October 16, 2015
Contact: paulina jakubec
#YFChina Day 4: A Golden Era?
2015 has been described as a “Golden Year” in UK-China relations. Prince William, David Cameron and George Osborne – and now the Young Fabians – have all visited China this year. Next week President Xi Jinping will visit the UK. This is also the first ever UK-China Year of Culture.
2015 has been described as a “Golden Year” in UK-China relations. Prince William, David Cameron and George Osborne – and now the Young Fabians International Network – have all visited China this year. Next week President Xi Jinping will visit the UK. This is also the first ever UK-China Year of Culture.
Much of the focus of this burgeoning relationship has been on trade and investment between the UK and China. In fact, the UK embassy in Beijing is now our largest and is dominated by its economic and trade section.
Despite China’s recent economic slowdown, GDP growth still registers at around 7.5%. Given the size of the Chinese economy this meant that in 2013-14, China effectively added an economy the size of the Netherlands to its GDP.
Much of the slowdown in the Chinese economy has come from a decrease in industrial activity and fixed asset investment – investment in property, manufacturing, and resources – as China tries to build a more consumer and service driven economy. This is described as the “new normal”.
Today our delegation visited the China-Britain Business Council (CBBC), an organisation focused on helping to develop a strong economic relationship between the UK and China and on harnessing China’s desire to “go global”. They told us that there has been a concerted effort by the Chinese government to increase outbound investment, and that in 2015 for the first time the volume of outbound investment surpassed that of inbound. Chinese investment abroad went from $2bn in 2004 to $116bn in 2012, bucking all international trends.
The UK has been a beneficiary of this drive. From 2010-2014 the UK went from being the 21st largest recipient of Chinese direct investment to the fourth.
China’s drive to increase its outward economic power can be embodied in the One Belt, One Road – or New Silk Road – initiative, in which the UK is an investor through the new Asian Infrastructure Investment Bank. This will essentially provide the hardware across China and Central Asia for China to increase its trade capacity and connection to Europe.
A big theme of this delegation so far has been mutual learning and innovation. China’s move to look outward is being driven by not only by the need to access new markets but also, importantly for the UK-China relationship, by the desire to harness technology transfer and learn from international practice.
On a domestic level the Chinese have been increasing investment in R&D and been implementing measures to increase indigenous innovation. This includes major public investment into incubator spaces and procurement rules which exclude foreign technology companies. Internationally this means an increasing amount of investment into UK tech companies. The CBBC told us about a number of joint initiatives to increase partnership and innovation between our two countries including the Launchpad, Newton Fund and the upcoming UK-China Tech Hub, which will support UK companies into Chinese incubators.
On this theme, we also visited Beijing Goldenway Biotech (BGB), the largest food waste treatment plant in the world. This company secured the patents for all its hardware and processes from the UK and uses European product quality standards. It was explained that this was because the UK has a strong technology influence around the world and it gave them a strong base from which to promote their innovation. They were also looking to expand their collaborations with universities in the UK and hoped to expand their operations to the UK. While much is made of the barriers to doing business in China, which the CBBC described as overblown, BGB explained that they were frustrated by their inability to easily locate information on UK planning regulations and subsidies on the gov.uk website.
Many of our Chinese hosts have expressed a strong desire to enhance global working practices to solve problems and promote peace. Their emphasis has been on finding common ground and putting to one side our differences.
The significant progress on the economic and trade relationship between our two countries is a prime example of this common ground. However, we also heard that the UK Government’s recent decision to put aside human rights in favour of focusing on our economic relationship has damaged its reputation with the Chinese Government and the rest of the Western diplomatic community.
This will certainly do some harm to the UK’s standing not only with China but also in other contexts and must be something that should be carefully considered by the Government. Building a strong diplomatic relationship based on mutual trust and respect with China will require strong economic and political exchange if we are to truly usher in a golden era of UK-China relations.
By Jessica Toale, Young Fabians International Network Steering Committee
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