Trade chief: Let’s make China rely on OUR firms
As political tensions grow, trade chief Lord Sassoon says there is a way to do business...
SHOULD Chinese firms be allowed to take charge of building vital parts of Britain’s infrastructure, such as our 5G phone networks and nuclear power plants in Suffolk and Essex?
Senior Tories increasingly think they should not. Sceptical MPs believe Britain cannot cede control of such important assets to firms that must ultimately bow to the will of the ruling Communist Party in China.
Even the Prime Minister, Boris Johnson, has expressed concern at the growing influence in Britain of firms such as Huawei, whose technology is being used in the rollout of superfast 5G mobile internet.
Last week, the former chief executive of Google, Eric Schmidt, said ‘there is no question’ that Huawei had sent intelligence to the Chinese government. He wasn’t necessarily talking about British secrets – and Huawei’s UK chief executive has insisted that the allegation is ‘simply not true’ – but the intervention of one of the world’s most powerful businessmen reflects a major mood shift in Westminster over the past few years.
Under David Cameron and George Osborne, the UK was on a different path, intent on wooing Chinese investment into the UK and talking about a much closer union.
Former Treasury mandarin James Sassoon – who worked under Cameron and Osborne on that project and is now the chairman of the China-Britain Business Council – has witnessed the shift first hand.
But he believes there is another way to stand up to the increasing power of China as it spreads its influence – and technological expertise – across the Western world.
‘China is very dependent on the UK in a number of areas, and we shouldn’t forget it,’ Lord Sassoon tells me over a Zoom video conference call from his home library.
‘We need to manage any dependency we have on China to make sure it is safe, but I think we should exploit every opportunity we have to make China more dependent on us for drugs from AstraZeneca, or engines from Rolls-Royce.
‘That is the way that we get more jobs, but also some respect from China, which we can then use to talk to them and influence them.’
He laughs as I notice a picture from his Treasury days sitting behind him. It’s a photo of him and former Chancellor Osborne standing outside Number 11 Downing Street. ‘I promise I don’t put it there deliberately,’ he says, picking up the photo to show me. ‘It’s signed by him as well.’
Lord Sassoon worked for the Treasury for 11 years, and became a Treasury Minister under David Cameron in 2010. His idea of making the Chinese more dependent on British businesses as a way to redress the balance of power and maintain strong relations will sound risky to those sceptical MPs in Westminster amid a tense trade war with the US and even mutterings in some quarters of a looming cold war.
But Lord Sassoon clearly believes fervently in his mission as chair of the China-Britain Business Council – the main organisation promoting trade between the two countries.
Lord Sassoon’s r ol e chi ef l y involves advising UK businesses on how to access Chinese markets.
He says the Chinese are particularly interested in financial services firms that can help fund huge infrastructure developments and encourage Chinese citizens to save for their retirement.
Prudential and Schroders have both benefited from the huge growth in China as middle-class families try to protect and grow their money. Meanwhile, HSBC and Standard Chartered are pitching for business as part of China’s ‘Belt and Road’ initiative, a vast infrastructure programme seeking to connect Eastern Europe, the Middle East and Asia by road, rail and sea.
‘ These companies have relatively small shares of this huge Chinese market, because the Chinese market is still highly protected, even though huge progress is being made,’ Lord Sassoon says. ‘ The Chinese need to build up a savings market.
‘They want to link their savings to long- term health provision, and provision for the elderly, because they don’t want it all to be so dependent on the national budget. That’s where they look to the likes of Prudential and Schroders.’
But these financial giants are now at the centre of a growing political row between the UK and China. Both HSBC and Standard Cha r t e r e d h a v e c o me u n d e r severe criticism for publicly supporting China’s new security law in Hong Kong, which critics say will be used to stamp out dissidents in the territory.
‘It’s a fact of life that wherever financial services operate, they are under the spotlight of regulators perhaps more than any other industry,’ Lord Sassoon says.
‘ Banks in particular are often put in a difficult position. They have to respond in a way that is consistent with their own philosophy, and remain as politically neutral as possible.
‘But they also need to be good market players in the countries where they do business.’
Lord Sassoon steers clear of saying when a business should voice its opposition to a political policy in China. But he says politicians should definitely challenge Chinese thinking, if they do it in the right way.
‘ The Chinese way is perhaps rather different from how the Western culture responds to issues. Of course there are times when politicians need to speak out, but how do you sequence things in order to achieve the best result?’ he says.
‘With the Chinese, you make more progress when you talk to people in private.
‘You can talk to them very candidly and openly in private, but also make clear where there are public red lines.
‘ Although British politi ci ans don’t tend to like that, because it’s not compatible with a Twitterapproach to life.’