Huawei issue focuses spotlight on Sino-UK ties

High point

The Huawei issue has focused attention on relations between the UK and China, which reached a high point in October 2015 when President Xi Jinping made a state visit to the UK, heralding a new "golden era" of relations between the two countries.

The UK and China have an almost perfect economic symmetry. The UK is the world's largest exporter of services after the US, and China has huge demand for services as it moves its economy away from being dependent on manufacturing.

China also offers the UK a major new market for its goods and services as the latter embarks on new trading relationships after leaving the European Union. The UK is also strategically placed on the western edge of the Eurasian section of China's Belt and Road Initiative.

Although China is the UK's fifth-largest trading partner, with a total volume of￡80 billion, few observers doubt that there is huge potential for major growth.

However, in April, a group of Conservative MPs formed the China Research Group, or CRG, with the aim of resetting the relationship between the two countries. Huawei's involvement in the UK's 5G network has been a large part of the group's focus.

The CRG is chaired by Tom Tugendhat, also chair of the House of Commons Foreign Affairs Select Committee. In recent months, he has been a high-profile critic of China in the media.

Many commentators have said that the CRG appears to be following in the footsteps of the similarly-named European Research Group, home to euroskeptic Conservative MPs and which played an important role in the UK leaving the EU.

Chris Yang, chairman of the Hampton Group, a strategic consultancy based in London specializing in Chinese business and investment, fears that the new group has the same closed mind toward China as some in the ERG had about Europe.

"From what I have learned, the proposed reset of relations being led by the China Research Group is not being approached with either an open or an informed mindset," he said.

Yang, who has advised leading Chinese companies－including all banks－setting up in the UK, as well as leading multinationals operating in China, believes there needs to be a more informed debate in the UK about the importance of the China market.

"This discussion is vital. China is on track to become the largest global economy," he said, adding that within the next decade it is estimated that the country will have a middle-class population of 750 million.

"This biggest domestic market in the world by far is one that the UK should not ignore, in order to deliver rising prosperity to British people."

Douglas McWilliams, executive deputy chairman and founder of the Centre for Economics and Business Research, a consultancy headquartered in London, said it is important not to combine Brexit and the UK's relations with China.

"Suggesting that the issues are Brexit-related is missing the point. The problems have come from the deterioration of relationships between the US and China. The EU is facing the same problems, and the UK would have faced them even had the country voted to stay in the EU," he said.

Ian Goldin, professor of globalization at the University of Oxford, said the danger of part of the debate about China in the UK is that it risks a new Cold War, which would be bad for everyone.

"History is unfortunately full of examples of politicians taking their countries down very dangerous and dark roads," he said.

Goldin, a former economic adviser to late South African president Nelson Mandela, said the UK and other European countries need to resist pressure from the US to take its side against China.

"The only way we're going to get a thriving global economy, and the only way we're going to deal with pandemics and climate change, is if we cooperate with China, and the US also cooperates with China," he said.

Tugendhat, from the CRG, who is a former officer in the UK's volunteer Territorial Army－renamed the Army Reserve in 2013－has even suggested that UK universities should reduce their dependence on Chinese students and relax visa requirements for their counterparts from countries such as India. More than 120,000 students from China are studying at UK universities, providing income of ￡1.7 billion ($2.1 billion).