KERRY BROWN ON UK-CHINA RELATIONS IN 2022
Britain and China’s relationship in 2022 will offer a continuation of themes and issues we have seen developing over 2021. Geopolitically, the tensions between the US and the People’s Republic will continue to overshadow everything else. Having signed up to the AUKUS (Australia, UK, US) security pact in September, and framed China as a strategic competitor both at the G7 summit in June and in its own Integrated Review of Foreign Policy which came out in March, the UK has shown which side it is on in this.
There are no surprises here. The UK’s closeness to America is longstanding. The question is to what extent a significant deterioration of US-China relations will impact the UK’s attempts to craft at least some space for autonomy in bilateral relations with Beijing. Put more simply, will the UK be willing to take at least some risks in the relationship with China, or will it wholly toe the line issued from Washington.
One way of trying to work out what might be more likely to happen is to look at some fundamentals. China UK trade in 2021 saw a 10% increase over the year before. But despite this, the imbalance in favour of imports from China rather than exports to it worsened, with the former rising 39%, and the latter falling 30%. As the UK moves more into the era of Global Britain post-Brexit, this imbalance will need to be addressed. Rising trade has long been an aspiration London has harboured. But not where the exports are falling. The perennial quest to sell goods and services to China continues, with current efforts to date being highly limited in their outcomes.
If the economic situation in the UK does deteriorate markedly in the coming 12 months, that may have an impact on views towards China, creating more pragmatism, and more clarity about what the UK wants from the country. It may finally make the potential role of China far clearer in the UK, after years of speculation and lack of focus.
This is particularly the case in the Xi-era of common prosperity and dual circulation. China’s rising middle class need to continue being better consumers. But the pathways to selling them things has been complicated by the imposition of new restrictions and impediments by a Chinese government increasingly defensive and distrustful of the outside world. Without the Covid-19 era complexities and challenges diplomatically, for the UK to try to economically increase, and rebalance, its relations with China would have been challenging. Events over the last 18 months have only made this even more difficult. This implies that if Britain wants this situation to change, a radical new strategy needs to be put in place.
One area to look at to supply this is environmental co-operation. COP26 in October in Glasgow resulted in an outcome that, while less than many had been seeking, at least gave the world something to work on. The UK and China have been collaborating in this space for many years. Now they have a clearer framework, and the UK has issued such a strong declaration of intent that it wants to take an international leadership role here, work with China should theoretically stand a good chance of increasing.
For both these practical areas – trade and environmental collaboration – the main barrier will continue to be political. Domestically, concern about ongoing issues in Hong Kong and Xinjiang, along with the diplomatic boycott of the Winter Olympics in China, mean that while the Johnson government continues to say that it is pro-engagement, finding unproblematic areas in which to practice this will continue to be difficult. To add to the mix, the UK has a lack of consensus and coherence in terms of its policy and practice towards China, with divisions between those who are deeply critical of even the most tepid links with the PRC, and those who want more effort to be made to bridge the trade gap referred to above. Only 0.2% of Foreign Direct Investment stock from 2020 to 2021 into the UK came from China. For those stressing practical engagement and self-interest, this sort of poor performance is more key than, for instance, trying to pick on areas to fight over.
The UK’s economic situation in 2022 will determine a lot of how this debate between the pro and anti-engagement groups in Britain goes. Britain’s own GDP growth in the third quarter of 2021 nearly ground to a halt. Buffeted by continuing efforts to combat Covid-19, and the issues of leaving the EU and what long term impacts that is having on trade and investment, there are high levels of uncertainty as 2021 comes to an end. Politicians may speak in a different way if the economic situation in the UK does deteriorate markedly in the coming 12 months. That may have an impact on views towards China, creating more pragmatism, and more clarity about what the UK wants from the world’s second-largest economy. It may finally make the potential role of China far clearer in the UK, after years of speculation and lack of focus.
The view from Beijing over 2022 will be framed by how China’s government addresses the list of policy challenges it laid out at the Plenum meeting held in Beijing this October. Long-standing issues like the provision of social welfare, public health, environmental improvements, and addressing inequality stand out. The mantra of ‘common prosperity’ will continue to be key. While the political focus will be on the Party Congress, held every five years, around the end of the year, expected to mark Xi Jinping’s reappointment as party leader, what policy adaptations and changes the government makes to meet its domestic agenda, and what sort of space it might consider for an outside partner like the UK, will be key. It too will be experiencing economic challenges. These will also push it into thinking and acting in a more pragmatic way. For this reason, while the UK and China start 2022 in a combative and divided situation, it is possible their respective domestic problems over the following twelve months will give them the grounds to co-operate in surprising ways. That, at least, is one of the core lessons of the whole Covid-19 era – to expect surprises. That is what we should expect when we look at the UK and China in 2022.