Britain, China's 'win-win' with Xi Jinping's visit

Xi Jinping's state visit to Britain from October 19 to 23 is important in itself, clearly illustrates the basis for mutually beneficial relations between different countries and shows principles for overcoming problems between states.

There are striking differences between China and Britain. China has the world's largest population, the world's largest economy in Parity Purchasing Powers (PPPs), and is a country increasing in global weight and clearly only at the beginning of its rise. The UK has approximately one-twentieth the population of China and a significant economy although outside the 'superheavyweight' league of the US and China - its GDP being 10th in the world in PPP terms.

For many centuries Britain was the world's largest economy and most powerful state, but this position has been taken by the US and increasingly by China. Thanks to Britain's long period of development it retains a standard of living China is still growing towards – Britain's per capita GDP in PPPs is almost three times as high as China's.

However, it can be not national similarities that can create the most fruitful interaction but differences. Xi Jinping's visit will illustrate that.

Starting with the economy, China has become the world's industrial producer, the largest goods trading nation and runs a large surplus on manufactured trade. Britain has undergone one of the world's sharpest declines of manufacturing as a proportion of its economy and has been running deficits on manufactured trade for decades; however, it has a large trade surplus in financial and other services.

Even within manufacturing the contrast is striking - Britain's remaining manufacturing sector is concentrated in very high value added products, such as pharmaceuticals, while China is the world's most competitive producer of an increasingly broad range of manufactured products. The result is the two economies are complementary and vividly illustrate the international trade principles of division of labour and comparative advantage.

Due to these complementary features the economic interaction between the two countries is dynamic. Britain is China's second largest EU trading partner, while China is Britain's fourth largest trading partner. Britain is the second largest recipient of China's foreign investment within the EU and the second largest EU investor in China. Trade between the two countries in 2014 rose by 15 percent.

The UK now sees opportunities to use its position in global financial services to win Chinese business. London is the world's largest foreign exchange dealing centre - bigger than New York and Tokyo combined. This puts London in a strong position to help establish the RMB as an international currency, a development also in China's interest. It is reported London will become the first center outside China in which Chinese government RMB denominated debt will be issued.

China is highly interested in using its expertise and finance to invest in UK infrastructure projects. Over a fifth of Britain's power generation capacity will be replaced in the next decade, and on a recent trip to China British Chancellor of the Exchequer George Osborne announced opening of bidding for the country's projected $17 billion High Speed Two rail link - contracts potentially of great interest to China which now has the world's largest high speed system.

The opportunities for cultural, educational and 'people to people' exchanges are also enormous. Shakespeare, Agatha Christie, Harry Potter and other classic and modern British icons are well known known cultural imports in China. Britain's knowledge of modern Chinese culture is not yet as good as it should be, but enormous queues for exhibitions such as the British Museum's exhibition of the Xi'an terracotta warriors show deep interest in Chinese classical culture, while China's rise will produce increasing knowledge of China's modern achievements. More Chinese students study in British universities than from any other foreign country, for example.

Unfortunately a few years ago these potential benefits were blocked by ill-judged moves by Britain. Prime Minister David Cameron held a meeting with the Dalai Lama – a person pretending to be a purely religious figure but who actually leads a separatist political movement. This was an intervention in China's internal affairs and contrary to Britain's unequivocal recognition of Tibet as part of China. It was rather like de Gaulle's notorious 'Vive Le Quebec Libre!' declaration regarding Canada. This naturally led to a frost in relations – China refusing to hold high level meetings for over a year.

Both sides lost from this, but as China is a rising economy Britain lost more. Fortunately the British government reversed this approach and no further meetings have been held, and relations warmed. David Cameron visited China earlier this year and on his recent visit George Osborne declared Britain wanted to be China's 'best partner in the West.'

Now, Britain is doing everything possible to overcome previous problems in relations and China has responded. Both sides gain.

From going through a difficult period China-Britain relations currently are a model of how countries should interact. Regarding cultural and human interaction the situation was very accurately observed by China's President:

'Civilizations are equal, and such equality has made exchanges and mutual learning among civilizations possible… No single civilization can be judged superior to another… Every civilization is unique…. All achievements of civilizations deserve our respect and must be cherished. History proves that only by interacting with and learning from others can a civilization enjoy full vitality.'

Fortunately these principles currently inform British-China relations - to the benefit of both countries.

The writer is a columnist with China.org.cn. For more information please visit: http://www.china.org.cn/opinion/johnross.htm