Olympics Boycott, British gene firm links to BGI Group, Selling Sovereignty report

A Beijing to Britain briefing

Hello,

Welcome to ‘Beijing to Britain’ - a weekly overview of the ebbs and flows of the discussion in Westminster and the City around the UK’s relationship with China, and how it impacts politics, the private sector and society.

As always: tips, feedback, and your views to BeijingToBritain@protonmail.com. If this Briefing has been forwarded to you, please do sign up.


Politics

  • Boycotts

  • Foreign Affairs Committee

  • Newport Wafer Fab

Business

  • Gene investment

  • Companies and advice

  • Funds

Socials

  • What’s being discussed on social media?


First, a quick look at this week for China in Parliament

  • 78 mentions of China

  • 2 mentions of Xi Jinping

  • 20 mentions of Hong Kong

  • 16 mention of Uyghurs

  • 18 mentions of CCP

  • 6 mention of Magnitsky

  • 589 out of 650 MPs (90.6%) have a Twitter account.

    • 11 MPs’ tweets containing the term ‘China

    • 3 on ‘Hong Kong

    • 6 on ‘Uyghur

    • 0 on ‘Magnitsky’



Who’s asking what?

Order! Order!

Some of the more eye-catching questions asked in Westminster this week

  • Philip Hollobone (Conservative) asked “In contrast to Kettering, which generates enough renewable electricity locally to power all 45,000 homes in the constituency, this week the Sun Yat-sen University in Guangzhou, China, reported that 52% of the world’s urban greenhouse gas emissions come from just 25 megacities, 23 of which are in China. Will the COP26 President focus on that at COP26?

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Spotted

In January we drew readers’ attention to a situation developing in Wigan. A £130m contract for the redevelopment of the council-owned Galleries Shopping Centre had been awarded to Beijing Construction Engineering Group International (BCEGI) - in the backyard of Labour’s Shadow Foreign Secretary Lisa Nandy.

While the contract is not particularly large, our interest in this project is at a macro level. We suspect it could become heavily politicised very quickly should it be picked up by media - additionally, it may serve as a bellwether for how Chinese-state backed investments across the UK may be challenged. Readers will also remember that a fortnight ago that we flagged a question concerning BCEGI from Stephen Kinnock, Labour’s Shadow Minister for Asia.

Keep a close eye on this.

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Politics

Boycotts, Prisons, Diplomacy

Nolympics

On Thursday afternoon, a group of predominantly IPAC-aligned MPs gathered for a Backbench Business Debate (BBD) put forward by Tim Loughton MP (IPAC and Chair of APPG on Tibet). This was specifically pushing for a diplomatic, rather than sports, boycott of the Beijing Winter Olympics in 2022. It was voted through unanimously.

In terms of technicalities, this was the same format used by Nusrat Ghani MP to put her motion through declaring the situation in Xinjiang to be that of genocide.

The motion was as follows:

“That this House believes that the 2022 Winter Olympic games should not be hosted in a country whose Government is credibly accused of mass atrocity crimes; and calls on the UK Government to decline invitations for its representatives to attend the 2022 Beijing Olympic Games unless the Government of the People’s Republic of China ends the atrocities taking place in the Xinjiang region and lifts the sanctions imposed on UK Parliamentarians, citizens and entities.”

Those arguing in favour of the diplomatic boycott set out the following points, and was supported by Labour and the Liberal Democrats:

  • Parliament has unanimously declared there is an ongoing genocide in Xinjiang

  • The Chinese Government will crush dissent around the Olympics from within China, and continues to suppress free speech

  • It had been argued when China was awarded the games in 2008 that it would get Beijing to acknowledge and uphold human rights to a greater degree - something which has clearly failed

  • Attending at a diplomatic level allows China to sportswash its ongoing crimes, turn it into a propaganda event, and gives the Chinese Communist Party the legitimacy on the world stage it desperately craves

And for those arguing against the diplomatic boycott (just Mark Logan MP, who didn’t get to finish his speech):

  • Over the last year nearly all the debate on China has been extremely one-sided. It is not multifaceted and fails to see much of the nuance that exists

  • We should not boycott because it is now more important than ever for us to push for as many people-to-people and governmental exchanges as we possibly can

  • Attending is a chance to build common ground and enhance intercultural understanding

  • A boycott will not lead to China changing its policy towards Uyghurs and other minorities in Xinjiang or Tibet

Given the length of the debate and speeches, we will leave it to readers to trawl through the Hansard - which is worth doing. Congratulations to the UK National Committee on China (UKNCC) which received its first Parliamentary mention following Mark Logan being asked to put on record that he was a founding patron.

