Following President Xi Jinping’s marathon keynote speech at the 19th National Congress of the Communist Party of China (NCCP) in October, no one was left in any doubt about China’s third wave of modernisation. The West is witnessing the economic and social manoeuvres that will see China rivalling US as the world’s dominant superpower. It looks like the UK is committed to cooperate with CPC’s global ambitions; before Christmas, the Chancellor of the Exchequer Philip Hammond and Chinese Vice Premier Ma Kai concluded the ninth UK-China Economic and Financial Dialogue (EFD) in Beijing. UK and China reiterated their commitment to the 21st century “Golden Era” of UK-China relations; some notable outcomes include commitments to deepen the UK-China financial services relationship, an agreement to accelerate the timeline for launching the London-Shanghai Stock Connect and the aspiration to establish a UK-China bond market connect, a new partnership between Shenzhen Stock Exchange V-Next Alliance and the LSE ELITE programme to support bilateral start-ups and SME investment.
London as a global financial centre will partner with China on the Belt and Road Initiative (BRI), to jointly identify BRI pilot projects andbegin a feasibility study on a mechanism to help attract private capital investment into the BRI. The Chancellor’s Financial and Professional Services Envoy to the Belt and Road is Douglas Flint-former group chairman of HSBC Bank, a Financial and Professional Services BRI Expert Board will be established, supported by an Infrastructure Financing Exchange with a capacity to support new business in BRI countries in Asia, up to £25bn. It was announced that former PM David Cameron will be vice-chairman ofLord Chadlington’s new private investment fund of circa £750million to improve infrastructure networks between China and various trading partners.
Ahead of Brexit agreements to further boost trade and investment, foundations have been laid for a deeper future trading and economic relationship, especially on beef and pork exports. Engagement in the digital economy, intellectual property rights and overcapacity of steel were considered important.
The entry into the second phase of the Generic Design Assessment for the Chinese HPR1000 reactor at Hinkley Point C was welcomed. The UK formalised its commitment to contribute $50m to the AIIB’s Special Fund for Project Preparation. Cooperation of sharing the benefits and of mitigating the risks of the nuclear power sector was noted in detail. The UK government produced a 49-page pdf collating all Policy Outcomes of the 9th UK-China EFD, covering the economic challenges—financial regulatory cooperation, international tax transparency, climate change, sustainable development and bilateral cooperation in space. It was decided that in 2018 London would host a UK-China RMB internationalisation dialogue.
China also employs a social and academic outreach strategy in the shape of non-profit Confucius Institutes. They teach Chinese language and cultural characteristics. Already China has 29 affiliations with UK universities and 148 Confucius Classrooms in schools and colleges. According to Hanban News, “Mandarin learning has grown in popularity in the United Kingdom in the wake of the British government acknowledging the importance of China as a key partner after the nation leaves the European Union.” Reportedly, the Foreign Office hosted a special celebration Mandarin lesson to show the Chinese government the significant progress British people have made in learning their language.
Making its leap from the “century of humiliation” to an “era of rejuvenation”, China is progressively expanding its international persona. In 2016, China was the second largest source of outward foreign investment. China is the largest investor in the least developed countries, with apparently no strings attached. But Beijing is somewhat notorious for its alleged attempts at shaping policy in Australasia. Just as the CPC cheque book soft power woos India’s smaller neighbour states, America’s Caribbean island neighbours and African nations, the UK has accepted increasing billions of Chinese government investment, including into UK’s Digital and Critical National Infrastructure. While all investment is welcomed and appreciated, a recent report by the Asia Studies Centre of the Henry Jackson Society, authored by John Hemmings, calls for “A formal investment screening regime is both necessary and desirable to protect the UK’s economic interests and its national security”—a regime to review not only Chinese, but all foreign investments into sensitive parts of the UK economy, to ensure the investment does not alter or compromise the process or the result.