Theresa May, to her credit, has ended the meetings of the annual UK-China Joint Economic and Trade Committee. Boris Johnson and Rishi Sunak, acting in rare unison, have restarted them: apparently Mr Johnson favored dealing with the Chinese, ruling out the controversial Huawei telecoms deal only under US pressure. Now Mr. Sunak had a revealing moment. In scathing remarks last week he accused China of being “the biggest long-term threat to Britain and the world’s economic and national security”. Addressing China’s drive to spread soft power, he promised to close 30 Confucius Institutes in Britain, which teach Chinese and Chinese culture. He accused China of stealing technology, infiltrating universities, supporting Putin and bullying neighbors, especially Taiwan. He accused his rival, Liz Truss, of going soft on the Chinese while she was foreign secretary, despite both supporting the new policy of dialogue as members of Johnson’s cabinet. Unfortunately, successive governments have been seduced by China’s money and influence. The rhetoric that British “values” are not “compromised” by dealing with this unpleasant regime has remained just that. Mr Sunak made a remarkable U-turn, but Ms Truss appeared to hint at a Commonwealth summit in Rwanda last month that we might start arming the Taiwanese. Arguably, China’s economic and moral influence on Britain has reached a critical level. Total trade in goods and services between the UK and China reached £93 billion by the end of 2021. China is our third largest trading partner, accounting for 7.3 per cent of our total trade: it is the second largest importer and the sixth largest export market. Yet Britain invests far more in China (£12.9bn) than China invests in us (£3.4bn, falling 21.5 per cent a year). It recalls the situation in Berlin on the eve of the Great War, when German businessmen begged the Kaiser’s advisers not to start a war that might involve Britain because the City of London was largely responsible for financing the economic miracle of the Second Reich. We increasingly rely on China for office machinery, telecommunications, apparel and consumer goods. Business services account for 45% of service sector imports. Some 865 UK-based companies are Chinese-owned, including UK Power Networks, which supplies electricity to 8.3 million homes. Chinese investors have a portfolio of UK businesses and properties worth £135bn. Their sovereign wealth fund has just bought an 8.68 per cent stake in Thames Water, the biggest water and sewerage company. A Hong Kong-based company owns Felixstowe, our busiest port. We are not yet at the stage Germany is in after Angela Merkel’s crazy decision to rely on Russian gas, but parts of our economy and infrastructure are dangerously dependent on the pandering of Chinese businesses with close ties to the autocrats who rule China . They even own 64 of our care homes. A salutary lesson is provided by the University of Cambridge, whose insatiable desire for money exposed it to an easy seduction by the Chinese that began more than 15 years ago. Cambridge has 1,900 Chinese students, more than any other overseas country, and in 2010 I was alerted to the fact that some students were reporting back home vicarious comments made in seminars and that China had tried to influence Sinology studies at the University. The outgoing vice-chancellor, Stephen Toope, whose tenure was cut short largely by his philosophical struggle with free speech and academic freedom, has been a long-term intercessor in Beijing. He is overseeing a collaboration with the Nanjing Center of Technology and another with Tsinghua University “to address the urgent challenges facing humanity,” challenges that exclude the shutdown of democracy and persecution. Lei Zhang, owner of Shanghai-based Envision, which has made a major investment in Cambridge, joins China’s National People’s Congress. A professor, during the protests in Hong Kong, warned students not to criticize Beijing. Cambridge and particularly Jesus College, which housed two Chinese study centres, have been hurt by criticisms of this gratitude, and recently their language, like that of the government, has become noticeably less friendly. The prospect of an invasion of Taiwan may well have diminished after Russia’s debacle in Ukraine, due to the crippling effect of sanctions. China values the growth of wealth not, like Putin, for the benefit of individual kleptocrats, but for the greater glory of the Chinese nation. A Yale School of Management study last week argued that Putin’s strategy was driving Russia into economic oblivion. Russian foreign reserves have fallen by $75 billion, or more than 10%, since February. Imports, especially of inputs for Russia’s manufacturers, have collapsed and domestic production has “come to a complete standstill”. These are the last things China wants. A priority for the new prime minister will be to appoint a Foreign Secretary and International Trade Minister who will not bow to the Chinese. A policy of encouraging British businesses to consider, for strategic reasons, other suppliers of goods and services would be entirely prudent. There needs to be more strategic thinking to allow the Chinese to buy infrastructure and basic services. we would never have encouraged the Russians to do such a thing during the Cold War. Unfortunately, our attitude toward China has not been smart, nor has it matched our boast of a foreign policy that matches our values. We have to wake up and make a fresh start.
