End of Year Note: 2022

Musings on a tumultuous year

Hello,

In Westminster, time is warped: days last weeks, months last hours. 2022 alone saw three British Prime Ministers in six months, compared to three in the previous 84 months. In this haze, it can be difficult to find a moment to reflect on the bigger picture. Significance can be attached to things which at the time felt incredibly important, while other more critical moments took place outside the spotlight.

Globalisation as we know it is changing, perhaps coming to an end, but more likely evolving. In this context, it is clear that the United Kingdom needs to rapidly determine and dovetail its domestic and foreign policy goals and ambitions for this new era. A deep understanding of bilateral, trilateral and multinational relationships will be absolutely critical.

I started this year in an unusual position - working for an MP, primarily on their China interests. I end it running a small company which maps the ebbs and flows of the UK’s approach to China. This has put me in somewhat of a unique position: an insider and outsider, adviser and observer, not a journalist, analyst, or researcher. In many ways, the weekly briefings I produce on this complex bilateral relationship are simply the end product of conversations, voice notes, meetings and coffees I have with the others in this space - civil servants, MPs and their researchers, diplomats, intelligence and defence sources, civil society and business people. Beijing to Britain is a one-person operation, existing thanks to the support of hundreds of paying readers.  To all of you, I am deeply grateful.

What follows then is not a comprehensive analysis, but a series of observations, views and predictions I’ve accumulated from operating in this space day in and day out.

I would love to hear your views. 2023 will be a year of change. Stay tuned.

- Sam Hogg, Founder

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DOWNING STREET AND CHINA

The year closes with Prime Minister Rishi Sunak in Downing Street. The former hedge fund manager is inexperienced and reportedly uninterested in foreign policy, a trait which has seen him grilled by his own MPs. As Beijing to Britain highlighted at the beginning of his premiership, it is perhaps most helpful to view Sunak as an economic pragmatist with a view that China needs to be engaged with, putting him in direct contrast to his predecessor Liz Truss, who held a core belief that values-led engagement with countries around the world could constrain China. To this end, in his first major foreign policy speech, Sunak notably included a quote from (in)famous statesman Henry Kissinger: “during periods of crisis, whether war, technological change or economic dislocation, management of the status quo may be the riskiest choice of all.” 

Pushing “robust pragmatism” as his modus operandi, it is curious that the examples Sunak points to when pressed to prove his China hawk credentials are events that were determined before he walked through the doors of Downing Street. It was not Sunak’s Government that ordered the creation of a new set of rules around foreign companies investing in and purchasing British companies - although his Government did pull the trigger on British semiconductor firm Newport Wafer Fab - nor did he order the removal of Huawei. Conservative MPs are aware of this, as is the opposition Labour Party (itself lacking a coherent approach to understanding China), which explains in part why Shadow Foreign Secretary David Lammy has begun to have an interest in the issue.

On the backbench, Alicia Kearns, the Chair of the China Research Group and Foreign Affairs Committee, and Iain Duncan Smith, the co-chair of the Inter-Parliamentary Alliance on China, have caused headaches for Downing Street, criticising Sunak’s slow approach in the case of the former, and accusing him of “appeasement” in the case of the latter. But Sunak also faces pressure from within his own Government: Security Minister Tom Tugendhat brought the issue of Confucius Institutes back on the agenda early into his new role, has gone on air to discuss the risks posed by Chinese surveillance firms, and singled out TikTok as a company causing him concern. Nusrat Ghani, now a Minister in the Business Department, has also tweeted her concern about TikTok while in Government. Foreign Secretary James Cleverly’s recent speech was also poorly received among Parliamentarians, primarily because MPs thought it lacked teeth. His concept of “patient diplomacy”, in which Britain forms relationships with other countries over decades, is not a new concept. That is literally describing what diplomacy is. 

Ultimately, Sunak has inherited a Government that is in a state of flux when it comes to understanding how it wants to engage with China. Downing Street can rightly point to new laws and tighter investment screening, such as the Newport Wafer Fab call and the National Security Bill, but because it lacks a coherent public China approach, it is routinely flustered and on the defensive diplomatic or political incidents occur. Having never explained its overarching approach, the British Government struggles with the core contradiction of balancing economic interest and national security when it comes to China.

The Government could save itself significant headaches by engaging more proactively with China-interested MPs in small ways, such as letting them know what China-related strategies or new units are being formed in advance, rather than as a footnote in a Committee report. Part of this lack of engagement stems from Westminster churn: there have been three Foreign Secretaries in the last 24 months, and three different sets of Ministers with responsibility for the Government’s China portfolio in the Foreign Office over the last year. If, as The Spectator’s well-sourced editor Fraser Nelson seems to believe, Sunak is hawkish but holds the view that China will naturally fall short in its ascendancy due to a myriad of domestic issues, then the Prime Minister should express this view. Communications will need to be clear, intelligent and concise as the United Kingdom watches how China handles rising Covid cases, an ageing population, and posturing over Taiwan.

