New free offering, Brit jailed in China, Government on the Indo-Pacific, Hong Kong debate
A Beijing to Britain briefing
Hello,
I’m really proud to announce Beijing to Britain is partnering with Trivium China to produce a monthly, succinct note aimed at analysing the latest critical happenings in China - from a UK perspective. As readers will know, Trivium is a top-notch policy research team producing readable, primary source-driven analysis on China's political economy, with clients sitting throughout the FTSE100, Wall Street, Governments and hedge funds across the world. In the last week alone, their analysis covered the disappearance and return of Premier Li Qiang’s top man Wu Zhenglong (not picked up at all by British media, despite the policy implications it could have had) and harsh comments from Jiang Xiaojuan – a well-respected technocrat who served as a deputy secretary-general of the State Council from 2011 to 2018 - towards multinational businesses.
I think this product is timely, naturally. There was not a single meaningful debate or comprehensive question that focused primarily on the state of China’s economy in Parliament last year. Why is that? Given China is clearly a pressing concern for both the Government and Parliament, both know the Chinese economy plays a significant role on the global stage, why is there a political vacuum around this topic?
Some might argue that politicians are having these discussions in private, or are reading enough in the papers to be content that they understand the issue to a satisfactory level. Perhaps they are compounding their knowledge on economic matters in WhatsApp groups or tea room talks with colleagues, or browsing the pink sheets of The Financial Times to a degree that they’re confident they know enough on these issues. However, there’s not a huge amount in the public political discourse that would suggest this is the case. Others would posit that matters related to China’s economy are discussed on an ad-hoc basis: steel, Beijing’s approach to critical minerals, and China’s CPTPP application have all appeared in Hansard over the last fortnight. That’s true to an extent, but the observations are surface-level and made, naturally, through a political lens. Could it also be that Parliamentarians - and their staffers - are not confident discussing matters to do with geoeconomics or fiscal policy in other countries? Previous surveys have shown weakness in this area about how the UK’s economy functions, let alone one as complex as China. Perhaps it’s also because Chinese economic data is notoriously tricky and false, and there is an overwhelming amount of information being churned out every single day in the papers and beyond. China’s Ambassador to the UK, Zheng Zeguang, told the good and great of the FTSE100 on Monday that China’s GDP grew by 5% in 2023. Analysts at Rhodium Group, the widely respected advisory, think it was closer to 1.5%. Others think it sits between the two. And that’s before we get on to China’s own ever-changing fiscal and economic policies and priorities. What should British investors and politicians make of this?
As with most things in life, it’s probably a mixture of these factors and more complex than all of that. But given how much attention focuses on issues around supply chains, building resilience, outbound investment restrictions or debt restructuring abroad, it seems like an area that could use some more objective analysis of what China’s political and economic thinking is on these subjects too.
Our joint note will cover updates on China’s latest economic and political ongoings and legislation that should matter to the British political and City establishment: from electric vehicles to artificial intelligence, diplomacy to debt discussions. Harnessing our joint expertise, we’re going to cut through the noise and bring you insights that have an impact.
Our note will arrive at the beginning of each month and will be entirely free for the moment.
