Cameron and the Foreign Affairs Committee, UK funds and China, Taiwan elections
A Beijing to Britain briefing
Hello,
Welcome back, folks. I hope you had a peaceful break, and thank you for the kind words on our end-of-year note about the current state of the UK’s thinking regarding China. I’ve had lots of feedback from inside and outside the machine - if you’re interested in my view on how we can build China capabilities, please do give it a read.
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2024 is a year of elections: UK, USA, India, Mongolia, you name it. As a side project, I’ve decided to track them all. For extra fun (and to try and learn some stuff about macroeconomics) I’m going to analyse them against three rough hypotheses:
Whereas in the past countries that have elections that are viewed as contested or 'not fair' in the eyes of G7/West could have risked significant sanctioning, this year Western sanctions will largely be held back because the US & allies fear pushing the countries into China's arms, especially if they are involved in the Indo-Pacific push
Instead of sanctions, the US & allies/partners may use means such as tariffs, investment restrictions or freezing of assets to punish unfair elections. Countries where an incumbent party refuses to give up power in what should have been a 'fair' election end up temporarily losing FDI despite the companies and industries at the heart of the economy still being the same
Some Western investment firms may not have priced in geopolitics accurately when it comes to the above scenario of elections, especially with how the governments of their respective investments could react. E.G. if an African or Asian country 'slides back' at a democratic election, it could make it awkward for a European FTSE250 mining company to remain operating in that country. However, the flip side is that if the company is working in a field closely related to critical industries (minerals for example), they may get more leeway as Western blocs don’t want to cede ground to China.
As you can see, I’m at the beginning of the ladder here. Regardless, a good number of these elections matter from the UK-China bilateral viewpoint too. For example: Bangladesh went to the polls last week, in an election marred by violence and an opposition boycott. Unsurprisingly, it was deemed unfair by the US, the UK, and their allies. China on the other hand congratulated the winning Awami League Party (along with Russia and India), and stressed how close the relationship between both countries is. In normal times, the US bloc may have responded to this undemocratic election by sanctioning high-level officials - however, Bangladesh is part of the Indo-Pacific push, and the US and UK are keen to keep them onside: therefore the leadership seems to have avoided the worst of the brunt. These calculations will be repeated a dozen times this year: worth monitoring I think.
- Sam Hogg, Editor
In this week’s briefing:
David Cameron goes before the Foreign Affairs Committee
Taiwan goes to the polls
UK funds performed poorly in China
More detail on Labour’s ‘Securonomics’
Politics
Parliament resumed sitting after the Christmas break. Tobias Ellwood, formerly Chair of the Defence Committee, brought forward a debate on Afghanistan. China, he argued, “is eyeing up Afghanistan’s rich mineral resources and could easily turn the country into a vassal state.” MPs and Peers, led by Iain Duncan Smith (IPAC) and Lord Alton (Hong Kong Watch) continued to pressure the Government over its response to the ongoing Jimmy Lai case.
As readers will know, the case against media mogul Lai is currently playing out in Hong Kong, and has drawn significant political attention in Westminster, especially after a couple of British citizens were painted as co-conspirators (more on that here). Just before the Christmas break, Duncan Smith secured an Urgent Question on the issue, which saw many MPs criticise the Government’s response to the affair and call for action.
On the opposite side, Chinese and Hong Kong state media and authorities have attempted to portray the trial as a clear case of national security. The Global Times, for example, has run a series of articles on the matter, with a recent one including a quote from Fu Kin-chi, director of the Chinese Association of Hong Kong and Macao Studies and vice-president of the Hong Kong Basic Law Education Association: "One has to question whether it is necessary for a media businessman to frequently interact with US defense department personnel or political figures." Hong Kong Free Press has provided good counter-coverage, and Big Lychee is also worth reading.
Across the border SNP leader Humza Yousaf and First Minister of Scotland on Monday delivered a speech setting out his party’s vision for industrial policy in an independent Scotland. Not picked up by the media, he gave China a long mention. “China’s commitment to industrial policy has strengthened in recent years. Made in China 2025, launched in 2015, is the Chinese Government’s ten-year industrial plan to rotate their manufacturing base away from low value, low wage activities towards higher-tech, higher value, future-facing industries. Chief amongst these are electric vehicles, next-generation information technology and telecommunications, AI and advanced robotics. The Plan includes the setting of specific targets and extensive direct subsidies, as well as encouraging foreign investment and acquisitions. Inevitably, other major economies viewed the 10 Year Plan as not only a threat to global trade rules but also a security risk. It is no secret that China’s development helps to explain recent strategy in the US and EU. And given the Scottish Government’s aspiration for Scotland to rejoin the EU as an independent country, it is EU policy that is most relevant for us.”
A short swim away from Scotland, Chinese Premier Li Qiang is set to visit the Republic of Ireland next week. From the BBC “Speaking ahead of the visit, Taoiseach (Irish prime minister) Leo Varadkar said he is "looking forward to extending a warm welcome" to Mr Li on his first visit to Ireland. "It comes in a year in which we will mark 45 years of diplomatic relations between our two countries," Mr Varadkar said. "China is one of the world's great powers politically and economically and I am glad that Premier Li has decided to include Ireland in his itinerary."…"China is an important economic partner, a permanent member of the UN Security Council and has a huge role to play in overcoming the shared challenges the world faces, including working for peace and security in the world and ensuring we stop climate change," the taoiseach added. "I look forward to what I hope will be an in-depth and constructive discussion on issues where we are of like mind, as well as those on which we have a different perspective.””
Also worth noting: there’s been a change at the Taiwanese Representative’s office. Vincent Chin-Hsiang Yao assumed the top position as the new representative to the UK on 10 January 2024, and will be at an event in Parliament on the 30th.