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China Daily Global / 2020-02 / 14 / Page013

Pragmatic view of relations

By ZHANG JIAN | China Daily Global | Updated: 2020-02-14 00:00

UK knows it is in its best interests to strengthen its trade and economic cooperation with China despite the US trying to pressure it to do otherwis

As the United Kingdom has now left the European Union, it will have to perceive China in a new light given the changes in its position within Europe and in the global context. In the past few years, there have been frequent shifts in positions and contradictions in the UK's China policy. In light of the rising competition between Chinese and Western paradigms and values, the UK has been using hawkish posturing to make a point about its self-importance. But the UK is, after all, a pragmatic country which is realistic in its belief that "there are no permanent friends or permanent enemies, only permanent interests".

The United States will likely feature more prominently in future Sino-UK relations. In fact, the US is already playing an outsized role in shaping the UK's China policy. With the US pursuing a full-throttled containment policy against China, the UK will face pressure from the US in its trade talks with China and also on China-related issues such as science and technology cooperation, people-to-people exchanges, the South China Sea and the unrest in the Hong Kong Special Administrative Region.

While the contradictions and shifts in the UK's China policy will likely continue into the future, the overall reading of these policy stances, positive or negative, will largely depend on the UK's own interests. The post-Brexit UK will still have the same global interests and global mindset. China will hold the same appeal, and be given the same priority as before.

Economic interests are the basis of Sino-UK relations and a key instrument in implementing the UK's China policies. This primarily economic nature of bilateral ties may be even more pronounced in the future. The UK has been aware of the great opportunity that China represents since the days when David Cameron was the prime minister, which is why the UK became a member of the Asian Infrastructure Investment Bank (AIIB) despite the opposition of the US, championed China's bid to include the renminbi in the IMF's currency basket, and persisted in its joint project with China to build a "golden era" in bilateral relations despite the objections of the US.

China is the UK's largest trading partner in Asia, and the one with the highest growth potential. The UK has seen a rapid increase in its exports to China, with the latter becoming its sixth biggest export destination. In recent years, China remains the fastest growing major economy despite significant downward pressures. The annual increase in China's economy is equivalent to the GDP of a medium-sized country. China is also home to a growing middle-income group, with large and growing demands for quality products from abroad. This is an important factor for the UK to consider and especially more so in the future, as the UK will rely more on non-EU markets than before.

The UK is the largest European recipient and perhaps also the largest Western recipient of China's outbound foreign direct investment. Chinese investment will play an even greater role in the post-Brexit UK.

On the financial front, the UK has been a strong advocate of the renminbi's internalization effort, and plans to position London as the world's largest trading hub for the renminbi. Trading volume in the euro will inevitably suffer as the UK leaves the monetary union, and the UK's financial market will also face restrictions in the European market. As a result, major emerging economies such as China will prove even more important for the diversification efforts of the financial industry in the UK.

Brexit is also happening at a time when China's economy is undergoing an accelerated transition away from a model focused on heavy industries such as coal, mining, steel and cement. As technology and the service sector in China make up a growing share of GDP, the Chinese economy is more complementary to the UK's. As such, the UK's creative industries, services in general and financial services in particular can expect to find more opportunities as China enters a new round of reform and opening-up.

The Conservative government, led by Boris Johnson, can be expected to take an overall positive policy stance toward China. In fact, the Tories pledged in their campaign platform to invest 100 billion pounds ($128.8 billion) over the next five years to strengthen infrastructure and stimulate the local economy in less-developed regions. The government must now maximize the opportunity, while it lasts, to diversify the UK's economy and leverage greater say in economic and trade matters through building closer ties with other countries including China. Signing free trade agreements with as many countries as possible will be a priority for the current government.

However, Johnson's government may still be compelled to do things that hurt China's interests as a result of pressure from the US.Even though that may be the case, one thing is for sure: a steady and strengthened relationship with China, especially in trade and economic cooperation is in the interests of the UK. The UK will not put itself at the mercy of the US. In fact, the UK is no longer an unthinking follower of US policies since the days when Tony Blair got the UK involved in the Iraq War blindly following in the footsteps of the US. The UK's policy toward the US has been in constant adjustment and fine-tuning ever since.

Johnson has shown himself to be well disposed toward China as former mayor of London, former foreign secretary and prime minister. He also made a point to mention that his daughter was studying Chinese in China, citing it as an example to show how much the UK values its Asian partner. Johnson's China policies in the future may have uncertainties, but the main theme will continue to be pragmatic cooperation.


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