Relations between China and the UK have been under spotlight especially after UK Prime Minister Rishi Sunak announced recently that the "golden era" with China is over.
“I am cautiously optimistic about China-UK relations under Sunak,” said Lord Neil Davidson, Shadow Treasury Minister for the Labour Party of the UK and member of the House of Lords, at a recent interview with GDToday for the Understanding China Conference.
“Cooperation is the way forward. Sunak was pro-development of good relations with China when he was the Chancellor of the Exchequer. He recognizes the importance of China as a country that can invest in the UK, and as a country with which the UK can cooperate economically,” he said.
UK is not so stupid to cut off Chinese investment
Lord Davidson believes it is significant for the British Prime Minister and Chinese President to maintain good relations. The two leaders were set to meet at the G20 Summit earlier but the encounter was canceled due to a sudden emergency of the missile blast in Poland.
Although Sunak is now facing pressure from his Tory backbenchers to toughen the stance on China and has to appease the way in which these arguments are created. Lord Davidson considers Sunak is much less inclined to go down the populist route that Boris Johnson and Liz Truss took and expects that the Prime Minister will be seeking to renew the China-UK economic and financial dialogue soon in the new year.
As for the voices asking for decoupling with China, Lord Davidson said these voices are not necessary in favor with most people though they might gain more media coverage. “Business and financial practitioners understand the relationship with China is essential as the bilateral trade is increasing. The trade is in both parties’ interests and will only continue to grow in the future.”
According to China’s Ministry of Commerce, the trade in goods between China and the UK exceeded 110 billion USD for the first time in 2021, and China has been the UK’s second largest trade partners as of September 2022. China is also a favorable investment destination to British investors as the investment from the UK into China saw a 40 percent year on year growth from January to October in 2022.
In addition, a report released by The Times in 2021 indicates that Chinese investors have spent 134 billion pounds on UK assets including energy, infrastructure and healthcare. “The UK is dependent on foreign investment. We are not so stupid to cut off investment from China, given its enormous power in the world economy,” said Lord Davidson.
UK, EU can address energy crisis through cooperation with China
The UK is facing increasing concerns about having sufficient electric power in the future due to the disruption caused by the ongoing Russia-Ukraine conflict. However, the British government is maneuvering to end Chinese investors’ involvement in such areas as nuclear power and telecommunications.
Now that the UK has taken the same hit as the rest of the EU countries with soaring energy prices, Lord Davidson said Sunak is bound to appreciate the necessity of cooperation to address the energy crisis given his economic background and rational approach to politics.
“The UK and EU can cooperate with China in the energy sector since China has achieved profound development in turbines and solar power, built up an enormous amount of renewable energy way beyond most economies. We can definitely benefit from the lessons that China has learned and the products that China produces in the green energy sphere,” he said.
In the meantime, Lord Davidson pointed out that the UK has developed remarkable innovation in the area of maritime arrays for wind power and again, emphasized that cooperation is the way forward.
Modernization of Chinese legal system gives western investors confidence
2023 marks the 10th anniversary of the Belt and Road Initiative (BRI). Lord Davidson said the EU countries and UK now have more confidence and trust in the Initiative especially since the Piraeus Harbor Project, the state-owned China Ocean Shipping Company’s investment in Athens, shows China's extent of BRI is moving well into Europe.
Being a former law minister, Lord Neil Davidson, has been impressed by the way that the Rule of Law has been developed in China as part of the modernization and considers it a foundation for international economic cooperation. “I saw more investors are convinced that China stands behind the Rule of Law, believe China is ‘investable’ and profited from their investment in China,” he said.
As for the argument accusing China of laying ‘debt trap’ for other countries through BRI, Lord Davidson said the notion that one borrows money to engage in a project and treats that as a burden just ignores the way in which investment works.
“It’s a question of economic decision-making. If one party proposes and the other party accepts, the accepting party has to realize the nature of their transaction getting into. I don't see this as the disruptive outreach by China,” he said.
In addition, Lord Davidson believes the BRI will facilitate the internationalization of RMB as most of the contracts developed through Asia, Africa, and to a degree in Europe are being denominated in RMB. “There has been discussion about the increase of RMB in nation's reserves recently to diversify and keep the receipts so as to come to some measure of control.”
“London, as a global financial center, has to be wholly involved in the development of the RMB or would be to ignore the world's second largest economy and a world major trader. There has been a substantial offshore market in London for the last 10 years and that market has been developing,” said Lord Davidson.
Reported by Jasmine
Edited by Wing, Steven, Jerry
Graphic Lulu