Finally, and moving beyond the scope of China (in as much as one can), Downing Street needs to show evidence that it is taking the diplomatic choices of the next decades more seriously. In 2017, a note from the accounting firm PwC imagined the world in 2050. China (1st), India (2nd) and Indonesia (4th) were projected to be in the top five economies. However, in recent evidence submitted to the Foreign Affairs Committee, Chatham House noted “Expertise in China is already very limited in the UK. Expertise in other key Indo-Pacific partner countries such as Indonesia, the Philippines and Vietnam is even more thin. How can the UK government hope to sustainably boost trading and political ties with these countries unless it backs broader efforts to build knowledge and networks around them?” Likewise, a generally held view is that the African continent is set to play a far more influential role in the coming years. Here, the British Government is beginning to put in the work, but the Minister for Africa has changed at least three times in the last two years. A consistent approach to building capacity and long-term relations with emerging powers is imperative.

In the Integrated Review, the Government noted “the United States will remain our most important bilateral relationship.” The conventional wisdom is that the United Kingdom will side with the United States on almost all diplomatic matters relating to China. However, America mixing industrial policy - such as the Inflation Reduction Act - and foreign policy goals is already causing difficulties for its allies. Washington’s recent rhetoric around the World Trade Organisation is likewise being received poorly in some quarters. 

Predictions

• Prime Minister Rishi Sunak will try and take some of the tension out of the relationship. An aborted meeting with General Secretary Xi Jinping on the sidelines of the G20 in Indonesia was indicative of how he wants the relationship to go. White House Indo-Pacific coordinator Kurt Campbell recently noted that China wants stabilised relations with the United States in the short term as it faces domestic economic challenges and pushback in Asia to its assertive diplomacy. Downing Street will be hoping so, and it seems likely Sunak meets Xi this year.

• The British Government will attempt to resume and normalise ministerial visits to China again. Given that Australia’s Foreign Minister Penny Wong recently visited the country, it seems likely that the United Kingdom will send some senior officials or a senior Minister to China in the coming year.

• Economic talks and dialogues, such as the UK-China Joint Economic and Trade Commission or UK-China Economic and Financial Dialogue, will resume between the two countries. 

• The Integrated Review refresh, due for publication around March, will include a limited section on Taiwan.

• Businesses will begin to play a more public role in calling for a steer from the Government when it comes to engaging with China, either through media briefings or groups. 

• The United Kingdom will join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

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PARLIAMENT AND CHINA

The way China is discussed has evolved in Parliament. Thematically, two security concepts now tend to frame any debate around Beijing: dependency and resilience. In the case of the former, the Russian invasion of Ukraine has put the idea of “dependency” firmly on Parliament’s radar. The consequent global economic and energy crisis has been felt across British constituencies and the country at large. 

In the context of UK-China relations, the most obvious examples of perceived dependency involve supply chains. MPs and Ministers are generally aware of the critical minerals supply chain and China’s dominant mid-stream role within it, while a handful of others have raised dependency issues in relation to polysilicon used in solar panelling and our wider reliance on China for our net zero transition. Thanks to America’s CHIPS Act and devastating export restrictions on China, as well as the months-long fiasco around Newport Wafer Fab, semiconductors are also being discussed with more frequency in Parliament.

Debates, public or private, that touch on the theme of dependency tend to naturally turn to the idea of building “resilience”. The intelligence establishment has been talking about the concept of whole-of-society resilience for some time, and in its steering foreign policy document, the Government frequently referenced the term and committed to publishing a Resilience framework, which it did a couple of weeks ago. Within, it promised “a new ‘whole of society’ approach to emergency planning encourages individuals, businesses and other organisations to play their part in building resilience across the UK.” To this end, newly minted Security Minister Tom Tugendhat announced he was forming a Defending Democracy Taskforce, tasked with “build[ing] resilience across all levels of the UK’s democratic system, including vital security practice for all elected officials, ensuring that core electoral infrastructure is secure.” It remains to be seen what this taskforce will actually achieve, and how it communicates success. Expect concerns about supply chain dependence to proliferate amongst MPs should Chinese action over Taiwan appear an increasingly likely possibility. 

