Xi Jinping’s visit to the United Kingdom was marked by fanfare, red carpets—and heated criticism. For the critics, London seemed too eager to trade silence on human rights and liberal democracy for investment from Chinese companies. Others countered that China offers a great opportunity to diversify the British economy, a potential market of 1.3 billion consumers, and a chance to reinforce London’s role as a global financial hub. The trade and investment deals signed by Cameron and Xi seemed to vindicate Chancellor Osborne, who had said that Britain should “take a risk” with China.
Whatever one may think of this closer relationship, it should not come as a surprise; it’s just another example of Britain’s trademark foreign policy pragmatism. The historical record of the British Empire’s dealings with the Middle Kingdom provides a good example of this pragmatic tradition. London had neither the will nor the means to colonize China as it did India, the Jewel of the Crown. But the imposition of the Unequal Treaties allowed it to develop spheres of influence in order to profit from trade, leading to the development mostly of the coastal areas. Later on, it was a British territory that was the key to the opening of the Chinese economy under Deng Xiaoping. Hong Kong was the crucial ingredient for attracting foreign investment into continental China, and its handover in 1997 was carried out with this in mind. Neither London nor Beijing wanted to curtail the financial clout of this small territory. Moreover, the United Kingdom was the first Western country to say yes to the Asian Infrastructure Investment Bank, and London largely refrained from commenting on the Umbrella Movement and related protests in Hong Kong.
The reasons for Britain’s focus on China aren’t merely the increasing global weight of the Chinese economy; the ongoing debates over Britain’s role in Europe are also a factor. The referendum next year to decide whether the United Kingdom stays in the European Union weighs heavily in any analysis of Downing Street’s foreign policy. If the “Brexit” scenario becomes reality then London has to have other cards up its sleeve.
On the Chinese side this closer relationship should come as even less of a surprise. It is one more chapter in the long chain of investments by Chinese state-owned and private companies in Europe in search of quality and technology. This explains why, for instance, Chinese firms have bought the Swedish Volvo, the Italian Pirelli, and the French Club Med. These investments have also become increasingly diversified, ranging from the banking to the health sector. In the United Kingdom there are several examples, albeit with different levels of engagement: The House of Fraser, Standard Bank, and Thames Water, among others. This is to say that today Beijing has a very solid presence in many European countries. Its strongest European bilateral relationship, naturally, is with the powerhouse Germany, but it also has invested in struggling economies such as Greece.
The strategic implications of this new reality have stirred strong debates, such as the one over Beijing’s investment in the Greek port of Piraeus. Should there be areas where, for strategic reasons, China is not allowed to invest? There are essentially two reasons for saying “yes.” The first deals with the state-led capitalism that characterizes China. High-dollar deals mean one is dealing not merely with Chinese companies but the state and its one-party regime as well. The second reason has to do with the fact that Beijing is testing the boundaries of Washington’s influence, particularly in China’s near abroad. U.S. allies have to take all of this into consideration when framing their foreign policy priorities.
This discussion was raised to a whole new level with the inclusion of a nuclear deal between London and Beijing. This means that China (together with France) will be a partner in the construction of a nuclear facility in Britain. One would think this pushes British pragmatism too far, but only time will tell. Regardless, this will only be the first of many such dilemmas. By dint of its new deals, Beijing has gained a voice in European business. How China will use this capital remains to be seen, but, regarding the thorny issue of British membership of the European Union, the Chinese Foreign Ministry’s official statement at the end of the visit is bound to disappoint Euroskeptics:
China hopes to see a prosperous Europe and a united EU, and hopes Britain, as an important member of the EU, can play an even more positive and constructive role in promoting the deepening development of China-EU ties.
In 1793, the Manchu Qianlong, who reigned longer than any other Emperor, wrote in a letter to king George III: “We have never valued ingenious articles, nor do we have the slightest need of your country’s manufactures.” How the world has changed.