Wednesday, 21 October 2015

The art of compromise

I thought it would be rude not to come out of hibernation to do a post on the China-UK strategic alliance. That, and I have been bullied by my Capitalist Masters to write something...

Lots of the debate I have seen and heard revolves around the question of "does engaging with a fairly brutal regime make it more or less likely that the regime will become less brutal?", linked with "can we afford not to engage with the Chinese?". These are interesting questions. When the Iran ball dropped and suddenly the possibility of selling stuff to the Iranians and getting a return on investment there arose, I read a newspaper article crowing that as usual the Brits were slow off the mark and that our French and German rivals were much more ready to benefit. I didn't read anyone slamming the French and Germans for getting into bed with a dodgy regime. We Brits seem to be damned if we do, and damned if we don't. The Germans have made a very big success out of selling cars to China. Does that make the Germans more or less human-rights-aware? 

Let's be brutally frank about this: Britain could use the investment and trade opportunities from pretty much anywhere. The UK economy is reasonably steady (perhaps even overheating in places) but that does not mean we have got over our longstanding problems. Without entering into a debate about whether the nuclear deal is worth the money, we do need someone to be building the next couple of decades' worth of electricity generators. There are plenty of opportunities for British investors to get involved in things, but there seems to be so much capital piled up in China, it would seem to make sense for us to get some of that to work here. 

We aren't simply a charity case here, though. The British and Britain are still held in high regard around the world, something which you would not guess from the self-flagellation in which we indulge ourselves so often here on the island itself. For the Chinese, perhaps in addition to the return on the capital they employ, and the businesses they develop, there are rewards in being shown to be a trusted partner. If the Chinese companies involved in the deals being outlined during the state visit screw up, it is Brand China that will suffer the most. Much of the rich world is shut off to Chinese investors, but maybe the Chinese hope that entrenched views on both sides of the Atlantic may soften if the British projects work out well. 

China is at an interesting stage of economic development. The huge investment-based export-reliant catch-up upswing appears to be ending. To get really rich, the Chinese will have to become good at innovation and fostering small businesses. Famously, when the Japanese decided to integrate themselves into the world economy, they transposed whole chunks of the German legal system into their own. Perhaps Chinese investors will learn what it is that makes us a good place to do business and take some of that back with them.  

It was not so very long ago that people worried about the return of Hong Kong to Chinese sovereignty. Would an oasis of the rule-of-law and vigorous free-market capitalism survive when ruled by a bunch of Commies? The treaties between the UK and China demanded fifty years of effective independence, and a currency peg to the US Dollar. Yet, the great success story of the subsequent period has been how economic freedom (not complete, mind) has spread from that little corner to right across that huge country. I doubt anyone especially worries about a repeat of the Cultural Revolution.

So, my conclusion is: if you are keen to get the Chinese government to treat their own people better, it is probably better not to treat that government as a pariah, and let it fester in its own insanity a la Iran or North Korea or even Cuba; if you are keen for the UK economy to develop and thrive as a centre of excellence in trade and free markets, then you should welcome investment in almost any industry from almost anyone - it is up to us to make sure that we get what we need and don't overpay. 

Britain has been a successful country over the centuries not because it has stuck to a particular principle or ideology, not because we have fixed and immutable red lines, but because we have been able to adapt to ever-changing circumstances. We should change our name to the Pragmatic Kingdom.


Thud said...


Anonymous said...

Agreed, however:
"To get really rich, the Chinese will have to become good at innovation and fostering small businesses."

Or maybe they'll just get better at stealing western technologies...

andrew said...

I think we do have red lines.
The most accurate words I can put it in is

"Dont take the piss, except when its funny"

The thing is you have to be british to know when it is funny.

Nick Drew said...

@Andrew, that's a very good summary of a highly intangible issue that drives foreigners berserk

reminds me of Dara O'Briain's comment: the Irish Police have refined their communications to the public they encounter in the street, to just 3 utterances: in ascending order of severity

- ah, yer grand
- moind yerself, there
- now yer reely takin' the piss!

and there's the comment I quoted on Monday: “The Chinese have dealt with the British for a long time ... they are practised at the brilliant complexity of British hypocrisy, and I think they are very comfortable dealing with that. This works well for them.”

if they really do understand us then *all we need to do* is to understand them ... and stuff the EU!

Sebastian Weetabix said...

If this nuclear is soooooo beneficial for brand China, then why the fuck have the simple shoppers in Whitehall agreed a 2x+ strike price for the next 30 years?

dearieme said...

It must be some time since China has buggered up other countries the way NATO/US have lately - Iraq, Afghanistan, Libya, Syria, Ukraine, and Serbia come to mind.

Jer said...

Indeed dearieme, our alleged commitment to human rights and democracy extends as far as encouraging a civil war, but not as far as doing anything very useful. Of course there is little useful we can realistically do, so it's a shame we didn't consider that before buggering up the status quo.