The Chinese Embassy responded, stating:

The passing of the motion tabled by an individual member of UK parliament that calls for a boycott of Winter Olympics is clearly an act of politicizing sports. It is contrary to the Olympic spirit and the Olympic movement. It is also disrespectful to the British athletes and athletes around the world. We are firmly opposed to such irresponsible behavior.

The accusations leveled at China by the inventors of this motion are based on complete disinformation. The fact is, Xinjiang-related issues have nothing to do with human rights, religion or ethnic groups. There is no "genocide", "detention camp" or "forced labour" in Xinjiang. The Chinese government has been taking measures in accordance with the law to combat terrorism, radicalism and separatism. Thanks to these efforts, Xinjiang has achieved social stability and sustained development. All ethnic groups in the region, like in other part of China, enjoy full rights and freedoms, and their languages, cultures and customs are well preserved.

The Beijing 2022 Winter Olympic and Paralympic Games represent another important contribution that China will make to the international Olympic movement. Winter sports lovers worldwide are looking forward to these events. The preparations for the Games are making good progress and have been highly recognized by the international community, including the IOC. With the concerted efforts of every member of the Olympic family, we have every confidence that the 2022 Beijing Winter Olympic Games will be a splendid event.

We urge the relevant UK MPs to stop playing despicable political games, stop demonising China and refrain from standing on the opposite side of athletes and winter sports lovers across the world. It will be self-defeating for them to continue down this road.

Your writer has a couple of thoughts:

  1. In light of what they would believe to be Government inaction, it seems IPAC MPs have chosen Backbench Business Debates as the new format for showing Downing Street and the Cabinet their strength of feeling on certain China related issues.

    • This in turn allows them to stage manage powerful unanimous outcomes and create opposition cross party support

    • However, it also the chance to create propaganda undermining these results - for examples, screenshots of a near-empty Chamber. Clearly politics should not be dictated by what hostile propaganda or distortion of the facts could be created, but it’s worth keeping in mind.

  2. Beyond registering backbench feeling at the time on that issue, it’s not clear how much effect these BBD outcomes have within Downing Street or at a Cabinet level. The Government has an 80 seat majority (even if it’s often poorly managed), and can push or block legislation as it sees fit - for example, the 0.7% cut to Foreign Aid this week, which was widely unpopular but still went through. Your writer also subscribes to the theory that the Prime Minister is not particularly fond of engaging with backbench issues or processes.

  3. However, it does allow other Parliaments and parties from across the world to put pressure on their own Governments, which may end up putting pressure on the British Government in return.

So as Parliament prepares to head on recess next week, we now have a Commons that both unanimously believes an active genocide is taking place in Xinjiang, and that the UK should diplomatically boycott the upcoming Winter Olympics in Beijing.


Sovereignty for sale

Another week, another hefty Committee report - this time from the Foreign Affairs Committee. Sovereignty for sale: the FCDO’s role in protecting strategic British assets is the culmination of a months-long inquiry looking at FCDO’s role in understanding national security risk.

It notes:

The Integrated Review’s recognition of China as “the biggest state-based threat to the UK’s economic security” appears to be at odds with plans for deeper Chinese involvement in UK critical infrastructure through the Bradwell B nuclear plant. The prospect of a significant part of the UK’s nuclear energy infrastructure being built by a potentially hostile power—and of these sensitive operations being almost entirely reliant on Chinese-owned technology—is concerning and warrants close examination.