On this point, in the last week Sunak has hired The Spectator’s political editor James Forysth to become his political secretary. Forsyth has shown increasing concern over the fate of Taiwan in his writings since the Russian invasion of Ukraine, and in March 2022 set out four steps the West needed to implement to deter China from invading the island: be explicit about sanctions, reduce dependency on China, arm Taiwan, and push regional partners like Japan to include defence spending. If Forsyth plays his cards right, he could pre-empt and limit potential China hawk rebellions on upcoming legislation.

General concern around national security has spawned a number of issues. On the technology front, Parliamentarians remained deeply sceptical of social media giant TikTok, with Tugendhat recently taking the provocative view that TikTok could have huge sway over the news provided to young voters. In her role as Chair of the Foreign Affairs Committee, Kearns has corresponded with the firm regarding British user data being accessed from within China. Given the information that has come to light since then and growing calls in the US for restrictions on the app, TikTok’s Parliamentary scrutiny seems far from over. On the security front, the Government’s weak handling of the Manchester incident, and its opaque communications regarding any potential investigation of Chinese overseas ‘police stations’ have both angered MPs, including a number who had previously not engaged in this space. The United Front has been placed firmly on the Parliamentary radar following an MI5 alert in January. While it has been recognised that the United Front Work Department is an issue that threatens British norms and the democratic way of life, few suggestions have been put forward as to how the United Kingdom can coherently deal with this challenge. Banning Confucius Institutes in an effort to reduce Chinese Communist Party influence, without having a suitable replacement, is one such example of short-sighted thinking. This party falls under Tugendhat’s brief in the Home Office. On this note, more thinking needs to go into how the United Kingdom protects the Hong Kong and Chinese diaspora in the United Kingdom.

This blob of MPs that can be loosely classified as China hawks is changing, and new faces are appearing in debates discussing Beijing. This is a natural result of Sunak putting hawks into his Government (Ghani, Tugendhat), but also reflects the changing levels of interest around China in Westminster. Those MPs that are most vocal in the papers are not necessarily the ones providing solutions to the problems facing the Government, and run the risk of losing their capital. Note then Chair of the Foreign Affairs Committee Kearns, who recently said, “[m]y assessment is that we can be cautiously optimistic about the steps taken by the new Prime Minister thus far.”

Backbenchers are openly against Chinese surveillance firms Hikvision and Dahua. This concern originally stemmed from one based on human rights - the firms are alleged to have been involved in abuses in Xinjiang - but has evolved into one of national security and data flows. Note that the secretive Government Security Group has undertaken a review of the current and future possible security risks associated with these systems, which in turn has forced the Government to publicly discuss the relationship between Chinese companies and Article 7 of the National Intelligence Law of the People’s Republic of China - “All organizations and citizens shall support, assist, and cooperate with national intelligence efforts in accordance with law, and shall protect national intelligence work secrets they are aware of.” Conversations in backrooms between Government and backbenchers seem to have convinced the latter the upcoming Procurement Bill will be wide enough to prohibit these firms from effectively operating in the UK. However, as some in this space have noted, this runs counter to fiscal constraints - how will the replacement of these firms and similar be funded?

Some of the most useful output has not come from discussions in the Commons, but from sessions in the Committee rooms. The Foreign Affairs, Defence, and Business Committees have all held inquiries or evidence sessions that touch on critical components of the United Kingdom’s relationship with China, with the former electing Kearns as its new Chair as the year closed. Trips abroad have resumed. There is now a group of talented staffers that speak Mandarin and float between committees, helping them form their reports. Engagement with the business community has been strong, and experts continue to send in evidence and expertise (for free) to help guide MPs and Peers as they audit the Government’s approach to Beijing. There is much to be positive about in this space.

However, it is worth briefly mentioning one of the more wasteful episodes of the last twelve months: the “threat” classification of China. Spearheaded by Liz Truss, the conversation around declaring China to be an “official threat” flared up throughout August through to October. At its core, unless there was to be a substantial set of policy implications that come with designating Beijing a threat, it was a meaningless and distracting conversation that also threatened to lead to an unwelcome backlash from Beijing. The entire episode is symptomatic of a lack of a cross-Government China Strategy explained clearly to Parliament, and a lack of statespersons able to speak about the ‘China challenge’ fluently.

Speaking now in generalities, MPs I talk with and listen to tend to have the following bipartisan views. First, they believe China was tipped off around the Russian invasion of Ukraine. Second, they believe it's a case of when - not if - the Chinese Government decides to invade Taiwan. Third, triggered by the opening of the Zero Covid approach, they think the Chinese Government is in a potential moment of peril. Fourth, they understand that the United Kingdom will have to engage with China on transnational issues, but aren’t entirely clear on what this means beyond the headlines of “climate change” or “pandemic prevention.” And fifth, they believe it is their duty to speak out about human rights abuses being undertaken by the Chinese Communist Party.