- Sam Hogg, Editor
In this week’s briefing:
The latest Government rhetoric on China and Ukraine, CPTPP, and steel
Parliamentary debates on Hong Kong,
Government report on the Indo-Pacific
British businessman imprisoned in China, publicly acknowledged for the first time
JPMorgan China Growth & Income's AGM
Diplomacy Tracker
🇺🇸 Prime Minister Rishi Sunak spoke to President Joe Biden on the phone. Interestingly, neither readout mentioned China. 🇦🇺 General Sir Jim Hockenhull met with General Angus Campbell, Australia’s Chief of the Defence Force, to discuss how to maximise the UK-Australia relationship “to ensure we remain ahead of our adversaries, including through our growing cyber partnership, the opportunities provided by AUKUS and the sharing of lessons and experiences.”🇦🇺🇺🇸 The United Kingdom joined the United States and Australia in sanctioning Hamas-affiliated financial exchanges in Gaza, their owners, and associates, and particularly financial facilitators that have played key roles in funds transfers, including cryptocurrency transfers. Notably, the accusations from the triumvirate were that one of those sanctioned had "directly facilitated the transfer of Chinese yuan from bank accounts in China to accounts controlled by Hamas in Gaza. Imad has also facilitated multiple transfers, worth approximately 50,000 Chinese yuan, to accounts in China likely for the benefit of Hamas."🇸🇬 Singapore formally ratified the UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)🇰🇷 From 31 January 2024, the number of nationals from South Korea who can apply for the Youth Mobility Scheme (YMS) visa each year is increasing from 1,000 to 5,000 and the age limit will also go up from 18 to 30, to 18 to 35.🇺🇿 🇹🇲 🇰🇿 🇰🇬 🇹🇯 In response to a Foreign Affairs Committee report, the Government listed all senior diplomatic and political engagement with the Central Asian ‘Stans’. Beijing to Britain created a searchable table here. On the same day, China upgraded relations with Uzbekistan. Politics
This week saw more Government comms regarding China-related issues on the defence, geoeconomic and industrial strategy fronts. Writing in Politico, Defence Secretary Grant Shapps argued “There’s no world in which Putin can be allowed to win. Not only would it embolden him, putting our other Eastern European allies in Russia’s crosshairs, but it would also signal to China that everything is up for grabs.” The “everything” here is an obvious allusion to Taiwan, and follows the Government’s strategic communications line on the illegal invasion of Ukraine since 2022. His speech comes as the American political establishment appears to be splitting on how much support it should continue to offer Ukraine, and the UK’s own military capabilities are under close scrutiny.
On the economics front, Business Secretary Kemi Badenoch appeared before the Business and Trade Committee for a session on “UK accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.” Readers will recall that China’s potential accession to the bloc has become somewhat of a hot topic in Parliament of late: reflecting this, Labour Chair of the Committee (and China-experienced) MP Liam Byrne pushed Badenoch on what the UK’s plans for this scenario would be. Responding, the Business Secretary said “speculating outside of the process is not helpful,” in line with the view other CPTPP members have. When Byrne pushed her on the same question regarding Taiwan, Badenoch remained non-committal. Again, it’s worth re-iterating that joining the CPTPP is primarily a geopolitical win - the Government’s analysis shows a GDP gain of only £2 billion, or 0.06%. In an earlier session, the Government’s lack of a published trade strategy was criticised again. Taking a step back, Westminster’s commentariat has convinced themselves to various degrees that Badenoch is a frontrunner to lead whatever Conservative Party emerges from the Election; her output is worth viewing with this in mind.
In terms of industrial strategy and lack thereof, Labour managed to get an urgent debate granted on the topic of the steel industry following last week’s announcements on the Port Talbot works. We’ve previously flagged that steel is an important issue to the Labour Party on several fronts, combining the trifecta of workers’ rights, employment, and national security - the party is keen to make it out that the Government has sold out the sector and lost capability - while the reality is, as usual, more complex. Shadow Business Secretary Jonathan Reynolds was highly critical of the Government’s lack of strategy, saying “The decisions the Government have made will have consequences. They will have consequences for our national security and our resilience, and they risk leaving us exposed at a time of significant geopolitical instability.” Minister for Investment Security Unit at Cabinet Office, and Minister for Industry and Economic Security at the Department for Business and Trade Nusrat Ghani retorted that “the motion is fundamentally performative politics and a major disappointment.” The debate was fairly ugly, with lots of mud-slinging. For a more complex overview of the UK Governemnt’s current approach to steel, read Badenoch’s evidence here, and for technical analysis of the UK’s steel industry, read here.
Of note on the intelligence front: former deputy head of MI6, Nigel Inkster, warned this week that the spy agency “clearly does have difficulties, in terms of language expertise and collective general historical and cultural awareness” when it comes to China, as do its counterparts of MI5 and GCHQ. His comments are the latest in a slew of warnings on the subject - including repeatedly from Beijing to Britain - that the UK establishment has failed to invest in China capabilities properly. The entire interview is worth reading in full.