With China coming in at 14 mentions, the report sets out some proactive key recommendations:

  • The Government should call in the acquisition of Newport Wafer Fab by Nexperia for review and impose appropriate mitigating measures, as a matter of urgency.

  • Ongoing monitoring of the global technology landscape by the FCDO should inform any future changes, as needed, to (a) the sectors subject to mandatory notification under the National Security and Investment Bill, and (b) the factors to be taken into consideration by the BEIS Secretary of State when assessing transactions, as set out in the Statement of Policy Intent.

  • 10 % of Investment Security Unit (ISU) staff should be secondees from FCDO, to ensure that FCDO expertise can be drawn upon on a day-to-day basis.

  • The Government should cooperate on FDI screening with other countries with whom we share values and strategic objectives. The Committee recommends that the FCDO seeks to play a leading role in bringing together countries and partners from overseas and in building alliances to make sure investment vehicles in one country aren’t used as a Trojan horse in others.

  • The Committee recommend that the Chairs of the Foreign Affairs Committee, Intelligence and Security Committee and Science and Technology Committees are also provided with private briefings on the activities of the ISU on Privy Council terms, to ensure that Government decisions are scrutinised from all angles relevant to the UK’s interests. These briefings should be held bi-annually as a minimum.

Having spent too much of their time reading Committee Reports on weekends, your writer has scribbled in his notebook that this is a combative report. The language and recommendations are very strong, and its the third of its type in as many months to criticise the Government’s lack of cohesive strategy when it comes to getting its domestic and foreign affairs in order with China in mind.

There are concerns that the British Government is running the risk of becoming the weak link in the triumvirate of the EU and America on these issues, and as part of the wider G7 - supply chain transparency being an obvious example. Just this week, the US Senate passed legislation to ban the import of products from Xinjiang. Although it must also pass the House of Representatives, it is indicative of where US policy is heading. Likewise, the European Parliament just issued updated business advice on the issue. Both of these follow a G7 Communique on forced labour in supply chains. Meanwhile, meaningful policy on this issue from Westminster simply doesn’t appear to be the agenda, despite countless claims it is.


National Security and Investments

It’s been a busy couple of weeks since we broke the news that there was significant upset at the top of the Conservative party over British semiconductor company Newport Wafer Fab being bought by Chinese-owned Nexperia. We cited Chair of the Foreign Affairs Committee Tom Tugendhat’s letter to Business Secretary Kwasi Kwarteng, and said:

Keep a very close eye on this. It’s worth noting straight away that Tugendhat has already attempted to raise his concerns with the Business Secretary on this issue and has had to resort to publishing a public letter. Will the Biden Administration pressure Downing Street to block this purchase? Will the Prime Minister cede to the pressure?

Thank you to the Spectator for crediting us. Since then, a fair number of events have unfolded - here’s a rough overview. The Labour party issued a statement.

This was then followed by Tugendhat raising the issue directly with the Prime Minister.

Downing Street then announced the takeover would in fact be reviewed. The Financial Times notes:

Speaking at a parliamentary select committee on Wednesday, Johnson said concerns about the takeover had been flagged to Westminster by the Welsh government. Sir Stephen Lovegrove, the national security adviser, will investigate the takeover. “We have to judge whether the stuff that they are making is of real intellectual property value and interest to China, whether there are real security implications,” he said, adding: “I have asked the national security adviser to review.”

But the Welsh government said it had not made a formal request for Johnson to intervene: “The Welsh government has not made a request to the UK government to review the takeover of Newport Wafer Fab.”

On Thursday, the matter was debated formally in the Commons. An Urgent Question was asked by Geoffrey Clifton-Brown MP, notably the co-Chair of the Conservative Friends of the Chinese. He noted:

While I agree with the Prime Minister that we do not want an “anti-China spirit to lead to our trying to pitchfork away every investment from China into this country”, in this particular case the security issues should be paramount. China considers this matter vital for its national security, as do other countries, including our ally the United States. Why are our Government not taking the same view?

