Is the UK-China “golden era” over already?

Ma Zhengang is China’s Ambassador to the UK (1997-2002), President of the China Institute of International Studies (2004-2010), and is a member of the Chinese Foreign Ministry’s foreign policy advisory group

The whole world has felt the shock of the UK’s cataclysmic decision to leave the European Union. In China, people are concerned most about how much the vote will affect the bilateral Sino-British relationship, which was declared as entering a golden era by leaders of the two countries only last year.

I don’t give much credence to the term “golden era”. Long before its announcement, China and Britain had built up cooperation in many areas. The two countries have been important trade and investment partners. Bilateral trade reached $80.9bn by the end of 2014; the UK’s direct investment in China amounted to $18.5bn by the end of 2013; since 2000, China has poured more direct investment into Britain than any other EU country. Former prime minister David Cameron began his second term last year with an expressed desire for a stronger partnership with China. Britain, at present, urgently needs to invigorate its economy after the grave international financial crisis. For one thing, the UK must attract more outside investment if it’s to improve and update its infrastructure. The City of London serves as one of the most important services centres in the world, contributing around 20% of Britain’s overall GDP and creating huge numbers of jobs. In the age of increasing global competition, Britain naturally wishes to play a leading role in financial and services cooperation with China, the second largest economy in the world.

After more than 30 years of rapid development, China faces vitally important reforms to create new patterns of growth by innovation. The country has had to transform its cooperation strategy from “inviting in” to “reaching out”. While China possesses the largest foreign reserves in the world, and Chinese enterprises are generally strong in production capacity and equipment manufacturing, the Chinese need more experience of international operating and have to explore wider business. As one of today’s great economic powers, China also feels it necessary to push for the internationalisation of its currency, the renminbi. All things considered, China finds that Britain, an old and experienced developed country, could be the right partner for this cooperation. Both powers, therefore, have come to recognise that strengthening their cooperation is in full accordance with their interests.

It’s no real surprise, then, that the leaders of the two countries reached agreement last October that China and the UK would build a global comprehensive strategic partnership for the 21st century and declared the opening of a golden era in the Sino-British relationship. We can clearly see the decision wasn’t taken on impulse, but out of a strong common desire and with common interests. Irrespective of Brexit, the fundamental elements and necessities for Britain to strengthen cooperation with China remain, with enduring and solid foundations.

But beyond any doubt, Brexit has caused uncertainties. First, we can’t be sure whether Britain can quickly resolve its internal divisions – mentally, socially and geographically – and realise some kind of basic national unity. The root cause of Brexit was a growing anti-globalisation populism in society, and if the British remain confused and divided on this issue for a long time, the negative influences of Brexit will be extended, affecting Britain’s ability to handle foreign relations coherently. Second, it’s also not certain the British economy can escape the dilemma into which it was thrown by Brexit and get back to a comparatively fair shape. If these difficulties endure or worsen, Britain will gradually lose its attractiveness to foreign business. But Britain is a mature country,
and quite experienced in dealing with a challenge.

People are generally still waiting to see what kind of result Britain’s exit negotiations with the EU will yield. A poor deal for the UK would mean yet more trouble, further weakening Britain’s position internationally. The negotiation will, of course, not be easy. Nevertheless, there is a mutual need for cooperation between Britain and the EU. There is reason for us to be hopeful of them reaching some kind of beneficial agreement in the end.

Some suggest that since Britain has placed itself in difficulty with the EU, the country will lean towards even closer cooperation with China out of economic necessity. But the new Prime Minister, Theresa May, has never been directly involved in Britain’s relationship with China. Her attitude to China is almost totally unknown. Nobody can say whether she shares the view of her predecessor and his closest ally, the former chancellor George Osborne. And May’s cabinet has few members with direct experience of working with China. Her early decision to postpone and review Cameron’s project for the Hinkley Point nuclear plant project, to which China agreed to commit huge funds, offers some indication of her hesitant stance.

It’s understandable that the most urgent and pressing task for May is managing domestic issues and relations with the EU. She cannot give too much attention at this time to Britain’s relations with
China. But I believe it necessary for her to nuture the relationship – given its importance to both countries – and the sooner, the better.