G7 debrief, Taiwan, Baillie Gifford and SMIT, Semiconductor Strategy
A Beijing to Britain briefing
Hello,
As this briefing arrives in your inbox, this year’s G7 meeting in Japan is just about concluding. The readout, which we unpack later in this briefing, paints a picture of a unified group of nations looking to invigorate efforts to tackle CCP-shaped issues; there was lots of concern around Chinese economic coercion, talk around Taiwan, and criticism of the Chinese Communist Party’s use of transnational repression all make an appearance. The gathering served as an opportunity for Prime Minister Rishi Sunak to set out his new China approach among allies and close partners; three takeaways are worth noting closely. First, there was a significant multi-billion pound announcement around UK-Japan collaboration on critical issues like semiconductors (and the publication of the long overdue British strategy on the topic), named The Hiroshima Accord. Second, Sunak revealed that the UK has begun discussions following the US policy lead on preparing outbound investment restrictions on British companies investing in Chinese critical industries. Third, the G7 (and therefore Britain) seem to have formalised a ‘de-risking’ approach to engagement with China. Of course, Beijing to Britain will keep you abreast of how these areas develop in the coming months.
Back at home, the media split its coverage of both the G7 and former Prime Minister Liz Truss’s visit to Taiwan equally. Britain’s shortest-serving Prime Minister delivered a long and ideological speech, which read as a mix of vague complaints - “there have been too many mixed messages from the free world” - with an even more vague list of ideas -“ [how are] these regimes … successfully taken on [?] [T]hey're not successfully taken on by accommodation, appeasement or from adopting a position of weakness. They're taken on through strength.” Truss, The Economist concluded, “is experiencing the politician’s equivalent of the Make-A-Wish foundation. Much as the terminally ill are granted an audience with The Rock or allowed to score a goal at Wembley, Ms Truss can now fly to Taiwan and tell Xi Jinping to shove it.” Regardless, in total I’ve counted eight recommendations Truss set out, and examined them briefly further down today’s note.
While Truss’s trip to Taiwan soaked up media and political bandwidth, another high-level political beast was also in the region. Her predecessor, Boris Johnson, popped up on a quiet trip to South Korea, where he dined with President Yoon Suk Yeol on Tuesday and discussed strengthening bilateral ties between the two countries.
Three Prime Ministers, two large egos, and one lapse of party discipline. The timing of the Johnson/Truss excursion should lead to questions over Prime Minister Sunak’s ability to control his party discipline on geopolitical matters, especially given neither of his predecessors is speaking on behalf of the British Government when it comes to pushing for closer bilateral ties with their respective host countries, and it seems unlikely either one is being used seriously for track two diplomacy. Chuck into the mix that Sunak is set to backtrack on another campaign pledge from last summer - a promise to close all Confucius Institutes in the UK - and you’re left with the impression that geopolitical security matters are something he would rather not think about outside of the big set pieces.
Finally, one of the UK’s most popular investment trusts published its annual results this week. Scottish Mortgage Investment Trust, which counts a number of Chinese giants in its top 30 holdings and is managed by Baillie Gifford, described its performance as “disappointing”. We unpack the key takeaways and holdings and examine the “four principles” that Baillie Gifford uses to invest in China. To top it off, we reveal how the trust’s former pioneering mind will now be rubbing shoulders with one of the architects of the UK’s Golden Era with China.
— Sam Hogg, Editor
In this week’s Briefing Note, we look at:
G7 key points and chatter
Truss in Taiwan
Results from Scottish Mortgage Investment Trust and Baillie Gifford China Growth Trust
The UK’s semiconductor strategy, and critical reception from experts and business