Evidence, UK Parliament, 28 April, 2017
1. The UK’s China policy under the former government was based on a number of erroneous assumptions that predicate that (i) Chinese economic growth is certain and sustainable, (ii) that Chinese investment into the UK was an unalloyed good; and that (iii) there are few political risks to engagement to China; and (iv) that China is a status-quo power which desires only modest changes to the current global order.
2. Western debates about rising power China have long been divided between those who emphasize engagement and the transformative side of trade and those who emphasize China’s autocratic government, human rights record, and assertive foreign policy (particularly over its near maritime space). Over the past ten years, there has been a gradual shift as China watchers have begun to adopt a more critical view of China’s foreign policy behaviour, which has been particularly strong among foreign policy elites in the United States, Japan, and other regional (Asian-Pacific) powers. Despite this shift, most diplomacy seeks to hedge against the risks inherent in China’s rise, carrying out both engagement and balancing behaviours. While many in the mainstream insist that this is the best means of maintaining peaceful and stable relations with China, this ambiguity may be ultimately ineffective, and even counter-productive to both UK national interest and to defending a rules-based international order.
3. By this reading, the current spate of tensions between Washington and Beijing are down to the unpredictability of the new Trump administration, and the UK should not or cannot afford to become involved. While these three assumptions still define bilateral ties, they are becoming less and less valid and should be reviewed in the light of changes inside China and in China’s foreign policy behaviour. This submission examines the bilateral under the following propositions:
• The UK cannot afford let trade define the relationship with Beijing, despite the pressures of Brexit, instilling instead a policy of “cautious engagement”
• The UK should not develop too strong a dependency on Chinese trade, given the structural weaknesses of its economy, such as slowing growth, uncertain financial reporting methods, the property bubble, the continued dominance of state owned enterprises (SOE), and the large national debt to GDP ratio. There is a potential for sudden shocks.
• The UK must also consider the costs and risks of Chinese investment inside the UK.
• The UK must reconsider the proposition that economic interdependency is making China into a “responsible stakeholder”. In key ways, it has not.
• The UK must realize that Chinese actions in the South China Sea (and Asia Pacific more widely) are bound to effect the UK. The idea that the UK can stand aside as a major power attempts to control a major Europe-Asia trade route is misguided and counter-productive to UK national interests.
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