From ‘golden era’ to ‘Brexit era’ for May in China

by Alan Wheatley | 01.02.2018

For centuries, China’s neighbours paid tribute to the emperor of the Middle Kingdom by sending treasure and luxuries to his court. Xi Jinping is as powerful as any emperor, yet all he got from Theresa May today was a boxset of Blue Planet II.

Too much can be read into the exchange of gifts. So what if French president Emmanuel Macron presented Xi last month with a magnificent Republican Guard stallion?

Yet symbols matter, especially in China, which shares the view of May as weak and bereft of ideas, paralysed by Brexit and liable to be turfed out of office at any moment by her own party. As this week’s pro-Tory Spectator puts it: “Time is running out for the Prime Minister. She must act like a leader or resign.” Seen in that light, a modest gift to reflect the modest clout of Brexit Britain’s premier was perhaps appropriate. Anything grander would have smacked of hubris.

So, what of the substance of May’s visit? Here, it’s possible to have some sympathy for her. China respects strength, so she was right not to kowtow and give Britain’s unalloyed blessing to Xi’s flagship Belt and Road Initiative. As it stands, this opaque New Silk Road programme is primarily designed to generate business for Chinese state-owned companies and to bolster Beijing’s standing in the world. She was right to risk irking her hosts.

Despite persisting with talk of a “golden era” in UK-China relations first trumpeted by David Cameron and George Osborne, May knows she is playing a weak hand, especially post-Brexit.

First, China is likely to remain a closed market for many of the professional and financial services Britain would like to sell to it. Restarting beef exports and flogging a few more Aston Martins will not move the needle on trade and investment. Second, no major country, let alone China, will contemplate a free trade agreement until Britain’s future relationship with the EU is clear. And on that score, as we know, May hasn’t a clue.

It was honest, therefore, of the international trade secretary, Liam Fox, to admit in Beijing that a free trade deal with China could be “some time away”. However, he might usefully have explained what purpose such a deal would serve in any case. Why, if EU red tape is strangling Britain’s valiant exporters, is Germany – bound by the same rules – doing so much better than us? China leapfrogged the US and France in 2016 to become Germany’s leading trading partner.

The truth is that any future trade deal with China – or other big economies for that matter – is unlikely to be a game-changer for the British economy. As leaked government assessments this week confirmed, gains from trade pacts with non-EU countries would make up for only a fraction of the losses we will incur from excluding ourselves from the single market and customs union.

No wonder that China, like most other countries, just cannot understand what has come over Britain. But, as Xi will discover, at least we still make good documentaries.

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    Edited by Luke Lythgoe