Ditching European trade for China and India
The world has changed since, post-Brexit, “Global Britain” set itself to “pivot” from sclerotic Europe towards booming Asia.
Always a fanciful idea that disregarded Asian realities, it has now become farcical. Neither China nor India are proving the easy pickings on which “buccaneering” Britain could ride to economic success, denied through being tied to the “corpse” of an EU economy allegedly shackled by regulation and tax. Brexiter ambitions are turning to ashes.
Instead, there is China, run by an ever more openly dictatorial and militarily ambitious communist government. Its economy is plagued by politically inspired production targets: everything from building flats to EV batteries outstripping any likely demand.
There is growing youth unemployment and a once fevered, now overblown, property market retrenching to such an extent it threatens the viability of the vastly over-extended banking system.
Meanwhile, the rival Indian economy may be growing a little faster but eerily suffers from parallel structural problems that it does not want to make worse by promoting yet more foreign access to its markets.
The prime minister, Narendra Modi, author of a virulent Hindu nationalism set to intensify after his expected election victory in June, sees little merit in a trade deal with the former colonial master unless it overtly favours India.
Inevitably, the negotiations have stalled. Imagining that Asia could replace Europe as Britain’s chief trading partner was always a poor bet. Leaving aside the small matter of geography, it now looks risible.
The entire Asian “pivot” was flawed from the beginning, with the courting of China by David Cameron and George Osborne in the 2010s; recall how, at the 2015 UK-China summit, Britain took upon itself to be the strategic “bridge” between China and western markets without either agree- ing to this self-appointed status.
Clearheadedness about China, and the modest extent of British power, was subordinated to the need to assuage the delusional Eurosceptic wing of the Tory party that, despite Britain then being in the EU, we could still play the China/Asia card. It would be win/win, typified by agreeing that
China would be welcome to help build the planned new wave of nuclear power stations.
Eurosceptics may have had their doubts about putting such a key part of Britain’s energy supply in Chinese hands, but any criticism at the time was low octane.
Today, they are among the strongest critics of China’s dark intentions, whether of an alleged Chinese spy working in parliament or using its new technological mastery to do Britain down.
Indicative of the change of heart is that two years ago the government bought China out of the deal to build Sizewell C. For President Xi Jinping’s ambitions are very different from the great founding father of the Chinese economic miracle in the early 1980s, Deng Xiaoping, who created markets, promoted more free enterprise and opened up to foreign investors.
The party would remain preeminent but in a looser, more open China. Instead, Xi wants to translate party pre-eminence back to wholesale dominance. His means is there for all to see in “Xi Jinping” thought: “One country, one people, one ideology, one party, one leader”; and the aim is for China to become the globe’s number one power and to reshape the global system to favour its, rather than western and particularly American, interests.
In this respect, he is a Chinese version of Donald Trump or Modi. Thus the elimination of political freedoms in Hong Kong, the sabrerattling over Taiwan, and ever tighter control of the party apparatus.
It is accompanied economically by a crackdown on independent business and monumental state investment in a techno-utopian vision in which the state directs “new productive forces”, artificial intelligence, semi-conductors and electrical vehicles, to become a global “megatrend”.
But as the US treasury secretary, Janet Yellen, currently on a four-day visit to China, calculates, the Chinese economy is in such trouble that its immediate focus is less on driving for global dominance than avoiding an economic tailspin, the fallout from which could damage everyone.
She is courteously reminding her Chinese hosts that if China tries to flood American markets with cheap EV batteries or semi-conductors to solve its problems, the US will respond with tariffs, however reluctantly. China, aware that if foreign markets close, its overcapacity problems would become so insuperable they could threaten its political stability, has dialled down on threatening Taiwan, eased its tensions with Australia and is actively calming the US relationship, so important as a destination for more than $500bn (£396bn) a year of Chinese exports.