BY DAVID HUTT
Under consecutive Conservative Party-led governments since 2010, Britain has become overwhelmingly the largest recipient of Chinese investment in Europe. And even when France, Germany, and the U.K.’s overall share of Chinese investment in Europe declined from 71 percent in 2017 to just 35 percent last year, Britain remained the continent’s second-largest recipient of Chinese foreign direct investment in 2019, according to an April study by the Mercator Institute for China Studies, a Berlin-based think tank.
But in recent months, the governing Conservatives have changed tracks, attacking the Chinese government on a range of issues and backing away from Chinese partnerships. And with not all Tories on board, the question of how to deal with Beijing is becoming a major fault line within the party.
Foreign Secretary Dominic Raab said in April that “there is no doubt we can’t have business as usual” with China, expressing London’s anger over Beijing’s handling of the COVID-19 pandemic and its disinformation campaigns. The Tory government has also proposed the creation of a group of democratic nations that could develop its own 5G technology and equipment—so as not to have to rely on China’s tech giant Huawei, which is accused by the United States of spying on behalf of the Beijing government. London has also said it will reduce Huawei’s involvement in its own 5G network in the coming years. And a plan codenamed “Project Defend” was launched in May to end Britain’s reliance on imports of vital products, like pharmaceuticals and high-tech electronics, from China. London has also come down strongly on Beijing’s new security law, which threatens to undermine the autonomy of Hong Kong. Prime Minister Boris Johnson pledged to admit 3 million Hong Kongers, saying the law broke the “one country, two systems” arrangement agreed on when the U.K. handed the territory over to China in 1997.
“The Tory Party has been high on rhetoric in terms of switching gear to a more hostile attitude towards China,” said Jie Yu, a senior research fellow on China in the Asia-Pacific program at Chatham House, a British think tank. Leading the way are Conservative politicians connected to the new China Research Group, a hostile parliamentary caucus modeled on the Euroskeptic European Research Group. The group’s co-founder Tom Tugendhat, a Tory member of Parliament and chairman of the Foreign Affairs Committee, told Foreign Policy that “China is not a point of division for the Conservative Party or even Parliament.” Instead, he said, “it has become clear since I set up the China Research Group that most MPs of all parties are in agreement on the challenges we face.”
Some party grandees are also on board. David Davis, a former chairman of the Conservative Party, reportedly prompted the government to intervene in April to stop the government-controlled China Reform Holdings from buying out the leading British graphics chipmaker Imagination Technologies. Damian Green, the chairman of the One Nation Conservative Caucus, a liberal-conservative faction, sent a letter signed by 14 other senior Tories to Johnson calling for a “rethink and reset” to British relations with China. Former party leader Iain Duncan Smith has also said recently that “our ridiculous addiction to China has now got to stop.”
Outside of Parliament, conservative ranks are also gravitating around the position. The Henry Jackson Society, a right-wing think tank that is thought to have close links to Michael Gove, an important member of Johnson’s cabinet, has argued of late that Britain must “decouple” from China. Britain’s right-wing newspapers, such as the Daily Mail and the Telegraph, a Tory-aligned publication, have also ramped up their anti-Beijing messaging.
But the backlash doesn’t represent the views of all Tories, and a division within the party is emerging.
But the backlash doesn’t represent the views of all Tories, and a division within the party is emerging. In May, Dean Godson, the director of the influential center-right think tank Policy Exchange, wrote that China has become “a key Conservative fault line post Brexit.” Writing the next month, Rachel Sylvester, a political columnist at the Times, called China “the Tory party’s new Brexit divide.”
According to Peter Harris, an assistant professor of political science at Colorado State University, the split in opinion has been “papered over for the time being” as the U.K. struggles to deal with the health impacts of the pandemic. But he expects that the narrative around China will likely grow more polarized in the coming months as the country faces the economic fallout. The looming fault line among the Tories lies between those who want to court even more Chinese investment in a post-Brexit economy and those who view China as an economic and security threat, especially if relations with Beijing jeopardize a free trade deal with the United States.
