The UK must make it clear to President Trump that engagement with China is the best policy
Our position should be as a strong but not subservient ally of the US and a strategic, but not subservient, partner of China, writes Richard Graham
While the domestic political focus is resolutely on Brexit and the Conservative leadership challenge, President Trump’s visit next week highlights the importance of the US-China relationship and what its current turbulence means for us.
We should be clear that the US-China trade war already means weaker global growth, hit by weaker global exports to China.
Yes, our own exports have increased significantly – up three times from a decade ago, and in a different space entirely from when I was British trade commissioner for China after Tiananmen Square – and its importance to us both as an export market and a source of inward investment has grown too. But this is from a low base, and is vulnerable: the JLR losses of last year specifically referenced “the backdrop of a weaker China market”.
The latest US escalation, effectively a prohibition on tech companies and chip manufacturers in particular from supplying China’s telecoms giant Huawei, impacts not just UK-based ARM but global supply chain relationships in general. No wonder British businesses in China recently reported to our China APPG feeling cautious about business prospects ahead.
This is alongside the earlier US ban in Huawei playing any role in the US 5G rollout, and an implication that the Five Eyes intelligence sharing would be at risk if any partner involved Huawei in their 5G plans, potentially overruling the UK arrangement where GCHQ oversight of Huawei equipment has mitigated against potential threats.
Behind tariff increases and cyber concerns is a strategic shift. On the one hand, Xi Jinping has seized the opportunity of waning US commitment to the global institutions and multilateral agreements built by the US and the UK post the second world war to make a bold bid for global leadership. And on the other, the US response has moved from seeing China as a rising power to be encouraged into the western rules-based order, to a competitive threat to be held back whenever possible.
As part of that, the US is deploying global leverage, first against ZTE over sanctions on Iran, now against Huawei on security grounds. If multinationals want continued access to the US market, will they need to rein back on China cooperation more widely?
Making America “great again” looks to be translating into protectionism, a shrinking of globalisation and global trade – with anti-China measures added on.
The economic cost of this for us all, not least US consumers, is incalculable but already evident: but the short-term positiveUS political dividend may outweigh that for President Trump.
The problem, therefore, is not who will win the US-China trade war – the US – but what the longer-term impact will be.
My concern is that China will simply redouble efforts to acquire or cyber-steal whatever technology it needs and become even more self-sufficient, reducing its imports from the west (including the UK) while determining to reinvent a new world order based on Chinese-led structures.
Such an approach could even lead one day to deploying the same argument back to the world – if you want to have access to Chinese markets and global projects, then accept our strictures on whom else you work with (Taiwan could be a starting point). As Kissinger is reputed to have said recently: “The US may win this one, but China will never forget.”
This makes it all the more important that the UK emphasises during Trump’s visit that engagement with China is the best policy, and that we don’t want to be squeezed into a ‘you’re either with us in our strategic struggle versus China or against us’ position. It will not be easy, but is what the UK should do.
The China dimension affects so many UK domestic issues now. Our position should be as a strong but not subservient ally of the US and a strategic, but not subservient, partner of China. We will not always agree with either: whether the former’s approach to Iran or the latter’s treatment of the Uyghurs in Xinjiang. But through engagement we can talk frankly with both in private, and when need be in public – and help make the world a safer place.
Richard Graham is Conservative MP for Gloucester and chair of the APPG China Group
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