A new Cold War may be upon us. At the center of tempest are Washington and Beijing, with London increasingly dragged into the vortex. In January, the UK announced it would permit Huawei to participate in the roll-out of its non-core 5G networks. By July, this decision was overturned. The reversal came just as the British government opened its doors to 3 million Hong Kong citizens, after Beijing imposed a new security law in the former British colony. An escalation of U.S.-China tensions since the start of the pandemic has, without doubt, created headwinds in the “golden era” of UK-China relations.
Unlike the Cold War of the 20th Century, where the iron curtain divided the East and West, the Cold War of the 21st Century has been characterized by a more ambiguous web of alliances. In fact, many claim the “Cold War” to be a misnomer. China and the U.S. have a fundamentally different relationship than the U.S. and USSR, and the new Cold War is being fought with tariffs and technology, as opposed to nuclear weapons. The only indication of the growing rift has been the trend of “separation”, oftentimes ideological. For instance, the pitting of free market capitalism against state capitalism, and authoritarianism against democracy. As U.S. Secretary of State Mike Pompeo warned in a speech in July, the goal is to induce China to change, instead of the other way around.
Still, a Cold War framing does not capture the complexity of global economic relationships, nor China’s economic clout and aspirations to play a greater role in domains such as climate change and digital governance. While the EU has labelled China as a “systemic competitor”, the UK is struggling to define its position in the pro-engagement or decoupling camp. Increasingly, the UK is caught between UK Prime Minister Boris Johnson’s reluctance to become a “knee-jerk Sinophobe” and Tory hawks’ insistence that partnering with China is a long-term strategic threat or a “golden error”.
As the deadline for Brexit draws close, Downing Street is pressed to negotiate new trade deals. However, it is being forced to choose sides, with the U.S. insisting on a “non-market economy” clause in a post-Brexit trade deal modelled after the new NAFTA agreement. Whereas the U.S. has traditionally been the UK’s top trading partner, trade between China and UK is growing at a faster pace. Moreover, Chinese companies have invested more than £45 billion (or EUR 50.3 billion) in the UK since 2000. Still, a growing trade deficit with China and reciprocity of investment remain unresolved issues.
Chinese involvement in 5G and nuclear power projects have also raised eyebrows in the UK due to national security concerns. Both are deemed critical infrastructure with military-sensitive technology and capacity for surveillance. For the most part, the UK has fallen in line with other members of the ‘Five Eyes’ security alliance, which includes Canada, Australia, New Zealand and the U.S. In recent months, all five members of the intelligence-sharing pact have banned Huawei, suspended its extradition treaty with Hong Kong, and promoted freedom of navigation in the South China Sea.
Ever since the eruption of protests in Hong Kong, the UK has strengthened its position on Taiwan and Xinjiang as well. While the West insists on a discussion of human rights abuses, China views it as an infringement of its sovereignty and interference in China’s internal affairs. It is clear that the U.S., and increasingly the UK, are taking a human rights-approach to foreign policy, especially in light of growing concerns over data privacy, China’s handling of the coronavirus, and the CCP’s alleged tightening grip at home.
The type of polarization the world is witnessing is fundamentally detrimental to globalization, a trend that has accelerated since the outbreak of Covid-19. While the days of an all-embracing attitude seem long gone, the UK will need to carve out a China policy of its own to cement its status as a global player.
The two key issues of the 21st Century all countries must address are technology and climate change. Moreover, Chinese and British actors have made headway in cooperation on both fronts. The City of London helped introduce the Green Investment Principles in 2019, alongside the China Green Finance Committee, which seeks to bolster sustainable investment along the Belt and Road. Moreover, the UK, which is Huawei’s largest market outside China, attracted £1 billion in investment for a new chip research center in Cambridge (plans currently pending). The UK also has fourth highest number of unicorns, behind the U.S., China and India. While Huawei’s ability to socialize into Western technology standards is dubious, China Standards 2035 is a good segue to set net rules in cyberspace.
As the Chinese Ambassador to the UK Liu Xiaoming has warned, “It’s hard to imagine a global Britain that bypasses or excludes China.” The UK should seek to safeguard gains from globalization to remain a relevant and powerful state. That means limiting economic and security confrontation. As Liu reminds, “decoupling from China means decoupling from opportunities.” However, a recent public opinion poll showed that 79% of Britons distrusted China. There comes a point when even industry representatives may be frustrated, if issues like corporate espionage, IP theft, state subsidies to national champions, and protectionist trade policies persist.
So far, the U.S.’s decision to declare a new “Cold War” on China has been received tepidly by allies. Australia, Japan, Korea, Germany have respectfully declined invitation to join Washington’s new Cold War cabal, acknowledging trade ties with China and its fast growing middle income market. The speaker of the South Korean legislature, Moon Hee-sang, pointed out that asking Seoul to “choose either China or the United States" was like "asking a child whether you like your dad or your mom”. Australian Foreign Minister Marise Payne further clarified, “the relationship that we have with China is important. And we have no intention of injuring it.” Indeed, decision should by no means be binary (i.e. China or the U.S.). It’s not a question of over-dependence on a country which has opposing (or similar) values, but exercising independence, in accordance to national interests.
The world is not necessarily becoming more like China. Instead, China will face new challenges, as it seeks to become more financially, economically and socially integrated with the rest of the world. The alienation of China is more likely to push it in the direction most fear.