Reports emerged in May that U.S. negotiators have been pressuring London to choose between Washington and Beijing, and there are also suggestions that President Donald Trump’s administration wants to insert a clause into any free trade deal with Britain that would allow it to retract certain parts if the U.K. were to sign a trade agreement with another country that the United States doesn’t approve of—like China.
The United States is Britain’s largest trading and investment partner, and prioritizing Washington makes sense. The British Department for International Trade estimates that a U.K.-U.S. free trade deal could boost bilateral trade by about $19 billion and British wages by $2.3 billion, according to a ministerial paper.
But Beijing is also trying to apply pressure.
Beijing is also trying to apply pressure. After London cut off Huawei’s involvement in its 5G network rollout, China’s ambassador to the U.K., Liu Xiaoming, suggested that Beijing could retaliate by cutting its investment to Britain for several nuclear power station projects and the costly HS2 high-speed rail network. Liu called London’s decision on Huawei “a litmus test of whether Britain is a true and faithful partner of China.”
And with Britain’s economy expected to contract by 8 percent this year and unlikely to recover until 2023, according to recent forecasts by EY ITEM Club, choosing between the U.K.’s two largest non-European Union trading partners will be increasingly fraught. Making matters even worse, London must navigate this superpower divide at the same time it leaves the EU, with the transition period expected to finish at the end of the year, even though negotiations for a trade deal with Brussels have stalled.
Chatham House’s Yu said it is “unlikely” for the Tories to reach a consensus over China because each constituency and lawmakers have different wants and needs. This is particularly true for Conservative members of Parliament from areas where Chinese investment is vital to local jobs. Some, like Ian Liddell-Grainger, the Tory MP for Bridgwater and West Somerset—where China wants to fund another reactor at the Hinkley nuclear power station—are seeking to avoid economic reprisal from Beijing.
In May, Tory MP Richard Graham, the chairman of the All Party Parliamentary China Group, said, “It might be tempting for everyone to want to treat China as a new national scapegoat, just as the EU was a convenient scapegoat in recent years.” But, he added, “[China] is not the most important thing in the minds of our constituents. The most important thing is going to be jobs. And in that sense, having a strong partnership with China makes absolute sense.”
Tory MP Ruth Edwards, who once worked for BT, a telecommunications firm, was hesitant earlier this year when several party backbenchers tried to get the government to change its Huawei stance, commenting that “there are no trusted vendors” when it comes to 5G technology. Tory MP Mark Logan, who previously served as a diplomat in the British Consulate in Shanghai, said in April that “now [wasn’t] the time for” critiques of China.
Trying to cut a middle path is Johnson, who was considered one of the most pro-China politicians within the Tory Party. In 2013, as mayor of London, he helped form the Conservative Friends of the Chinese.
Trying to cut a middle path is Johnson, who was considered one of the most pro-China politicians within the Tory Party. In 2013, as mayor of London, he helped form the Conservative Friends of the Chinese. Speaking to Parliament in June, he attempted to cut a moderate figure. “I am a Sinophile, and I believe that we must continue to work with this great and rising power,” he said. “But when we have serious concerns … over the origins of COVID or the protection of our critical national infrastructure or indeed what is happening in Hong Kong, then we must feel absolutely free to raise those issues loud and clear with Beijing—and that is what we will continue to do.”
When it came to Brexit, the Tories wanted to have their cake and eat it too, preserving trade preferences while avoiding the onerous legislative requirements of the EU. The same desire for “cakeism” is now on show with China. As expressed by some Tory politicians, there is a sense that Britain can take a much tougher line on Beijing and, at the same time, keep all the economic benefits of trade and investment with China while not jeopardizing free trade negotiations with other partners. But, as with Brexit, tough choices will eventually have to be made.
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