Fears voiced over pro­posed re­set­ting of re­la­tions

China Daily (Hong Kong) - - FRONT PAGE - By ANDREW MOODY an­drew­moody@chi­

The United King­dom could be dealt a se­vere eco­nomic set­back if Chi­nese tele­com giant Huawei is barred from tak­ing part in cre­at­ing the coun­try’s 5G net­work, ac­cord­ing to ex­perts.

Some Con­ser­va­tive mem­bers of Par­lia­ment are call­ing on the UK govern­ment to re­verse its de­ci­sion taken in Jan­uary to back Huawei’s in­volve­ment in the next gen­er­a­tion of wire­less net­work tech­nol­ogy.

Many in the busi­ness com­mu­nity are wor­ried that any such U-turn would deny the UK the op­por­tu­nity to be a Euro­pean leader in the tech­nol­ogy at a time when the coun­try’s econ­omy needs a sig­nif­i­cant boost.

The UK has seen the third-high­est num­ber of deaths glob­ally from the coro­n­avirus pan­demic, its GDP con­tracted by 20.4 per­cent in April and the coun­try may fail to reach a trade deal with the Euro­pean Union by its self-im­posed dead­line of the end of this year.

Much hinges on a re­port by the Na­tional Cy­ber Se­cu­rity Cen­tre in the UK, which is due to be pub­lished this month. Some believe this may lead to the govern­ment back­track­ing on its ear­lier Huawei de­ci­sion.

Alis­tair Michie, a UK busi­ness ex­ec­u­tive with long ties to China, said, “It will be deeply dam­ag­ing to the UK if the Bri­tish govern­ment bends to pres­sure to elim­i­nate Huawei from its 5G net­work.”

Michie, chair of the In­ter­na­tional Coun­cil at the Center for China and Glob­al­iza­tion, an in­de­pen­dent think tank based in Bei­jing, added that much of that pres­sure is com­ing from the United States.

“The US govern­ment is adopt­ing a to­tally flawed strat­egy in its at­tempts to block global dig­i­tal ad­vances by try­ing to throt­tle China. The dig­i­tal rev­o­lu­tion thrives on open bor­ders and ex­changes and has al­ready ut­terly changed the world, with im­mense ben­e­fits for ev­ery­one,” he said.

The UK telecom­mu­ni­ca­tions in­dus­try has made its po­si­tion clear on the is­sue.

Scott Petty, chief tech­nol­ogy officer for Voda­fone UK, a lead­ing tele­coms com­pany, said any re­ver­sal of the Huawei de­ci­sion would deny the UK a tech­no­log­i­cal ad­van­tage.

“The UK’s lead­er­ship in 5G will be lost if mo­bile oper­a­tors are forced to spend time and money re­plac­ing ex­ist­ing equip­ment,” he told Reuters.

“The Bri­tish govern­ment should make ef­forts to ex­pand 5G cov­er­age and in­vest in the next stage of this tech­nol­ogy, in­stead of strip­ping out the equip­ment of the Chi­nese tele­coms equip­ment maker.”

High point

The Huawei is­sue has fo­cused at­ten­tion on re­la­tions be­tween the UK and China, which reached a high point in Oc­to­ber 2015 when President Xi Jin­ping made a state visit to the UK, herald­ing a new “golden era” of re­la­tions be­tween the two coun­tries.

The UK and China have an al­most per­fect eco­nomic sym­me­try. The UK is the world’s largest ex­porter of ser­vices after the US, and China has huge de­mand for ser­vices as it moves its econ­omy away from be­ing de­pen­dent on man­u­fac­tur­ing.

China also of­fers the UK a ma­jor new mar­ket for its goods and ser­vices as the lat­ter em­barks on new trad­ing re­la­tion­ships after leav­ing the Euro­pean Union. The UK is also strate­gi­cally placed on the western edge of the Eurasian sec­tion of China’s Belt and Road Initiative.

Al­though China is the UK’s fifth-largest trad­ing part­ner, with a to­tal volume of £80 bil­lion, few ob­servers doubt that there is huge po­ten­tial for ma­jor growth.

How­ever, in April, a group of Con­ser­va­tive MPs formed the China Re­search Group, or CRG, with the aim of re­set­ting the re­la­tion­ship be­tween the two coun­tries. Huawei’s in­volve­ment in the UK’s 5G net­work has been a large part of the group’s fo­cus.

The CRG is chaired by Tom Tu­gend­hat, also chair of the House of Com­mons For­eign Af­fairs Se­lect Com­mit­tee. In re­cent months, he has been a high-pro­file critic of China in the me­dia.

