Chinese citizens barred from UK, Blinken and Cleverly on China, London Metal Exchange
A Beijing to Britain briefing
Hello,
In the event of a crisis - from a full-scale invasion to an economic blockade - would the United Kingdom follow the United States into action over Taiwan? Would Europe? Would other critical countries in the Indo-Pacific, or indeed many of those who are non-aligned? And if they did, what tools are actually available for these powers? One of the most often discussed options in this scenario is sanctions. Helpfully, two major institutions - America’s Atlantic Council and the highly respected research provider Rhodium Group - released a report this week looking at how this could play out. That it has once again fallen to the Americans to game out these scenarios for the Brits, rather than any of Westminster’s own think tanks, is in itself revealing.
They conclude that the G7 would likely implement sanctions and other economic countermeasures targeting China across at least three main channels: China’s financial sector; individuals and entities associated with China’s political and military leadership; and Chinese industrial sectors linked to the military. This would cost $3 trillion in trade and financial flows, not including foreign reserve assets - equivalent to the UK’s gross domestic product in 2022. Crucially for business, the organisations suspect any sanctions package would aim to reduce the collateral damage by targeting Chinese industries and entities that rely heavily and asymmetrically on G7 inputs, markets, or technologies.
And critically for policymakers, they are of the view that economic countermeasures will not cut the mustard as a stand-alone product. They must be complementary to, rather than a replacement for, military and diplomatic tools to maintain peace and stability in the Taiwan Strait. That chimes with a separate set of findings released this week by America’s Council for Foreign Relations. Its Taiwan Task Force notes that “deterrence is steadily eroding in the Taiwan Strait and is at risk of failing”, and that despite the fact that China’s military “does not yet have the ability to invade and seize Taiwan in the face of U.S. intervention”, ultimately “Taiwan is still not doing enough to address critical shortfalls in its defense and civil resilience.” One of their recommendations should be headed by British politicians - they argue the United States should “avoid symbolic political and diplomatic gestures that provoke a Chinese response but do not meaningfully improve Taiwan’s defensive capabilities, resilience, or economic competitiveness.” More action, less posturing.
Finally - although it appears to have slipped under everyone’s radar this week, I note that the British Government has quietly added an explainer section to Atlantic Declaration. Readers will remember that this major agreement provides “a framework for a twenty-first century US-UK Economic Partnership." It now comes complete with a small mention of where the British Government’s thinking is on “the national security risks posed by certain types of outbound investment.” In short: the Department for Business and Trade (DBT) will lead civil service engagement with business and financial stakeholders “to develop our evidence base to enable us to assess the potential national security risks posed by outward direct investment (ODI). This work will inform how the UK can best calibrate its actions to respond effectively to these risks.” Keep an eye on this.
— Sam Hogg, Editor
In this week’s Briefing Note, we look at:
What the UK Foreign Secretary and US Secretary of State are saying on China
Two Chinese citizens being barred from the UK for donating on behalf of CCP
What’s going on at the London Metal Exchange