Tariffs, UK-China trade down, Hong Kong arrests
All the latest Westminster happenings
Hello,
United States President Joe Biden announced a new raft of tariffs on goods of Chinese origin this week, totalling $18 billion (or 4.2% of all U.S. imports from China). They cover a range of sectors, from semiconductors to syringes, and from conversations I’ve had, seem likely to carry into a Trump presidency in some form should The Donald return.
This announcement will not have shocked Downing Street. How, if at all, can we expect the British Government to react? British politicians may want to consider some of the second-derivative consequences of this round of announcements for the United Kingdom. I suggest four areas readers may wish to observe in the coming months:
Clubbing together: We will learn more about the direction of British industrial and security policy at the G7 next month. The group may agree to impose similar barriers, giving Downing Street cover to act in conjunction with close partners and allies: a constant theme of Prime Minister Rishi Sunak’s foreign policy decisions so far. Or it may choose to sit this one out, which would create potential ammunition for Donald Trump to criticise the EU with, should he return to the Whitehouse. A clever leader could also look beyond the G7 to other countries concerned over Chinese dumping - such as Brazil (industrial products) or India (steel) - and work together on specific issues.
Climate criticism: Should the UK seek to replicate aspects of the tariffs on industries such as solar cells and batteries, it may potentially hamper the speed of any future Government push to hit Net Zero.
Electric Vehicles: A 100% tariff on Chinese electric vehicles entering the United States may incentivise Chinese EV companies to put more energy into penetrating the UK market (although very few are currently entering the US anyway). This may be good for the consumer - perhaps a pricing war will ensue - but it could also impact the UK’s fledgling EV sector and does little to answer many of the security concerns raised previously. In this case, Parliamentarians may want to pressure the Government to set out how it plans to mitigate these risks and ask why the Trade Remedies Authority has not been urged to investigate. Labour has previously suggested that trade remedies should be applied “where there is a concern that we’re not facing free and fair and healthy competition,” and has published some views on how it would seek to nurture the UK’s EV sector.
Winners: On the positive side, we could see some British winners who stand to benefit from these tariffs. For example, on the PPE front, a handful of companies that sought to diversify their supply chains away from China following COVID-19 may now find they can import goods into the USA 25% cheaper than their competitors who did not.
Finally, think tank Chatham House this week released a document arguing that ‘Realistic ambition’ should be the guiding principle of the next Government. I’m pleased to see the section on UK-China relations picked up on several recommendations I’ve made over the last couple of years, including the idea of creating a ‘China House’ in Whitehall for bringing together and incentivising expertise, and investing properly in Chinese language learning and capabilities.
Keep an eye on this space, as I plan to publish a strategy on how we can reform Whitehall and Parliament’s China capabilities at a granular level in the coming days. Just for fun!
- Sam Hogg, Editor
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Politics
Three individuals were arrested and charged under the National Security Act, the first public use in relation to Hong Kong/China affairs. Let’s unpack the public details, keeping in mind this is an active case.
Who: Chi Leung Wai, 38, Matthew Trickett, 37, and Chung Biu Yuen, 63. Chi Leung Wai, 38, works at Heathrow Airport for UK Border Force and volunteers as a special constable for the City of London Police. Former Royal Marine, Matthew Trickett, 37, currently works as an immigration enforcement officer for the Home Office. Chung Biu Yuen is an office manager at the Hong Kong Economic and Trade Office (HKETO) in London.
How: “The three men have each been charged with assisting a foreign intelligence service, contrary to section 3(1) and (9) of the National Security Act 2023 and also with foreign interference, contrary to section 13(2) and (7) of the National Security Act 2023. The foreign intelligence service to which the above charges relate is that of Hong Kong.”
Why: The trio stand charged with allegedly assisting a foreign intelligence service between 20 December 2023 and 2 May 2024 by engaging in conduct, namely agreeing to undertake information-gathering, surveillance and acts of deception. The trio also face a second charge of foreign interference on May 1 2024, by engaging in ‘prohibited conduct, namely, forcing entry into a UK residential address’. Commander Dominic Murphy, Head of the Met’s Counter Terrorism Command, said: ”A number of arrests were made and searches carried out across England as part of this investigation. While led from London, the Counter Terrorism Policing network has been crucial to disrupting this activity and we have worked closely with the Crown Prosecution Service since the start of the investigation.”
In the papers: The Telegraph cites insider knowledge, saying it “understands that the Home Office has ordered a review of Border Force and Immigration Enforcement recruitment, vetting and supervision procedures in the wake of the police investigation.” Nikkei Asia reported on the movement to shut down other Hong Kong Trade Offices.
Reaction:
The FCDO summoned Ambassador Zheng Zeguang: “Today, on instruction from the Foreign Secretary, the Chinese Ambassador was summoned to the Foreign, Commonwealth and Development Office. The FCDO was unequivocal in setting out that the recent pattern of behaviour directed by China against the UK including cyberattacks, reports of espionage links and the issuing of bounties is not acceptable. The summons followed Monday’s announcement that three people have been charged with offences under the National Security Act as part of an investigation led by officers from the Met Police’s Counter Terrorism Command. The foreign intelligence service to which the charges relate is that of the Hong Kong Special Administrative Region.”
Tom Tugendhat, Security Minister: “The National Security Act is a game-changer for our ability to crack down on foreign intelligence services and hostile actors. Our commitment to defending the rights and freedoms we hold dear is absolute. We will do whatever it takes to protect our national security.”
Suella Braverman, former Home Secretary: “If we are serious about national security we must … declare China a hostile state.”
Alicia Kearns, Chair of the Foreign Affairs Committee [on Chinese Ambassador being summoned]: “This is a relief to hear and long overdue. Hostile interference on UK soil is a serious issue for which we should have absolutely zero tolerance. We must be absolute on that with all countries.”
IPAC’s Bob Seely: “It’s quite clear that there is a significant uptick in espionage operations from both Russia and China, as well as subversive work from Iran too.” IPAC’s Luke de Pulford: “This is really excellent - fantastic to see the National Security and Investment Act being used against to stop extraterritorial intimidation of Hong Kongers. The whole of the UK, including our campuses, must be safe from Beijing’s long arm.”
Chinese Embassy spox: “The Chinese side firmly rejects and strongly condemns the UK’s fabrication of the so-called case and its unwarranted accusation against the HKSAR government, and has made serious representations to the UK side on the matter…The British side has also wantonly harassed, arrested and detained Chinese citizens in the UK under the pretext of judicial and national security. This constitutes a grave provocation against China and severely contravenes the basic norms governing international relations. It must be stressed that Hong Kong has long returned to China. Hong Kong is China’s Hong Kong. The UK has no right and is in no position to point fingers at and meddle in Hong Kong affairs. The Chinese government remains firmly resolved in fighting anti-China elements seeking to disrupt Hong Kong and in upholding the stability and prosperity of the region. The UK’s harbouring of wanted criminals tramples on the rule of law and leads nowhere. We urge the UK side to immediately correct its wrongdoing, stop spreading the so-call “China threat theory”, end all forms of political manipulation against China, and ensure all the legitimate rights and interests of Chinese citizens in the UK. We would like to make it clear to the UK side: any political trick to divert public attention and cover up its own serious problems by smearing China is doomed to failure, and any move to interfere in China’s internal affairs and undermine our interests will be met with a firm response. The UK side must not go further down the wrong path of jeopardising China-UK relations.”