Many com­men­ta­tors have said that the CRG ap­pears to be fol­low­ing in the foot­steps of the sim­i­larly-named Euro­pean Re­search Group, home to eu­roskep­tic Con­ser­va­tive MPs and which played an im­por­tant role in the UK leav­ing the EU.

Chris Yang, chairman of the Hamp­ton Group, a strate­gic con­sul­tancy based in Lon­don spe­cial­iz­ing in Chi­nese busi­ness and in­vest­ment, fears that the new group has the same closed mind to­ward China as some in the ERG had about Europe.

“From what I have learned, the pro­posed re­set of re­la­tions be­ing led by the China Re­search Group is not be­ing ap­proached with ei­ther an open or an in­formed mind­set,” he said.

Yang, who has ad­vised lead­ing Chi­nese com­pa­nies — in­clud­ing all banks — set­ting up in the UK, as well as lead­ing multi­na­tion­als op­er­at­ing in China, be­lieves there needs to be a more in­formed de­bate in the UK about the im­por­tance of the China mar­ket.

“This dis­cus­sion is vi­tal. China is on track to be­come the largest global econ­omy,” he said, adding that within the next decade it is es­ti­mated that the coun­try will have a mid­dle-class pop­u­la­tion of 750 mil­lion.

“This big­gest do­mes­tic mar­ket in the world by far is one that the UK should not ig­nore, in or­der to de­liver ris­ing pros­per­ity to Bri­tish peo­ple.”

Dou­glas McWil­liams, ex­ec­u­tive deputy chairman and founder of the Cen­tre for Eco­nom­ics and Busi­ness Re­search, a con­sul­tancy head­quar­tered in Lon­don, said it is im­por­tant not to com­bine Brexit and the UK’s re­la­tions with China.

“Sug­gest­ing that the is­sues are Brex­itre­lated is miss­ing the point. The prob­lems have come from the de­te­ri­o­ra­tion of re­la­tion­ships be­tween the US and China. The EU is fac­ing the same prob­lems, and the UK would have faced them even had the coun­try voted to stay in the EU,” he said.

Ian Goldin, pro­fes­sor of glob­al­iza­tion at the Uni­ver­sity of Ox­ford, said the dan­ger of part of the de­bate about China in the UK is that it risks a new Cold War, which would be bad for ev­ery­one.

“His­tory is un­for­tu­nately full of ex­am­ples of politi­cians tak­ing their coun­tries down very dan­ger­ous and dark roads,” he said.

Goldin, a for­mer eco­nomic ad­viser to late South African president Nel­son Man­dela, said the UK and other Euro­pean coun­tries need to re­sist pres­sure from the US to take its side against China.

“The only way we’re go­ing to get a thriv­ing global econ­omy, and the only way we’re go­ing to deal with pan­demics and cli­mate change, is if we co­op­er­ate with China, and the US also co­op­er­ates with China,” he said.

Tu­gend­hat, from the CRG, who is a for­mer officer in the UK’s vol­un­teer Ter­ri­to­rial Army — re­named the Army Re­serve in 2013 — has even sug­gested that UK uni­ver­si­ties should re­duce their de­pen­dence on Chi­nese stu­dents and re­lax visa re­quire­ments for their coun­ter­parts from coun­tries such as In­dia. More than 120,000 stu­dents from China are study­ing at UK uni­ver­si­ties, pro­vid­ing in­come of £1.7 bil­lion ($2.1 bil­lion).

Largest group

UK au­thor and aca­demic Martin Jac­ques be­lieves there is “ap­palling sen­ti­ment” be­hind such a sug­ges­tion, as if Chi­nese stu­dents are some­how not to be trusted in an en­vi­ron­ment where many have been sub­ject to racial abuse.

“The uni­ver­si­ties are hugely against this (sug­ges­tion). The Chi­nese are eas­ily the largest group of for­eign stu­dents at Bri­tish uni­ver­si­ties. The whole sec­tor would be badly af­fected by any se­ri­ous re­duc­tion in the num­ber of Chi­nese stu­dents,” he said.

“The idea that there is a pool of In­dian stu­dents in a po­si­tion to re­place them is, frankly, lu­di­crous. In­dia is a much smaller econ­omy, al­though that doesn’t seem to be widely un­der­stood.”

Many UK busi­nesses op­er­at­ing in China want to see a deeper re­la­tion­ship be­tween the two coun­tries.

Steve Lynch, managing direc­tor of the Bri­tish Cham­ber of Com­merce in China, said he does not mind a “ro­bust de­bate”, as long as it is in­formed.

“It is crit­i­cal that in­formed voices are heard equally and that as­sess­ments are ob­jec­tive,” he said.

