The Telegraph, 17 February, 2019
China’s decision to cancel a trade summit with the UK over remarks made in a speech by Gavin Williamson seems like bad news for Britain – it is estimated that the expected deals could have been worth £10bn over five years. Former Chancellor George Osborne accuses the Defence Secretary of “gunboat diplomacy of a quite old fashioned kind”.
The insinuation of these comments is clear: Williamson has hurt the economy by angering China. Yet beneath the outrage, China’s reaction suggests that the UK is finally beginning to develop a coherent response to Chinese aggression.
China’s current diplomatic aim is to persuade foreign governments that access to its market is based on largess and nobility, rather than the rules and regulations of the World Trade Organisation – heaven forbid we expect China to play by the rules. Not only is this type of discriminatory access illegal, it is also unlikely to be effective.
As British officials confided in me last year, Prime Minister David Cameron’s meeting with the Dalai Lama sent diplomatic relations into freefall, but barely affected trade. Deals continued to be signed. Political leaders were simply deprived of photo opportunities. Similar headlines which spoke of Beijing being “enraged” overlook the clever reward-punishment strategy deployed by Chinese leaders, which leverages market access to persuade countries to overlook or accept their expansionism. We are idiots if – knowing this – we bend to their manipulation again and again.
Williamson’s speech was hardly the fire-and-brimstone some critics are suggesting. I would defy readers to find an offensive word in it. He speaks of sending Royal Naval forces to “the Pacific region”. The Sun has creatively re-branded this as “threatening to send a British aircraft carrier to China’s backyard”. Really? As well as China, the South China Sea is shared by Brunei, Malaysia, the Philippines, Taiwan and Vietnam. Parts of it are more than 1,800 km from mainland China (for context, the distance between London and Moscow). China has no legal claims to the South China Sea, beyond usual practice on the high seas.
The Government’s new Global Britain policy emphasises its support for the ‘rules-based international system’. Yet the widespread criticism of Williamson suggests that these are mere buzzwords to our foreign policy elites. The Defence Minister deserves more support. What he said would hardly have surprised the Chinese, and he was simply doing his job of putting forward a strategy for protecting Britain’s interests.
A report by the Henry Jackson Society, published a week before Mr Williamson’s speech, attempted to define Britain’s interests in the South China Sea and called for the very transit that has now so angered Beijing. Of course protecting jobs and replacing access to the common market are crucial goals for this government, which must be balanced with hazy geostrategic terms like “freedom of the seas”. However, even if we were to discount our responsibility to our Asian allies and partners, it would be unwise to sell out for deals worth a mere £10bn in cosmetics and poultry. This figure is dwarfedby the £124bn of UK trade that crosses the South China Sea to southeast Asian markets. Selling out British national interests in open and free trade routes isn’t just short-sighted, but terrible fiscal arithmetic.
Press reports also talk about British officials embarking “on a frantic round of diplomacy to try to get the talks back on track”. This humiliation is likely the only real punishment that China will end up handing out.
In all of this, we overlook China’s reasons for wanting to trade with Britain. Skyrocketing food prices – the product of Trump’s tariffs – are pushing them towards alternative sources of poultry. The poisoning of citizens by dangerous counterfeit cosmetics gives China another strong incentive to reach a cosmetics deal with the UK, where standards are higher.
For all that Treasury figures might talk down our global standing, we should not forget that Beijing needs Britain to internationalise the Chinese currency, the renmimbi. Their new London Embassy, to be built in the heart of the City, reveals a long-term interest in accessing UK finance, fintech, and computing.
Finally, there are important – though much overlooked – ethical arguments. Are we really going to continue to aggressively pursue trade deals with a state that has re-created concentration camps for the modern era? Foreign policy elites in Western nations are still grappling with the moral conundrum this presents. Whatever our ultimate conclusion, I am convinced history will judge Mr Williamson’s remarks rather more favourably in years to come.
Britain needs to steel itself for the fight – if we decide to stand up to China, there will be far worse days than a cancelled summit.