Present were a handful of IPAC and China Research Group (CRG) aligned MPs. Representing the Business, Energy and Industrial Strategy (BEIS) Department was Amanda Solloway. She said:

 The Government have been in close contact with Newport Wafer Fab, but do not consider it appropriate to intervene in this case at the current time. We will continue to monitor the situation closely, and, as part of that, the Prime Minister has asked the national security adviser to review this case. Separately, work is under way to review the wider semiconductor landscape in the United Kingdom. 

Labour’s Chi Onwurah, speaking for her party, said:

The Government have consistently outsourced British national security and economic interests, because Ministers have prioritised market zeal over British security, as in 2012 when they let the Centre for Integrated Photonics, a prize British research and development centre, be taken over by Huawei. That is why Labour is calling for the national security and public interest test regime to be strengthened.

Tugendhat, the instigator of this affair, said:

I am told that Newport Wafer Fab is a key partner for the development of—I am afraid I will have to use the technical terms, because I am not qualified to translate them—RFMMIC high-frequency GaN designs for defence 5G radar systems. This is a £5.4 million project led by the Compound Semiconductor Applications Catapult and Cardiff University, with Newport Wafer Fab providing process development expertise and a route to scale up within a proposed expansion of Newport Wafer Fab 10.

If that does not put Newport Wafer Fab into the national security bracket, I do not know what does. The idea that this is a matter for the Assembly or the Government in Wales is, I am afraid, simply not the case. The Prime Minister seems to have pre-empted that, as he has asked the National Security Adviser, as he told the Liaison Committee the other day, to have a look into this. Will the Minister now commit, on behalf of her Department, to present the National Security Adviser’s report to Parliament, to allow us to hear the evaluation of Her Majesty’s Government and to debate it?

Barry Sheerman, a Labour MP, said:

Most people in this country do not realise just how widespread this insidious Chinese takeover of so many strategic assets in our country is. Will the Minister ask her bosses to have an audit of how far this takeover of British companies has now gone? As most people know, the whole of the electricity transmission in London and the south, with 10 million customers, is owned by the Chinese—or, again, the Chinese Government. How far can this go before we wake up to what is really going on? It is insidious, it is dangerous, and it is a real threat to our national security.

Iain Duncan Smith, former Tory leader, can be viewed below:

And so on - the entire debate can be read here. The Foreign Affairs Committee also uploaded a letter from Tugendhat to the Prime Minister that afternoon.

Nexperia has consequently hit back, telling Bloomberg that:

“We’re always sneered at because people say we’re a Chinese company. We are not owned or controlled by the Chinese government.”

We strongly suspect that there’s more to come on this story, especially from a Government investment angle. The Times also reports that Whitehall mandarins have been told to devise a plan to bolster the UK’s semiconductor industry amid growing concern about manufacturers’ vulnerability to microchip shortages.


Elsewhere on the estate

It was a heavy week for China across both Houses. In the Commons, the Government continued to duck questions it didn’t want to answer (note the question asked about trade discussions, not trade deals). During a debate on the new Higher Education (Freedom of Speech) Bill, China was mentioned in the context of limiting freedom of speech on campuses through fear, and Tencent investing in universities such as Cambridge.

However, it was during the debate around the cut to Foreign Aid from 0.7% to 0.5% GDP that China was most most frequently cited. A selection of MPs made the point that Britain cutting its aid budget would invite China to step in to the vacuum. Labour’s Chris Matheson said as much:

Overseas aid is a moral issue, but if we cannot look at it like that, let us be clear: our adversaries, Russia and China, and our enemies, al-Qaeda and Islamic State, will fill the gap if we do not, and this will simply make matters worse in the long run

Chair of the Defence Committee Tobias Ellwood added:

The sheer scale of global challenges was acknowledged at the G7 summit, yet here we are debating the reduction in our soft power profile—the only G7 nation to do so. In contrast, China is using its aid programmes as part of a long-term strategy to advance its own global reach. Look at what is happening across Africa and Asia. A new global soft power war is taking place. This, to me, is the face of a cold war that is slowly emerging, but we in the west have yet to wake up to its reality. China is weaponising its immense soft power to significantly advance its influence and reach and to promote its own interpretation of the international rules-based order, and it ensnares dozens and dozens of countries into its sphere of influence. That is why we should not be diminishing our own soft power.

