Tom Tugendhat is Chairman of the Foreign Affairs Select Committee, and is MP for Tonbridge and Malling.
The Government’s offer of residency to Hong Kongers if China’s new Security Law is imposed is welcome. Given the enterprise and energy of the people, they’ll benefit our country. But this response to Beijing’s authoritarian control is local. We need a global China strategy if we’re to confront the biggest challenge to the liberal world since the end of the Cold War.
From Australia to Zambia, Chinese officials and their connected companies are using every lever they can to attempt control. In Canberra, tariffs have been threatened as a punishment for speaking out; in Lusaka, debt traps are now leading to the probability of strategic asset seizures. Beijing is trying to build dependence, and obedience, into the global system, replacing the network of treaties and laws that have enabled mostly peaceful trade and competition for decades.
For Britain, this is a particular challenge. We’re at the heart of the existing model – our economy is built on it – and if we’re going to defend it, and other nations’ liberties, we’re going to need to do more than issue a few passports. This is going to require a whole of government strategy and determination to act.
There are five things our government can do to defend our interests.
First, remember what our economy is built on: knowledge. Our science and service sectors require people to succeed, and for that we need an open system of education that encourages freedom of thought.
Our universities have stimulated innovation, so that some towns in Britain register more patents than whole countries. Others are bigger tech hubs than EU states. But the freedom that has allowed us to prosper is under threat.
More than a third of the UK’s international students are from China, and the consequent reliance on foreign fees is exposing some of our institutions to pressure. Removing students or research grants has been threatened by Beijing to silence areas of study and influence all areas of university life. The government needs to help reduce the dependence on one country that has made this possible.
Students used to empower state censorship could also be threatened with removal – putting at risk the fees paid by China’s new wealthy, turning the pressure back on the regime. Diversifying students and changing visa requirements to encourage those from democracies like India to come would help regain the academic freedom that in some colleges has taken a knock.
That would also boost start-ups and promote the innovation sector, bringing up my second proposal.
Britain’s open UK economy was designed for a time when companies competed with better-run rivals, forcing everyone to improve. Today, state-backed entities with deeper pockets than any credit line is allowing national planned purchases to achieve strategic positions. UK firms that should be competitive are being asset stripped, ending their ability to compete or innovate.
China’s Communist Party is using state-owned enterprises to impose its concept of state capitalism through takeovers, buying up rivals to create monopolies, and using impossibly low state-loans to buy rivals or simply undercut competition and dominate markets that would otherwise be swarming with rivals. We’re seeing the erosion of markets.
That’s bad for innovation, but particularly damaging to the UK because other countries, from France to Japan, have introduced laws allowing their governments to step in, leaving us as one of the few still without the protections needed and, again, increasing our dependence on one country.
The third area should be to diversify our trade. Today’s choke points in our supply chains have caused Ministers to change policy, because offending one state could see their domination of the PPE manufacturing leave us without any. By tracing products from source, we should be able to ensure that our supplies come from more than one country and, working with others, we can reduce dependence on systems that we trust won’t use them for political leverage.
The international trade system started as a way for free, rules-based nations to deepen commercial ties and avoid dependence on, and influence by, the Soviet bloc. It became so successful that even the communists joined. But Beijing’s learned from glasnost, and didn’t allow economic openness into politics. Unlike their Soviet predecessors, Beijing’s communist princes have both cash and power.
The UK should lead a new trade initiative bringing together countries outside the main blocks. India, Singapore, Japan, Brazil, Indonesia, Mexico, South Korea and many others are dependent on global trade, and would resist attempts to change it from a distributed network to bicycle wheel where all the spokes lead to a single hub.
We should work on bringing them together in a new T-20 – or however many dependable partners we can find – reinforcing the rule of law as the basis of international trade. Opening up to poorer countries would help unpick some of the debt traps China has been laying around the world.
The fourth aim of the UK should be to neutralise the Belt and Road Initiative. Not to end trade with China, but to reinforce global trade. Democracies sustain some of the poorest countries in the world through aid and trade, but it isn’t properly coordinated. Bringing together the strands not just from the UK but around the democratic world would help to cut the strings that see Beijing’s loans deliver UN votes or silence over abuses – before other countries are converted into property.
As the Sri Lankan port authority, Pakistani power sector, and Zambian mining operators are all discovering, those many loans aren’t meant to be paid back: the aim is ownership. Using our existing investment and granting access to global markets based on the rule of law would relieve dependence on single creditors, and tie nations into principles that naturally resist the authoritarian attempts of others.
The fifth area the UK should lead in is protecting electronic independence. Keeping trade flowing was the Royal Navy’s job for 200 years – today e-commerce is essential. Protecting allies is protecting ourselves, and that means investing in cyber infrastructure we can sell. Changing the decision on Huawei is only the first step. We need to develop our own systems to help others grow and innovate online.
This is a long game. We shouldn’t be aiming to defeat China, but to help it evolve. As the world’s broker, the UK wants China’s people to prosper. Hong Kong and Taiwan show this isn’t about changing China’s deeper culture, just the Communist Party’s ability to control its people by exporting its system by financial force.
Command economies give dictatorships some strengths, but democracies have deeper reserves of strength because the system isn’t constantly terrified of its people. That’s why we can out-wait Beijing, but to achieve that we need a strategy to sustain each other and ensure that we don’t sell out.