Concluding now in specifics, the following MPs are worth having on the radar.

• Stewart McDonald and 6G infrastructure

• Catherine West and Alistair Carmichael on BGI Group and genomics

• Alicia Kearns on domestic resilience

• Siobhain McDonagh on energy links to Chinese entities

• Darren Jones on the Government’s industrial policy and China

• Bim Afolami and Alexander Stafford on critical minerals

Predictions

• A greater number of MPs will become involved in the China debate

• MPs demand TikTok appear before a Select Committee again to explain its previous statements to Parliament

• The China Research Group plays a more significant and public role in helping Downing Street form its China policy over the next 12 months

• The concept of creating economic deterrents to prevent Chinese action towards Taiwan (as raised by IPAC on a number of occasions) gains ground in Westminster

• The Integrated Review Refresh propels Taiwan back onto the Parliamentary radar, and the Government will be criticised for whatever approach they take

• New Chinese brands that carry potential security risks will become ‘household names’ and will be mentioned more frequently by MPs

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WHITEHALL AND CHINA

The (un)fortunate nature of Whitehall means it is difficult to see what civil servants are actually working on or doing when it comes to most issues - this is especially true when it comes to areas deemed to involve national security. Civil servants are wrapped in secretive agreements and are often unwilling to discuss their work with outsiders. However, Beijing to Britain speaks to many of them (this briefing remains entirely free for Whitehall), and they help paint a useful picture of what’s going on.

First, it’s clear that China-facing roles are being advertised internally in increasing numbers. These include a new China capabilities position in the Foreign Office, and various positions across other departments. New units have been formed, ranging from the secretive Investment Security Unit that helps the Business Secretary decide what deals to intervene in, to new teams in another unnamed department that focuses on national security threats.

Second, there are a number of concerns from civil servants working in the China space. These include a belief that cross-departmental work on China remains siloed, and that not enough is being done to facilitate and cultivate China expertise within the civil service. It is notable that the civil service as a whole remains weak at bringing in and engaging with people that have recently returned from China. Some relayed concerns that too much of how the UK engages with China is now being deemed an issue of ‘national security’, which tends to bring with it new classifications and therefore limits the number of civil servants and outside experts that can work on them. A months-long delay on Developed Vetting is not helping either, stopping civil servants without the clearance from being able to work on projects they may have expertise on. Having Ministers arrive for a handful of months before being reshuffled likewise impacts the work going into key Government strategies, several of which are already delayed as 2023 begins.

Fractured power and belief struggles are underway within the civil service, in part as a reflection of the different aims of each department. How success is measured in the context of relations between London and Beijing looks very different between certain teams at the Treasury and the Ministry of Defence at times. There are clear incentives, in the form of resources, for teams within some departments to express in very clear terms that China poses an all-encompassing threat.

2022 has seen the creation of a number of interesting things from within the civil service, particularly on the technological front. As we found in response to a Foreign Affairs Committee inquiry, a newly established Technology Centre of Expertise “will provide access to digital and technology expertise from the UK Government, private sector, civil society, and academia that supports countries to transform their economies in a sustainable and inclusive manner.” Additionally, Foreign Office staff will now be allowed to take part in an exchange programme placing them in technology companies for a short amount of time. Building on this, an upcoming International Technology Strategy promises to set out "the UK’s alternative offer to techno-authoritarianism by building partnerships and coalitions in line with our core democratic values." Within the Business Department, the aforementioned Investment Security Unit is humming along, examining nearly one hundred cases and advising that 10 receive final orders. In the Ministry of Defence, a new unit has been formed. The Secretary of State’s “Office for Net Assessment and Challenge (SONAC)”, previously OSAC, aims to bring together “the best of the civil service, armed forces, academia and business, providing a central hub for strategic analysis.” Other Departments are considering replicating the model.

One relatively easy way the Government could improve Whitehall and Parliament accountability around China would be to publish a more comprehensive list of what activities are currently underway, and then communicate that properly. Unless you choose to keep a running spreadsheet, or read a weekly briefing on UK-China relations, it’s hard to have a 30,000-foot view of what’s going on: information has to be eked out through Written Questions, Committee reports, sources in Whitehall or random reactive Government statements. This does a disservice to Whitehall and Government departments at large. For example, on the critical minerals front, the United Kingdom has undertaken several important meetings to work with allies and partners to secure supply chains in this space, including joining the Minerals Security Partnership, and a recent partnership with South Africa on minerals (the country is the world’s leading producer of platinum.) On the Artificial Intelligence front, the Government has a significant strategy under its belt, which seeks to build “the most pro-innovation regulatory environment in the world”, pledging to make the UK the “best place to live and work with AI.” Law firm Latham & Watkins has a useful overview here. But there is no coherent, overarching dashboard tying these achievements together. Researchers, journalists and even politicians are left wasting time trying to find the details themselves.