In the background there was also a debate about the Dog and Cat Meat Trade. This was the result of three e-petitions from the wider public:

  1. e-petition 555039, Make the consumption of dog and cat meat illegal;

  2. e-petition 308926, Urge the Chinese government to stop the annual Yulin Dog Eating Festival;

  3. e-petition 318423, Pressure Chinese & Korean governments to end slaughter of cats & dogs for meat.

This sort of debate is absolute catnip to MPs - easy clips on animal welfare.

In the Lords, a Second Reading on the Organ Tourism and Cadavers on Display Bill took place. This saw peers discuss China’s alleged use of organ harvesting, with Baroness Finlay of Llandaff stating:

China appears to have been killing persecuted religious minorities, particularly Uighurs and Falun Gong practitioners, then harvesting and selling their organs on an industrial scale. At least 29 people have gone from the UK to China to avail themselves of organ transplants. They will have been told the organs came from people who died in accidents et cetera, not that someone was killed to order because there was a reasonable blood group match.

The Telecommunications (Security) Bill is still being debated in the Lords. Notable here is the repeated mention of Hikvision, the Chinese security product firm which provides CCTV to hundreds of public bodies, councils and businesses across the UK.


Odds and ends

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Spotted

Parliamentarians continue to vent their frustration at HSBC, the London-based bank that has become the lightning rod for disgruntled MPs to express their geo-political frustration. Labour’s Peter Dowd tabled a series of pointed questions this week for the Chancellor to answer:

  1. What assessment he has made of the implications for his policies of HSBC’s decision to transfer executives from the UK to China.

  2. What discussions he has had with HSBC on the National Security Law in Hong Kong.

  3. What discussions he has had with HSBC on the freezing of pro-democracy activist Ted Hui’s bank account.

The bank was also mentioned during the Winter Olympics boycott debate, when Labour’s Navendu Mishra stated:

When the HSBC bank repeatedly refused to unfreeze the assets of Hong Kong activists, including one activist who fled to our country, after they had been crowdfunding for lawsuits against police brutality, did the Government speak out?

Virendra Sharma, also Labour, used a Topical Question to ask:

Does the Minister think it is appropriate that HSBC continues to meet Trade Ministers privately and advise on UK trade policy with China while it supports the crackdown on the pro-democracy movement in Hong Kong and continues to freeze prominent activists’ bank accounts?

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Business

Updates, meetings, funds

Fancy that

Last week Reuters filed a deep dive into Chinese gene giant BGI Group. It found the company, which remains on the US blacklist, is:

Selling prenatal tests around the world developed them in collaboration with the country's military and is using them to collect genetic data from millions of women for sweeping research on the traits of populations.

So far, more than 8 million women have taken BGI’s prenatal tests globally. BGI has not said how many of the women took the test abroad, and said it only stores location data on women in mainland China.

In November last year, we looked at BGI Group in relation to - what was in our view - a potential national security risk. This was because Tencent had announced it would be investing in Congenica, ‘one of Britain’s fastest-growing genomics companies’. Congenica has been “selected by Genomics England as the exclusive Clinical Decision Support Platform for research use for the UK NHS Genomic Medicine Service – a groundbreaking national initiative and a world first", and features organisations such as the University of Cambridge and the NHS under the ‘Partnerships’ tab on the website.

The firm also lists its investing partners - one of which is BGI Group. As we wrote then:

The relationship with BGI could be especially concerning. With significant and long-standing ties to the Chinese Government and China's government-owned national gene bank, it is described by Axios as the ‘leading Chinese gene sequencing and biomedical firm’, and ‘has contributed to efforts to document the genetic material of ethnic minorities in Xinjiang.’ BGI was blacklisted by the US Commerce Department in July due to their involvement in human rights abuses against Uighur Muslims and other ethnic minorities in Xinjiang.

