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There’s a joke doing the rounds in Germany:
“What borders on stupidity?”
“Mexico and Canada”.
As jokes go it’s only funny if you have the same mindset that saw the Democrats roundly defeated by Donald Trump. It is also ironic coming from a country whose economy, and politics, is far from being in the rudest of health.
Insulting the intelligence of opponents is one of politics’ biggest mistakes, only topped by sneering at those who vote for them. Knowing and not underestimating your opponents is a core political and diplomatic survival skill.
President Trump doesn’t care that much what people outside America think of him. He is getting on with the job the way we’ve come to expect. Also his recent flurry of tariff-taunting diplomacy has had results; Mexico and Canada have made instant concessions to fend them off. The Donald prides himself on being a deal maker, and deal makers don’t play softball.
China has started with a limited retaliation on US goods and rare metals. Nobody wins in a trade war, but if anyone is up for engaging in a skirmish, China might be. Economic coercion is after all part of President Xi’s power-play these days; just ask the Philippines and Vietnam.
The EU is bracing for the US President to make a tariff play on US-EU trade and here the Prime Minister keeps telling everyone that it’s not an “either, or” choice between trade with the US and with the EU. The UK Government still hopes it can avoid direct trade tariffs, but it won’t be able to dodge the ripple effects of them being in place elsewhere.
Labour talks of a reset with the EU and trying to get a deal with the US. If Starmer secured a trade deal with Trump, he’d have pulled off a major victory, but there’s other countries he’s interested in that could put that in doubt.
So, what about China?
Sir Keir is saying to everyone, everywhere, his government’s prime focus is economic growth. What he’s doing with China is seemingly not watching our back. He’s listening a little too easily to the siren song of trade value with Beijing and it could be a colossal mistake.
I understand his dilemma. I was part of wrestling with it, in Government. It is more about trade-offs, than trade.
Relations with China are like the Goldilocks story.
Slam the door shut too hard, and you’ll win a bit of temporary cheering from some in the UK, but doing so completely, is economically and diplomatically illiterate. However, open the door too nicely and you will be carefully exploited, all the while being told how rude you are to mention it, and potentially get sanctioned.
One thing President Xi and President Trump have in common is that they don’t see the world in terms of allies and enemies, but ‘useful to us’ or ‘unhelpful’. Between themselves they are political and diplomatic antagonists, but they do serious amounts of trade.
It is possible to trade with China, if you are very clear about the basics.
The Chinese Communist Party does not see you as a friend but as a market. They can be friendly, no doubt of it, but on their terms. Whilst they greet and shake your hand, parts of their system will think nothing of spying on you intensively, stealing intellectual property, intimidating critics in your country and in return – you’ll get a complete denial of egregious human rights abuses within China itself and any acceptance of bad faith conduct.
The counter argument is also stark.
Any global deal on climate change that has no Chinese involvement is pointless. Any military takeover of Taiwan would damage the global economy so badly it would make the ‘cost of living crisis’ look like a spending bonanza – also in China. Any global agreement on the boundaries of AI development without China is unwise. The risks with AI worry them just as much as us.
Chinese Foreign Minister Wang Yi told UK officials in the late summer of 2023;
“AI could benefit the whole of mankind. Or it could kill us all.”
So calibrating the benefits and risks of dealing with China is unavoidable. Ignoring China is unrealistic.
Rishi Sunak tried to describe China as ‘a systemic challenge’. For many this was like calling a spade an ‘instrument for removing topsoil’. However the Labour Government seems to have watched Iain Duncan-Smith criticise his own side for implementing what he called “operation kow-tow” and said, “hold my beer”.
The clues are in what they’ve been doing.
First, Starmer was the first PM in 6 years to meet with President Xi in November last year, and David Lammy and Rachel Reeves made Beijing a priority visit all within months of entering government. This was at the same time revelations about the alleged Chinese spy Yang Tengbo and Prince Andrew became public. On top of that MI5 were ruled to have acted lawfully in issuing a rare “interference alert” about another alleged Chinese spy, Christine Lee, who it is said infiltrated parliament via a Labour MP to run covert political interference for the Chinese.
The Security Services have described the challenges China presents as being on an “epic scale”. In October last year Ken McCallum, the head of MI5 spoke of the challenge publicly and it’s been revealed that 20,000 people in the UK have been approached covertly online by Chinese spies. However it seems China will not now be within the highest tier of the Foreign Influence Registration Scheme, FIRS. Lobbying on this has come from unexpected quarters including banks, and departments of government.
Second, the new Mauritian Prime Minister Navin Ramgoolam has told his MPs that the controversial deal over the Chagos Islands including Diego Garcia and the airbase used by the US there, is going ahead and at far greater cost than the original £9 billion price tag. This in the face of US concerns over Chinese influence and activity in the region and China’s ever closer relationship with Mauritius.
And third in London, the Foreign Secretary and Chancellor have all expressed the hope that Deputy Prime Minister Angela Raynor as Secretary of State for Housing, Communities and Local Government will look favourably now on plans she’s ‘called in’ for a huge new Chinese embassy on the old site of the Royal Mint opposite the Tower of London.
This, despite the exact same plans being rejected by the local authority, Tower Hamlets, and China declining to appeal in August of 2023. Concerns over the plans, and there are many, are seemingly no longer an obstacle for the Metropolitan Police who had expressed concerns originally. There is no clear idea of what, or who, changed their minds.
This third issue has been picked up by the Shadow Secretary of State for Levelling Up, Housing and Communities Kevin Hollinrake who has written to the PM to ask a series of very pertinent questions. It will be interesting to see the answers.
In the desperate search for economic growth in the UK, Labour want what Rachel Reeves said in Beijing was the £1bn value to our GDP of enhanced trade with China. She said very little about what that might mean for our security, or defence against economic dependency.
In terms of foreign and trade policy, Kemi Badenoch has experience of facing this dilemma, and she should use that now to outline a different calibration of the ‘Goldilocks conundrum’. It would also be a way of breaking with the past over Huawei. Theresa May’s government didn’t get that right, and were thankfully forced to change tack.
Enhanced trade with China may be too valuable to ignore, we just need to know, and the government needs to acknowledge, what it might actually cost us.
What really borders on stupidity? Dismissing that.
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