Neil O’Brien is MP for Harborough.
Are we, in fact, losing the competition with China?
Consider current events. The IMF predicts China will be the only country with a positive growth rate this year. Since 2004 the UK’s share of world manufacturing halved from four per cent to two per cent, while China’s rose from nine per cent to 28 per cent.
Being a surveillance state has proved handy in the crisis: detecting a dozen Coronavirus cases, the Chinese city of Qingdao is testing its entire population of nine million people for Covid-19 over a period of five days.
Whether it’s the holographic windows on the Beijing subway, or the scary videos of the People’s Liberation Army showing off its new mobile drone swarms, the sense that we are being overtaken is palpable.
So is the increasingly authoritarian and militaristic nature of the Chinese regime. Every day the Chinese press is full of two things. First, ever more lavish praise for Xi Jinping, now officially elevated to “People’s Leader”, and increasingly exercising one-man rule. Second, increasingly dire threats to other countries that dare to cross China.
This week it was the turn of Canada, which was warned not to accept refugees from Hong Hong on pain of having more Canadian citizens arrested in China. There’s a steadily louder drumbeat of threats to crush Taiwan: the other day Xi called on troops to “focus all [your] minds and energy on preparing for war”, and Taiwan revealed it had been forced to scramble jets 2,972 times against Chinese aircraft incursions this year.
A new and not very friendly superpower is emerging. How should we respond?
In the next month or two we should see the publication of the Integrated Review. This is a big improvement on previous Strategic Defence Reviews in that it goes wider, to think about economic competition, not just military rivalry.
The Review is a big deal, and in a world with no virus it would be headline news.
Other countries are considering the same issues. The EU now officially describes China as a “systemic rival” and “strategic competitor”, while the US is taking a huge amount of actions (on a cross party basis) to protect its interests from China.
While we’ve had less debate in the UK, we face exactly the same challenge.
In a speech last week, the head of MI5 noted that while Beijing’s espionage efforts typically take the form of “hacking commercially sensitive information or commercially sensitive data, and intellectual property”, UK spies have also detected attempts by Chinese counterparts to influence UK politics. China is “changing the climate,” he said:
“Sometimes our role is to spot the hidden State hand in the pursuit of promising UK companies whose acquisition might dent our future prosperity and security. On China, we need expansive teamwork – a broad conversation across government and crucially beyond, to reach wise judgements around how the UK interacts with China on both opportunities and risks.”
This is sensible. So what should the Integrated Review do on China? For me there are three big things.
First, we need an Australian style counter-influence unit to combat attempts to meddle in our politics
Like the Australian equivalent, it should be empowered to tackle a range of issues. Top London lobbying firms paid by hostile states for starters. We wouldn’t have let the Soviet Union hire Saatchi & Saatchi in the cold war, so why don’t lobbyists have to declare payments from arms of the Chinese state now?
Universities could use more oversight and guidance too – witness the Chinese cash-for-influence scandal at Jesus College Cambridge. The same issues apply in think tanks, businesses and even the House of Lords. China is quick to snap up ex-permanent secretaries and even ex-spies. We need a coordinated approach.
Second, we need a new partnership with firms and universities to protect our economic and technology security.
At the moment, we have a completely one-sided relationship, in which China can help itself to whatever university research it wants from the UK, buy up any interesting technology firm and even get our universities to work for branches of their military – an approach described in Beijing as ‘picking flowers in foreign lands to make honey in China’.
Through coercive joint ventures and corporate espionage, China can perform a sort of supermarket sweep on the intellectual property of the west. Meanwhile China bans investment in swathes of its economy, locks up people suspected of leaking industrial secrets and has just passed tight new laws on the export of key technologies.
It’s a modern version of the same mercantilism that saw China guard the secrets of silk-making for hundreds of years, but the real question is why we allow a one way transfer of technology?
A new unit in Number Ten or the Treasury should coordinate relationships with industry to help identify who is sniffing around new technologies – perhaps we need a UK version of the US Business Entrepreneurs Networks which help US government build up market intelligence.
We also need greater transparency on who is working with our universities. At present we don’t even collect data on who is funding them from overseas. Many firms would love help to counter hacking of their secrets or advice on tie-ups with Chinese firms. There should be an obvious place to turn to in government to get it.
Third, we need an “Office for the Future”.
China’s growing dominance isn’t just built on exploiting naive western countries, but on a relentless focus on research and industrial strategy which we should learn from. However, in government I felt that the different bodies which are currently supposed to help us think about technology add up to less than the sum of their parts.
Collectively the Government Office for Science, the Council for Science and Technology, UKRI, BEIS the Research Councils and learned societies have many brilliant people, but the system lacks a controlling mind or plan.
Some of this is about the wider civil service, and we should learn from Singapore: the world’s best civil service. Some of it is about our growing our pitiful level of investment in R&D, which has sunk over the decades just as China’s grew.
But we also need a plan. We need some part of government to be aware of the significance of new technologies and emerging firms before they have been snaffled and carted of to China or anywhere else. Research funding in government isn’t industrially-focussed enough. We need a unit to think commercially about where we should concentrate research investment, and where we shouldn’t. To work out what we need to do to be ready to catch the wave of new opportunities, in the way that Beijing is so good at.
In a new book, “The Wake-Up Call”, John Micklethwait and Adrian Wooldridge sketch out how the virus has exposed the challenges facing the UK and other western countries, and the scale of the challenge we’re facing.
It reminds me a bit of the late 1970s, when Helmut Schmidt, then West Germany’s Chancellor, declared: “England is no longer a developed country,” and Nick Henderson’s famous leaked telegram highlighted our rapid descent. Eventually we get angry enough to do something about it, and elected Margaret Thatcher.
This time the problems are different and we are already in government. But the urgency is just the same. Let us hope that the Integrated Review can be part of the wake-up call we need.