Last year saw the Government gradually lose control of its China policy in the Commons – or, to put it another way, among its own MPs. Boris Johnson had sought to balance the securocrats and ethicists, in the one corner, against the trade and Treasury interests, in the other.
The compromise was the formula in the Integrated Review of Security, Defence, Development and Foreign Policy. China was described as a “systemic competitor” while Russia was labelled an “acute and direct threat”.
“We will continue to pursue a positive trade and investment relationship with China, while ensuring our national security and values are protected. We will also cooperate with China in tackling transnational challenges such as climate change,” the review declared.
Conservative MPs nearly drove a coach and horses through it the policy in when a genocide amendment to the Trade Bill in the February of that year were narrowly lost. Two months later, a motion declaring that China’s treatment of the Uighars constitutes genocide passed the Commons unopposed.
Liz Truss will have seen the Tory view of China shift from the “golden decade” of relations heralded by George Osborne in 2015 through the tussles over Hinckley Point under Theresa May to the rise of the China Research Group and the Conservative revolt over Huawei in 2020.
She now apparently wants to tip the balance, recast the Integrated Review and give China the same status as Russia. Her view represents a marriage of convenience and conviction. Convenience, because she wants to march in step with Tory backbenchers.
Dean Godson of Policy Exchange has analysed on this site the various Conservative interests who want a harder and a softer line on China, crudely speaking. You will see from this piece that there seem to be more of the former than the latter. But don’t underestimate the force of conviction on the Foreign Secretary and, presumably, Prime Minister-to-be.
That Truss will have to water down her convictions on economic policy, as the taxpayers bale out voters by billions of pounds to ease the pressure of higher energy bills, may have the effect of firing them up elsewhere. And Truss is a foreign policy hawk as well as a free market devotee.
It would be insulting to suggest that her stance is Thatcher cosplay rather than liberal conviction. A politician whose instincts favour freedom will chafe against authoritarian tyranny. Remember her original support for Britons willing to fight for an international force in Ukraine.
And Freedom House’s summary of China comes as close to labelling it a totalitarian state as one can do without actually saying so. “The Chinese Communist Party continues to tighten control over all aspects of life and governance, including the state bureaucracy, the media, online speech, religious practice, universities, businesses, and civil society associations”.
So far, so good – if a change of tack has been thoroughly thought through. During the Cold War, Britain faced a single identifiable security threat abroad, the Soviet Union, and a serious internal one domestically, Irish republican terror. Today, we face two abroad, Russia and China, and a series of different threats at home of which Islamist terror is the most prominent.
Truss will be familiar with the trade and security trade-offs, having been in place for the Aukus deal, and having served as International Trade Secretary. On security, she will have a view on the projection of British military power in the Pacific, of which I was sceptical even before Russia’s invasion of Ukraine.
Vladimir Putin’s attempt to move international boundaries by force, or even eliminate them altogether, was a reminder that our security priority must be our European backyard. On trade, the incoming Prime Minister might point out that it always works two ways.
The UK had a £44.8 billion trade deficit in goods and a £5.7 billion surplus in services with China last year. We may not be as high on China’s export destination list as it is on ours, but China needs its markets abroad as it grapples with gender inbalance, Zero Covid harming sales and a property market in freefall.
So China has an interest in not over-reacting to a shift of Government policy, though neither Truss nor others can know precisely what it would do. A question that follows is whether China is so deeply embedded in our economy that a hostile communist reaction to changing British policy could cause serious economic damage.
One expert’s answer to my enquiry is “it depends what you mean”. After all, as Alan Mak has pointed out on ConservativeHome, China accounts for more than 90 per cent of the global production and supply of rare earth elements during the past decade, according to the US Geological Survey”.
“Whilst used only in small quantities, they are key components in a wide range of consumer products from mobile phones, laptops and TVs, and have widespread defence applications in jet engines, satellites, lasers and missiles,” he wrote. If we were paralysed by fear of what China might do, given this sobering reality, we would never criticise anything it ever does, anywhere.
Two years ago, we ran an article by Tom Tugendhat detailing how Britain might respond to the threat from China. He made five recommendations: diversifying our student intake, protecting firms from exploitative takeovers, broadening our trade, neutralising the Belt and Road Initiative and protecting electronic independence, here and abroad.
“This is a long game,” the recent leadership contender wrote – and it strikes me that his programme could be gradually implemented without tampering with the Integrated Review policy at all. But Truss will presumably want to send a signal to Whitehall that “the rules of the game have changed”.
China Research Group analysis in July concluded that “China General Nuclear is a Chinese state-owned enterprise, run by an arm of China’s State Council. Its involvement in our nuclear industry is now seen as unacceptable national security risk.” That would means the removal of CGN involvement from Sizewell C and Bradwell.
My source compared China’s legacy in our national infrastructure to wood provision for Hornblower-era warships. “You might know all about the material that you sold bought, and how it is deployed too, but it doesn’t follow that you can sink the ship”.
If Truss is set on rewriting the Integrated Review, she will need bandwidth at the top of govenment to do so effectively, given the awesome scale of the economic challenges facing her. Trade and Treasury lobbies will resist her and she must pick her fights carefully. Her instinct is sound but the jury is out.