“There are ar­eas in which the UK and China have mu­tual shared in­ter­ests, such as tack­ling cli­mate change and global health is­sues, and there are ar­eas in which our gov­ern­ments will dis­agree. It is im­por­tant that we have in­formed and con­struc­tive en­gage­ment around these.”

Many UK busi­nesses re­main frus­trated that the coun­try’s trade pol­icy to­ward China is of­ten re­duced to huge mis­sions, which visit the coun­try ev­ery few years.

In 2013, for­mer prime min­is­ter David Cameron took to China the largest UK trade del­e­ga­tion to visit a for­eign coun­try. Five years later, his suc­ces­sor Theresa May led a sim­i­lar mis­sion.

By con­trast, Ger­man Chan­cel­lor An­gela Merkel makes rou­tine vis­its to China fo­cused on her na­tion’s busi­ness in­ter­ests in the coun­try, where many Ger­man com­pa­nies, such as Siemens and BMW, have a ma­jor pres­ence.

De­spite the views of some of his back­bench MPs, UK Prime Min­is­ter Boris John­son de­clared him­self a “Sinophile” dur­ing Prime Min­is­ter’s Ques­tions in the House of Com­mons last month.

As mayor of Lon­don, he made a num­ber of vis­its to Bei­jing, in­clud­ing a high-pro­file trip dur­ing the 2008 Olympics. Some mem­bers of the UK busi­ness com­mu­nity in China believe he will make sim­i­lar vis­its as prime min­is­ter once the pan­demic is over and a trade deal is agreed with the EU.

Si­mon MacKin­non, chairman of tech­nol­ogy com­pany Xeros China, who is based in Shang­hai and has been in China since the 1980s, said he has had in­di­ca­tions that John­son will make such trips.

“After Brexit, the UK has the op­por­tu­nity to fol­low our French and Ger­man com­peti­tors in reg­u­lar top-level en­gage­ment with China on trade and other mat­ters,” he said.

“Bri­tish prime min­is­ters have only come to China ev­ery two or three years with a big trade del­e­ga­tion, but the UK busi­ness com­mu­nity in China is en­cour­aged to hear that John­son is look­ing at more-reg­u­lar vis­its.”

Foun­da­tions laid

Even be­fore John­son took of­fice, there were signs that the UK wanted to build a new firmer re­la­tion­ship with China.

In May last year, Mark Sed­will, the UK’s out­go­ing cabi­net sec­re­tary and head of the coun­try’s Civil Ser­vice, took a del­e­ga­tion to China that com­prised 12 per­ma­nent sec­re­taries from govern­ment de­part­ments.

Michie, from the Center for China and Glob­al­iza­tion, said a visit at this level was un­prece­dented.

“It laid the foun­da­tions for an ex­cep­tional un­der­stand­ing be­tween the UK and China. It showed the UK reaching out to China to match the Chi­nese cul­tural ap­proach, where long-term sta­ble re­la­tion­ships are para­mount.

“Min­is­te­rial vis­its to China of­ten de­liver no more than hand­shakes and staged pho­tos, but this demon­strated a com­mit­ment to con­ti­nu­ity.” Jac­ques, au­thor of When China Rules The World: The End of the Western World

and the Birth of a New Global Or­der, said a be­nign view of colo­nial­ism is of­ten a bar­rier to re­la­tions be­tween the UK and China and also other Asian coun­tries.

He said such a view is based on the be­lief that Western po­lit­i­cal sys­tems are still univer­sal.

“It is a self-con­grat­u­la­tory view of the West’s con­tri­bu­tion to the world. Peo­ple who es­pouse this view never talk about the ma­lign ef­fect of colo­nial­ism and what we did to the world. They are be­ing rather wrong-footed by the Black Lives Mat­ter cam­paign at the mo­ment and the whole is­sue of slav­ery,” he said.

How­ever, Yang, from Hamp­tons, be­lieves that the op­ti­mism about UK-China re­la­tions that arose dur­ing Xi’s state visit is still very much alive.

“There might be a vo­cal mi­nor­ity of po­lit­i­cal lead­ers in the UK cur­rently hog­ging the head­lines, but I believe that the good­will be­tween China and the UK that cre­ated the foun­da­tion of the ‘golden era’ re­mains in place,” he said.

“There is a huge op­por­tu­nity for the UK to cre­ate mu­tual op­por­tu­nity and pros­per­ity with China in busi­ness, par­tic­u­larly through ser­vices. This is why it is vi­tal there should be an in­formed and in­tel­li­gent strate­gic anal­y­sis un­der­taken by the UK to de­cide how its re­la­tions with China should progress.”


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