For those interested, building on the above observations, I submitted evidence to the Foreign Affairs Committee alongside the Oxford China Policy Institute last month, aiming to get a conversation on these issues moving forward and calling for the creation of a China House in a similar fashion to the Biden Administration. 

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MEDIA AND CHINA

American humorist Mark Twain once observed: “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” This remains the case for much of the Fleet Street commentariat’s coverage of China - a behemoth of an issue, complex and fractured, but presented as a monolith. Accordingly, British commentators tend to arrive at a series of conclusions that diverge from reality, while BBC radio, general television news, The Financial Times, Economist and The Spectator’s ‘Chinese Whispers’ remain the best places to get a wide breadth of expert views on current issues in this space. A classic example was in 2021 when The Times framed Barbados’ turn to republicanism as the country falling into the trap of Chinese “quasi-imperial rule”. On a more serious note, Taiwan serves as an ongoing case study. From reading Fleet Street coverage of China-Taiwan relations, it would be logical to arrive at the view that Xi has publicly stated that he has a 2027 deadline to conquer the island; repeated often enough, this becomes the accepted norm, and filters into British political thinking on the issue. However, as Jude Blanchette and Ryan Hass note in a recent Foreign Affairs article, this presumption is problematic. It is one example of many.

Such editorial shortcomings in the opinions pages detract from some of the stellar work being produced by Fleet Street's foreign and domestic correspondents. Why does it matter from a political standpoint? For two reasons. First, politicians read, share and tweet Fleet Street coverage. If they are being fed information that is slightly wrong, then they will form views that are slightly wrong. Second, the British media often turns to British MPs for comment on China-related issues. These comments occasionally add a useful view but are used by those MPs to rehash their own particular view on UK-China relations. More expert analysis and less political commentary would be useful in this space, especially as it seems likely that Taiwan will remain an issue of focus for some time.

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INTELLIGENCE AND CHINA

The year opened with an email sent to all MPs and Peers identifying Christine Lee, a solicitor, as a person who “has been engaged in political interference activities” on behalf of the CCP’s United Front Work Department. This analysis came from MI5 and would be the first of a series of public references to Chinese covert operations on British shores throughout 2022.

Indeed, the intelligence community had become increasingly vocal regarding their view of the threats the Chinese Communist Party poses to Britain. High-level speeches from the heads of MI5, MI6 and GCHQ have all stressed that China is the "national security issue that will define our future," in the case of the latter. In an unusual step, MI5 chief Ken McCallum appeared alongside FBI Director Chris Wray to give a joint address on “the growing threat posed by the Chinese Communist Party to UK and US interests”. Recent warnings from the MI5 chief have concerned Chinese efforts to capture or manipulate British politicians and their staff - although aside from Christine Lee, the intelligence establishment has chosen not to name any of those who have been targeted, or who are doing the targeting.

In a recent essay, senior fellow at the Hoover Institution Amy Zegart explored what the future of post-Ukraine intelligence thinking looks like. Within, Zegart discussed the new initiative the West had taken of “releas[ing] a relentless stream of remarkably detailed findings about everything from Russian troop movements to false-flag attacks the Kremlin would use to justify the invasion” into the public domain. This in turn “set Russian President Vladimir Putin on his back foot, wondering who and what in his government had been penetrated so deeply by U.S. agencies, and made it more difficult for other countries to hide behind Putin’s lies and side with Russia.”

In the context of sharing detailed findings about intelligence, perhaps post-National Security Bill, this will be the year the British intelligence establishment starts to publicly name Chinese interference operatives in the United Kingdom that they believe are behaving in an illegal manner, rather than just alluding to confidential cases in speeches. This would help to build the whole-of-society resilience they advocating for.

The Ministry of Defence publishes frequent ‘Intelligence Updates’ on the Russian invasion of Ukraine. Source

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CONCLUSION

As globalisation changes, having an acute and intelligent understanding of bilateral relationships will be critical. Beijing to Britain helps guide critical players through the evolving relationship between the United Kingdom and China. Change is afoot internationally and for Beijing to Britain as a whole - more details will follow later in the year.

In the meantime, thanks for reading - let me know your views. Leave a comment below, or get in touch on Twitter, LinkedIn or via email.