No one could accuse China of being soft on sovereignty. Witness their hard-line tactics on Hong Kong, the South and East China Seas, and Taiwan. So the bewilderment of most Chinese officials when asked about how they view the UK’s decision to leave the EU after the June 23 referendum is significant. Even for a country that brokers few compromises when confronted about issues over control of its own territory, the actions of British politicians is puzzling, bordering on the perverse, to most Chinese.
Now that it is becoming clearer that the government of British Prime Minister Theresa May is pursuing a hard-line, anti-immigration focused agenda, things have grown stark. This matters to the UK for two reasons. Firstly, because as the UK risks alienating its key trade and economic allies in the European common market, the need to open up new high growth areas like that with China increases. The option in the past of treating China as a remote, more distant prospect is receding. Suddenly all the grand promises in the past of trading with Beijing in a new, expanded way have to become reality much quicker than was ever expected.
But the second reason is much more politically fraught. Two decades ago, in the buildup to the handover of Hong Kong, the UK had a larger economy than China’s and, in many ways, was at the least an equivalent and, in some ways, a more powerful global actor. These days, the tables have turned. On almost every measure, the UK is now weaker than China. Nothing symbolized this more than an isolated-looking Theresa May on her first trip to the People’s Republic forlornly walking across the red carpet to shake hands with Xi Jinping in late September. The UK is the supplicant now. It is the one that needs favors and help.Enjoying this article? Click here to subscribe for full access. Just $5 a month.
While China mercifully does not want Britain to fall apart — after all, its short to medium plans are predicated on having a world around it which is stable and peaceful while it itself deals with its internal problems — there is little appetite among Chinese to grant Britain some sort of charity case status. The glib and irresponsible talk by some British leaders of doing a quick Free Trade Agreement with the Chinese once freed from the shackles of the EU shows a hopeless disconnect with reality. The simple fact is that the Chinese have proved on every other such agreement they have undertaken (with Australia, Switzerland and New Zealand for instance) to be ruthless and self-interested partners. They will take what they can, open up only what they have to, and aim to come out on the winning side. So far, China has a hundred percent winning record here.
The UK, meanwhile, matters for China as a financial center, a place of relatively liberal investment opportunities and an intellectual partner. All of these were to some extent based on a cooperative relationship with the EU. Take the EU away and each of these pillars is weakened without some radical remedial action. London’s primacy as Europe’s financial capital is dependent on free movement rights across the single market. Without these, it does not have the appeal, scale, and depth that Chinese have so far found useful for their ambitions to internationalize the renminbi. Investment in the UK is also for some a step to a wider European market. The UK in this area can still perform strongly after leaving the EU, but with a desperation that it currently does not need to display. For intellectual partnership too British companies and universities matter to China, which remains hungry for innovations it cannot create indigenously. But once more, this has a strong EU angle: much British research funding and many key researchers in the UK are from the EU. There is uncertainty over how this will be maintained after Brexit.
The harsh fact is that over the next few years, as the UK attempts to extract itself from the EU, China stands a good chance of going from being an important partner to the UK’s future to a becoming necessary one. Such stark dependency on China will mean that the days of talking, as former Prime Minister David Cameron once did, of human rights and Hong Kong will recede. The costs of displeasing Beijing will rise. May’s abrasive adviser Nick Timothy has, in the past, written pushy pieces about the need to be hard on China. These now read like they were written a century before. Brexit will make the UK a weaker partner with China, and a dependent and vulnerable one. It is a lamentable outcome. And the likeliest attitude that will eventually prevail in Beijing will not be respect, or even malice towards the UK. The Chinese have bigger fish to fry. It will be more like sporadic pity, with the occasional flashback to memories of a time when the UK mattered – a dismal outcome for a country that, until recent times, was influential, respected and often admired in China despite its complex history.