One of the great lost opportunities regarding the European Union is that while the EU has created a successful internal market that allows 27 nations to trade freely with one another (28 including the UK), the EU has been incredibly slow in opening up free trade to economies at different stages in their development to that of the major post-1945 European industrial economies. In this sense, while the now operational EU-Japan FTA (free trade agreement) deal is certainly not a bad thing, because Japan and the EU are both developed economies facing stagnation problems, the FTA will do little to inject new life into the economies that are party to the deal.
By contrast, if the EU opened up its markets to ASEAN, China, Pakistan, India and many emerging African markets, a new era could be inaugurated which would give EU manufacturers new and much needed export markets, whilst also giving European consumers access to more competitively priced products in an era where EU living costs continue to increase far more rapidly than wages.
But while any FTA with the EU is necessarily a complex procedure due to the amount of individual governments that have their say in European affairs, a traditional bilateral FTA is a comparatively smoother process. This is why news that Chinese tech giant Huawei plans to invest £3 billion into the UK economy, should be seen as the potential beginning of a new era in China-UK relations.
According to Business Insider Singapore: “Huawei, the Chinese smartphone and telecoms giant, has promised to spend £3 billion over the next five years on buying technology, intellectual property, and services from the UK”.
Of course, for a truly comprehensive economic relationship between China and the UK to commence, much more needs to be done from the British side regarding a demonstration of a transparent drive to ease the flow of trade between the world’s second largest economy and a Britain that is about to leave the European bloc that it joined in 1973.
In many ways, China represents a far better partner to Britain than the EU. On the one hand, while the UK has long been a net contributor to the European Union’s colossal budget, China is a major investor in countries that are roughly the same size or even bigger than Britain. Likewise, if trade relations are further reformed and modernised, China could give British firms millions of new customers that would help to create a solid incentive for UK companies to innovate in products that are much sought after in a market that is set to overtake that of the US in turns of domestic purchasing power.
At a time when mainly Japanese companies are engaging in a production exodus from the UK, Chinese investors could not only purchase the physical assets that Japan is looking to offload, but innovative Chinese firms could easily re-purpose many of the facilities and keep many of jobs from being permanently lost in the wake of Japan’s reticence to engage with a Britain seemingly on the verge of a so-called “no deal Brexit”.
Although China has viewed Brexit more with curiosity than with either optimism or disdain, as a country that views partnerships on a pragmatic long term basis, China is willing and able to approach a post-Britain EU with fresh ideas whilst simultaneously working to become a major factor in what will necessarily be a new economic era for Britain.
Because of this, any potential new era in China-UK relations in a post-Brexit economy, would represent a major win-win. That being said, major obstacles do exist.
Britain’s government is quietly at war with itself over what approach to take to China. On the one hand, there are those like the deeply inexperienced Defence Secretary Gavin Williamson, whose recent military threats against China forced Beijing to cancel scheduled trade talks with the UK. On the other hand, Chancellor of the Exchequer (finance minister) Phillip Hammond appears to favour a more pragmatic win-win approach to China and so too would it seem that Prime Minister May agrees more with Hammond when it comes to China.
Although Brexit remains a priority for the UK, because Britain will need to urgently compensate for the likely loss of easy access to the EU in the event of a “hard Brexit”, fostering win-win relations with China is not just one but is the essential ingredient that will help Brexit to deliver new opportunities instead of merely just a new set of challenges.
By resisting Donald Trump’s attempts to force a technological embargo against China’s innovative companies, Britain can allow China to become a vital partner in re-shaping the British economy, at a time when a new direction is desperately needed.