None of this implies any wrong-doing; it’s just interesting to revisit the relationship in the light of this most recent Reuters report. Note this question from Tory politician Sir Mike Penning:

To ask the Secretary of State for Health and Social Care, what assessment he has made of the level of risk of the NHS working with Chinese companies that have links to the Chinese state; and if he will make a statement.

As the National Security and Investment Bill comes under criticism for failing to catch Newport Wafer Fab, it does seem unusual that there’s no effective legislation to pick up on deals such as this.


A problem shared

It’s a difficult time for multinational businesses with one foot in the West and another in China. Geopolitical tensions have led the American and Chinese Governments to begin pushing binary choices on CEOs - you’re either with us, or against us. Unusually, the British Government has chosen a somewhat more ambiguous approach - allowing companies to operate as they see fit with minimal intervention and occasional chinwags with the Prime Minister. Some critics praise this as a business-savvy, realpolitik approach. Others view it as a dereliction of duty which allows companies to cynically profit off the back of suffering in Xinjiang or oppression in Hong Kong.

Our view remains that British Government’s ‘hands-off’ approach and lack of meaningful guidance, leaving companies to work out the nuances of geopolitical tensions on their own, will end in tears.

The British Government’s business advice to companies operating in Xinjiang is 558 words. America offers its business a 19-page PDF totalling 6,900 words, complete with regional breakdown and tables on which industries it suspects contain slave labour. On Tuesday, the Biden Administration again updated its business risk on Xinjiang with particular reference to supply chains. An anonymous official told the Financial Times:

“The point of the advisory is to stress [that] if you do not exit these supply chains you run a risk of violating US law,” said an official who did not want to be named. “We want to make clear to the business community . . . that they need to be aware of reputational, economic and legal risk of their involvement with entities involved in human rights abuses.”

On Hong Kong, Downing Street does offer updated advice on business risk in the city, but it is updated infrequently (the two most recent updates were on 16 February 2021 and 23 August 2019). Contrast this to the rhetoric coming out of the Biden Administration on Hong Kong and its upcoming business advice, or the EU’s latest forced labour advice. Why is Downing Street’s advisory instructions so opaque and poorly communicated? Your writer suspects it is because the Government does not want to poke Beijing anymore than it has to. Letting British businesses take the flak when things go wrong is so far proving an effective strategy.


Funds

“Contrary to the geopolitical rhetoric, from an asset management point of view you cannot avoid looking at the Chinese market.”

These were the words of Andy Maynard, a trader at investment bank China Renaissance, to the Financial Times this week. The paper reported that overseas’ investors holdings of Chinese equities and bonds is about $806bn, up from about $570bn a year ago.

We’ve wondered before about the exposure some investment funds have taken on by investing in a couple of key companies and industries; for example, who would have thought a year ago that investing in a handful of solar energy companies in China could lead to inadvertently supporting Uyghur forced labour in Xinjiang?

At the end of 2020, these were the best performing British funds focussing on China.

We’re still curious as to how many of these funds have ended up holding shares in companies that may soon find themselves on an American, or British, blacklist. Furthermore, how many Brits have seen their investments fall this week following the most recent crackdown on big tech firms in China? This also applies to pension funds - a point raised by Labour and IPAC’s Janet Daby, who asked:

What plans does the Minister have to ensure that state pension funds are not investing in companies linked to abuse of the Uyghurs?


Odds and ends

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Spotted

A new Bill being birthed. IPAC’s Tim Loughton has presented a Private Members' Bill, the Tibet and Xinjiang (Reciprocal Access) Bill.

This would require the Secretary of State to report annually on restrictions on access by UK nationals to Tibet and Xinjiang in comparison with other regions of China; to make provision to deny persons involved in imposing such restrictions permission to enter the UK; and for connected purposes. The Bill’s second reading is due to take place 18 March 2022 - bookmark this now and add that date to your diary. 

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Society

What are people talking about online?

This week, Countdown host Rachel Riley tweet about boycotting the Winter Olympics, the Chief Reporter at the Daily Express got confused about how Governments budget, and a video of a lady collecting a tennis ball in a Taiwanese jumper went viral.



Reading list

What we learned from this week


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