Cooling China ties will come at a cost for post-Brexit UK

Cooling China ties will come at a cost for post-Brexit UK

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UK Chancellor of the Exchequer Philip Hammond and China’s Vice Premier Hu Chunhua at Diaoyutai State Guesthouse, Beijing, April 25, 2019. (Reuters)

Boris Johnson’s government this week began a new review into the impact of allowing Huawei telecoms equipment into the UK’s 5G network. While bilateral ties are already chilled, they now threaten to enter the deep freeze with a major potential policy U-turn on the 5G issue, plus the strains of the coronavirus crisis.

The new review follows the UK government’s controversial decision earlier this year to approve a limited role for Huawei in building the country’s new mobile infrastructure, albeit with a ban on supplying kit to the sensitive, core parts of the grid. It was announced at the time that Huawei would only be allowed to supply 35 percent of the kit in the so-called periphery, including radio masts. UK mobile operators were told they would have three years to comply with this decision.

However, dozens of Conservative MPs, not to mention the Trump administration, have been urging Johnson to review this as a priority. The latest salvo came a few weeks ago, when Washington placed additional sanctions on Huawei that will restrict its use of US technology and software to design and manufacture its semiconductors. The Department of Commerce said that Huawei had flouted regulations implemented last year that require it to obtain a license in order to export US items. It says Huawei got around this rule by using US semiconductor manufacturing equipment at factories in other countries.

The new UK review is based on technical considerations as a result of the US sanctions, which offers the government a potential “get-out” from its earlier decision. This could see the firm excluded entirely or further limits imposed. Indeed, despite the review only beginning this week, it has been widely reported that Johnson is looking to curtail Huawei’s involvement in the UK’s 5G infrastructure, reducing it to zero by 2023. 

The reason why the government is acting now is to try to stave off what could otherwise be an embarrassing defeat on Johnson’s previous proposal to reduce Huawei to a 35 percent share. Although the prime minister has a large majority in parliament, the number of Conservative MPs willing to rebel on this issue may be as high as 50, showcasing how anti-Chinese sentiment is hardening during the coronavirus crisis. And this has been reinforced by last week’s “draft decision” — as it is known before approval by China’s National People’s Congress — to impose a new security law on Hong Kong that will undermine its remaining political autonomy.

That pending Chinese decision has provoked a strong reaction in the UK. The Johnson government has condemned the move, arguing that the best solution would be for Beijing to fully respect the rights and freedoms that were set out in the Sino-British joint declaration, agreed in 1997 when control of Hong Kong was handed over to China. In addition, some 200 senior politicians (including dozens of UK MPs) from around the world issued a statement criticizing China’s plan. The statement, drafted by former Hong Kong Governor Chris Patten, describes Beijing’s move as a “flagrant breach” of the joint declaration. It goes on to assert that “if the international community cannot trust Beijing to keep its word when it comes to Hong Kong, people will be reluctant to take its word on other matters.”

Relations between the UK and China had cooled even before the announcement of the draft Hong Kong law and the coronavirus outbreak, partly because of the political unrest in Hong Kong that Beijing says needs tackling via the new bill. But this cooling of ties may now be extended. Indeed, in the context of growing anti-China sentiment, there is a real possibility that bilateral relations could become as frosty as in the period after then-Prime Minister David Cameron offended Beijing by meeting with the Dalai Lama in 2012. London quickly reversed tack after this and the Conservative governments of both a chastened Cameron and Theresa May subsequently ratcheted down, in public at least, concerns about human rights in China. 

The number of Conservative MPs willing to rebel on this issue may be as high as 50, showcasing how anti-Chinese sentiment is hardening.

Andrew Hammond

This underlines that, for all the current UK government’s rhetoric against Beijing, a similar reversal cannot be ruled out. For, while there is growing international concern about China’s actions, London will soon have an acute post-Brexit dependence on intensifying economic ties with key emerging markets. Indeed, even before Brexit, economics had assumed higher importance in bilateral relations, with London putting greater emphasis on consolidating ties with Beijing. By putting the interests of commerce so prominently in the bilateral relationship, London has received significant criticism. 

Yet, despite this controversy, Conservative ministers have generally perceived in the last few years that enhancing ties with China is strongly in the UK national interest. It has widely been viewed that there is an opportunity to develop a relationship that could make a significant contribution to UK prosperity for a generation to come.

This is why it would now be such an important break in UK policy if the Johnson government moves to a consistently much harder-line stance. It now, therefore, faces a very tough balancing act as it seeks to reconcile its growing political concerns about China with its post-Brexit economic needs.

  • Andrew Hammond is an Associate at LSE IDEAS at the London School of Economics.
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