Alphen,
Netherlands. 5 December. British
PR-Meister David Cameron was in Beijing this week selling Britain to the
Chinese. No, I mean literally selling
Britain to the Chinese. I think he got
about twenty quid for Scotland, which to my mind is far too much especially as
come next September they could well be offering themselves to anyone for next
to nothing. He also promised to raise
the issue of human rights with Chinese Premier Li Keqiang. Given how desperate Dave is for money one can
imagine the conversation. Desperate for dodgy
dosh Dave: “So, Li, how are human rights doing in China?” Li: “Fine”. Dave: “Good.
How much will you give me for Manchester?
Thirty quid and I will throw in free delivery.”
What was
strange about Cameron’s trade visit was it seemed completely detached from the volcanic
geopolitics in the East China Sea. Having
finally settled on something that to Cameron’s a-strategic mind looks like a
strategy – mercantilism – nothing was going to get in the way of a deal. Now, don’t get me wrong, with the EU a mutual
impoverishment pact Dave is right to seek to open up the Chinese market to
British business.
However, the
sudden vigour with which he has suddenly discovered China after over three
years in office suggests that dear old Angela has told him that now she is in
bed with the EU-hugging German Left there will be no EU reform. Britain could soon be on a slow boat to China
via an EU exit.
Dave is not
great with timing. As he was selling
Britain China was unilaterally deepening its dangerous dispute with Japan (and
by extension the US) by declaring air space sovereignty over the disputed
Daioyu/Senkaku islands. By adding
Britain to its now extensive collection of Europeans desperate for Chinese money
it would thus be easy to conclude Beijing has neatly split and neutered the old
West.
So, has
China pulled off a strategic masterstroke?
No. In fact China’s creeping and
burgeoning assertive nationalism is in danger of putting at risk the very thing
that has made China rich – globalisation.
Yes, beneath the East China Sea there could well be huge reserves of oil
and gas that the Chinese economy desperately needs. However, the islands dispute is not really about
energy, it is about power.
China has
become rich precisely because of the relatively stable international order the
West, mainly the Americans, created. In
spite of efforts to boost domestic demand the enormous developmental challenges
China faces (town/country split, ageing population etc. etc. etc.) China is
more developing power than superpower.
China will need to export for years to come.
Given that
the last thing that the Chinese economy needs is strategic turbulence and yet
that is precisely what China is creating.
The disputed islands are like small pebbles dropped into an enormous
strategic pool causing ripples across the world.
What could
be that impact? Re-shoring is the simple
answer. On November 25th the Financial Times ran a piece in which it
said, “One in six UK companies has brought production back over the past year
or is in the process of doing so suggesting re-shoring is starting to gain
traction. The number of companies
returning production from countries such as China is outstripping those moving
output overseas according to a survey of more than 500 small and medium-sized
companies”.
Re-shoring
is gathering momentum across the West with many companies now abandoning Asia
to return production to their home markets.
The FT piece suggests that cost of production, lack of quality and long
lead times are the primary factors. Research
at the University of Tilburg also cites problems of communication to which add concerns
about the cost and reliability of regulatory regimes in Asia.
Now,
imagine China really steps up the heat on Japan. What is now still a trickle of re-shoring
would very rapidly become a flood. In
effect, China would be killing the Chinese goose that laid several million
golden eggs as the one thing business cannot stand is strategic
turbulence. If China pushes too far its
many claims across what it has unilaterally termed its far-ranging Economic
Exclusion Zone the ‘cost’ of doing business with or in China could become too
great and China’s export-led boom would rapidly end.
Perhaps
dear old Dave is not as strategically-challenged as his lightweight premiership
might suggest. It may well be that China
needs influential friends in the West as much as Dave needs China. Perhaps that was what Premier Li meant when
he talked of an “indispensable partnership” and there really will be some
Chinese give as well as the more normal take.
I wonder if Dave told Li that Britain might leave the EU?
As for
Manchester. Thirty quid? You must be joking. Five at best and you can collect it
yourself. Bring a bag.
Julian
Lindley-French
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