Beyond Checkbook Diplomacy: Chinese Premier Li Keqiang Visits the United Kingdom
Image Credit: Wikimedia Commons

Beyond Checkbook Diplomacy: Chinese Premier Li Keqiang Visits the United Kingdom


Chinese Premier Li Keqiang is currently in the United Kingdom for a major three-day diplomatic visit that is expected to result in $30.5 billion of trade deals between the two countries. Li is flanked by several Chinese business leaders, including the head of major state-owned enterprises such as China National Offshore Oil Company (CNOOC). Additionally, in a rare gesture, Queen Elizabeth II met with Li at the start of his visit. The visit is being touted as a textbook example of China’s checkbook diplomacy with European states. Ahead of his visit, Li called the UK “a great country and an important partner of China.”

Li described his visit as having three primary purposes: “First, to discuss ways to deepen co-operation in various fields and therefore spur the growth of our respective economies. Second, to present the real China so as to change misperceptions and ease misgivings; and third, to draw on British perspectives and experience.”

Li’s mention of misperceptions is important. As Premier, Li has focused primarily on economic issues. Ahead of his visit to the UK, he announced that China was expected to meet its official 7.5 percent GDP growth target this year. Overall, his mission as Premier is to preserve China’s image as a global economic powerhouse. In this sense, he serves as a sort of national ‘CEO’ for the Chinese brand. That he is accompanied by a host of businessmen on his trip to the United Kingdom is thus fitting.

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The UK and China will conclude deals in several areas, including energy, infrastructure, finance, and technology. On Tuesday, British Petroleum and Royal Dutch Shell signed deals with CNOOC in one of the deals that is a centerpiece of Li’s trip to the UK. BP signed an agreement worth $20 billion over 20 years to provide CNOOC with liquefied natural gas. Shell meanwhile “signed three production-sharing contracts in the Yinggehai basin in the South China Sea,” according to the Financial Times.

Relations between the UK and China have been undercapitalized in recent years, a point that was emphasized by the Chinese ambassador to the UK, Liu Xiaoming. In a comment prior to Li’s visit, Liu underlined France and Germany as higher economic priorities in Europe than the UK. Ambassador Liu noted: “Before I came here, we used to say, when we talk about Europe: ‘Britain, France and Germany’. But unfortunately many opportunities were missed in the past year or so … so people now start talking about ‘Germany, France and Britain’.” In 2012, UK Prime Minister David Cameron’s decision to meet with the Dalai Lama drew condemnation from Beijing and cooled relations. In the meantime, China has approached numerous other European countries, expanding trade and investment ties.

There has been a tendency for UK commentators to see Li’s trip as an example of the UK going hat-in-hand to China — a view that was partly precipitated by the ambassador’s comments. However, as others have pointed out, there are good reasons to think that diplomacy between the UK and China is still a mutual give-and-take. One of the major deals that will come out of Li’s trip to the UK is that China will acquire its first official Europe-based renminbi clearing bank in London — China Construction Bank (CCB) has been selected for this role in London. This development will help bolster the position of the renminbi as a global currency and London’s position as a global hub for foreign exchange trading. CCB being based in London is nothing short of a major coup for London.

In an attempt to address the relatively modest level of people-to-people contact between UK and PRC citizens, the UK has relaxed visa rules that should make it easier for Chinese visitors to travel to the United Kingdom. High net-worth Chinese have demonstrated great interested in investment in UK real estate, with one estimate showing that Chinese investment in London property has grown by 1,500 percent since 2010. The new visa rules will encourage Chinese investment in the United Kingdom.

With Li’s latest visit, contentious political issues will likely sit on the sidelines as officials and businessmen in the UK and China sign lucrative, mutually beneficial deals. UK Deputy Prime Minister Nick Clegg noted that Li’s delegation will meet with UK officials for “productive discussions” on human rights.

The visit may not immediately result in China thinking of the UK before France and Germany in Europe, but it will set the two countries on the path to a more pragmatic relationship based on mutual interests. While normative issues, including human rights, continue to be important to several constituencies in the UK, David Cameron’s government has demonstrated that it is willing to do business with China for the benefit of both nations.

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