war on the rocks

Britain’s Mercantile Diplomacy with China

November 2, 2015

Jinping, Kerching” read one London newspaper the week of Chinese President Xi Jinping’s state visit to the United Kingdom. There is no doubt about it; Xi came with deep pockets and an open checkbook on his recent trip. Unlike his state visit to the United States in September, the splendor of his visit to London and the Midlands focused less upon issues of good governance and the South China Sea. Instead, it was the wealth of bilateral business agreements — “billions of pounds” according to the press release from Prime Minister David Cameron’s office — that stole the show.

Analysts and pundits have been quick to conclude that Britain is selling out to the Chinese. Tom Wright of the Brookings Institution argued that the Conservative Party is sending a message “that commerce and economic cooperation is the only metric that will guide the UK’s policy towards China.” The British Foreign Office rejected such suggestions, arguing that the administration is “committed to engaging with China on human rights.” One must wonder, however, if and in what capacity strengthened trade and economic ties can lead to open, productive discussions on human rights or other issues at the core of China’s ties to the West.

Other assessments have criticized the United Kingdom for dealing a blow to its “special relationship” with the United States through close engagement and economic linkages to its most formidable rival. Such criticisms echo earlier concerns surrounding the emergence of China’s Asian Infrastructure Investment Bank (AIIB). Under Chancellor of the Exchequer George Osborne, Britain’s ascension to the AIIB has been interpreted as the first significant step of strategically accommodating China in hopes of deriving longer-term benefits.

Xi’s October visit to the United Kingdom did prove that business transactions can foster limited progress in other cherry-picked areas of mutual concern. Officials from both sides successfully inked a cybersecurity pact; and, somewhat surprisingly, Xi confessed that China has “room for improvement” on human rights. The incentive of economic benefits sweetened the deal for Xi, making the comparatively bitter topics of cyber norms and human rights a tolerable, but brief, side note of his visit. Beijing and London made progress in two areas that have long been on Washington’s agenda for its own bilateral discussions with China. Even the smallest markers of progress on such issues do not come at the expense of ties between Whitehall and Washington. Nor does the triumphant visit of Xi to England mean that money is the fastest way for other countries to win the favor of Chinese politicians. To assume either would be delusory at best.

While onlookers are correct in critiquing a lack of long-term thinking in the United Kingdom concerning the implications of extensive Chinese investment into the local economy, particularly the nuclear plant at Hinkley Point, those who perceive that Britain is leaning toward China and further away from the United States are mistaking the trees for the forest. Unlike the United States, the United Kingdom does not maintain a robust defense posture in the Asia-Pacific. Whereas the United States is in the process of a comprehensive “rebalance to the Pacific,” British policymakers have made minimal effort to expand their regional alliance networks. Instead, the benefits the United Kingdom seeks to gain from closer ties with Beijing are and will remain predominantly economic in nature.

Xi’s visit to the United Kingdom marks the start of a new era in checkbook diplomacy. Rather than fiscal incentives being dangled as a carrot to tempt a recipient state along a certain foreign policy path, the reverse can be seen in this case. George Osborne’s September visit to China utilized the promises of business deals to help pave the way for the successes of Xi’s state visit. The lesson learned is crystal clear: For other nations looking to bolster ties with the world’s second biggest economy in an era of geo-economic statecraft, stronger geopolitical ties must necessarily be rooted first and foremost in shared economic interests.

As host to $29.22 billion of Chinese investment since 2005, what policymakers in Whitehall must be alert to — as can be said for their counterparts in Washington — are any short-term decisions made within the framework of bilateral relations with China that create long-term vulnerabilities within their societies. Already, for instance, Cameron and Osborne did not openly confront Xi about alleged Chinese dumping of cheap steel in Europe and the crisis it has created for the British steel industry. Moreover, assuming the Chinese investors at Hinkley Point are successful in navigating the English bureaucracy with their French co-investors, one can only hope that Chinese construction pays meticulous attention to the environmental footprint of the new nuclear power plant. National security concerns over the long term remain at the forefront of the policymaking community in Whitehall; Cameron and company were keen to get a Chinese commitment to Hinkley, and perhaps did not consider fully the repercussions of a Chinese state-owned company inserting backdoor traps into technology used in operating the facility.

For now, thanks to the linkages between geo-economics and geopolitics, it seems that London can have both business deals and semi-substantive conversations with Chinese officials. But at what point will Chinese investments become overt tools of Chinese statecraft, thereby precluding serious discussions on issues that target the core of Whitehall’s national security agenda?

 

Lauren Dickey is a PhD candidate in War Studies at King’s College London and the National University of Singapore, where she focuses on relations between mainland China and Taiwan. She is also a member of the Pacific Forum Young Leaders program at CSIS.

 

Photo credit: UK Foreign & Commonwealth Office