIIB that triggered the condemnation from a U.S. official about the U.K.’s “constant accommodation” of China.

In Hangzhou, however, May’s task will be to ensure that the recalibration of the British approach does not cause too much harm to relations with the Chinese. During a shaky phase for investor confidence in the U.K. after the Brexit referendum, London is still looking to Beijing as a critical economic and financial partner. After the Hinkley review raised anxieties, the new British Asia Minister was dispatched to China with a letter of reassurance from the Prime Minister about future ties. As Liu’s op-ed in the Financial Times illustrates, China is understandably concerned that a relationship which had promised so much – and in which Xi had invested so much of his own political capital – is heading for a rockier phase.

In this respect, May can draw on Angela Merkel’s example. For all that Beijing appreciated about Cameron, he was consistently unable to deliver on his more grandiose commitments. Promises of a push for an EU-China free trade agreement were worth little, given hostile views on the matter among other EU member states. His China policy itself was built on thin foundations and was always going to prove difficult to sustain. Expectations have routinely been raised above the politically possible. Merkel, by contrast, has been seen by Beijing as frank, reliable, and always able to follow through on what she says. Bilateral meetings may at points be more uncomfortable than with Cameron’s “best partner in the West” bonhomie, but the relationship has been less prone to disappointment and volatility. A more pragmatic and sober relationship under May will look less appealing to Beijing than the “Osborne doctrine.” But, it will provide a more reliable basis for China’s long-term bets than false hopes of a “golden era” that ended up lasting less than a year.