Britain’s China trade policies

Britain’s China trade policies have come of age. Nick Robinson of BBC said that when he interviewed David Cameron in China on Wednesday about the autumn statement, he counted the words “long-term” were used 7 times in a short interview. For the first time since the formation of the coalition government, the words can be used to describe the conservative stance on working and dealing with China.

The media has focused on the difficult top political relationship since last year (although business has been ‘as usual’ in the commercial world), but signs were the government’s China trade policies had been dithering between following the line of blending trade with a dose of geopolitics and blowing hot and cold depending on the domestic political climate. Before the election, David Cameron started a media reaction in China when he defended the trident, mentioning China together with Iran and North Korea at the election debates on TV. Sources then said after the general election that dealing with China at the highest level was to be delegated to Nick Clegg (which doesn’t seem to have happened). In his first visit to China, as the media reported, the government felt it had to take a stance in insisting on the UK delegation wearing poppies when advised to the contrary by the host for sensitive historical reasons. Therefore it is a sign of maturity in the UK’s China trade policies that, this time, the message of working with the world second largest economy is firmed, expanded, well defined, positive, and ‘long-term’, that the UK want to build a “partnership for growth and reform” with China.


Britain has benefited from the new found wealth of Chinese trade, tourists, investors, students, and the consumption-led domestic market growth. David Cameron has finally got it right in setting a firm direction and with it a new tone for the Sino-British relationship. Following the positive visits of George Osborne and Boris Johnson, this will be seen as a defining visit for UK and China relations. He has staked his personal credibility on it by publishing ‘A Vision of Prosperity’ in the Chinese national broadsheet Caijin – Finance and Economy. No wonder No. 10 said that the relationship with China has now ‘turned a page’ and is ‘looking to the future’.


And David Cameron has gone a step further; he wants to put the UK in the lead position of EU – China trade partnerships. By championing an EU–China free trade agreement, he wrote “I now want to set a new long-term goal of an ambitious and comprehensive EU-China Free Trade Agreement. And, as I have on the EU-US deal, so I will put my full political weight behind such a deal which could be worth tens of billions of dollars every year”.


The European Commission has been irritated by this and called it premature. The Commission’s irritation is puzzling. After all, the EU has already signed free trade agreements with South Korea, Mexico, South Africa, Chile, Columbia and Peru and many non-EU European countries as well as others through Association Agreements. Countries and regions that have on-going negotiations with the EU for FTAs include the USA, Japan, ASEAN, Southern Mediterranean, Canada, India, Mercosur, the Gulf Cooperation Council, African, Caribbean and Pacific Countries. China has already signed FTAs with Switzerland, Singapore, New Zealand, ASEAN, Iceland, Pakistan, Chile, Peru, Costa Rica, and is in negotiation with Korea, the Gulf Cooperation Council, Australia and Norway, as well as the China-Japan-South Korea FTA.


Quite what the reasons are for the EU not starting the protracted negotiation process is unclear; India has been negotiating with the EU for a FTA since 2007. One UK newspaper is suggesting that the championing of an EU-China FTA from the PM of this country is odd. After all the UK is seen as the most Europe sceptic country consistently threatening to repatriate power from the EU or to have a national referendum on whether to remain in the current EU.


The Guardian has gone so far as to stating that David Cameron himself, by promoting the EU-China FTA, was at odds with his promise to hold a referendum on Europe. In fact, he is very consistent with his stance on Europe and not at odds at all. I believe that the government bottom line of the UK’s relationship with the EU is that the European ‘common market’ is at the heart of the UK’s European relationship. Even if the British public votes to opt out, the UK will still want to be in the ‘common market’ or have a FTA with the EU. He is perfectly on line with this.


In fact, in championing the EU FTA with China during his visit, David Cameron has achieved the effect of hitting two birds with one stone. In my frequent exchanges with Chinese businessmen, investors, chambers of commerce and the government, I have been asked repeatedly a question:  “will the UK remain a part of the EU?”; “Is it worth considering investing in the UK if it is to be separated from Europe?”  Chinese investors will think twice before they invest in the UK if the UK is not in the European ‘common market’. By taking a lead on the agenda, David Cameron has not only eradicated the fears of Chinese businessmen on doing business through the UK with the EU, but also shown to China that UK want to work with the EU on a free trade agreement.  A masterstroke.


Of course the proof of the pudding will be in the eating. How the new direction is translated into policy implementation and day-to-day partnership building, especially, how such a “partnership of growth and reform” with China politically is translated to real help to SMEs remains to be seen.

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