United Kingdom ministers are on damage-control exercises this week with their Japanese counterparts after reportedly angering Tokyo with their tactics over a new post-Brexit trade treaty. This faux pas, following China’s abrupt cancellation of a UK ministerial trip last week, underlines the big challenges with the UK mission to negotiate new economic relationships in Asia and beyond.
Take the example of last week’s UK-Japan trade talks, which saw Tokyo taking diplomatic umbrage at what has been reported as the “high-handed” approach of British Foreign Secretary Jeremy Hunt and International Trade Secretary Liam Fox. The desire of Fox and Hunt to try to secure a speedy new trade agreement with Japan, with their “time is of the essence” calls, backfired prompting Japan to consider postponing the talks.
And this comes after Tokyo’s decision to refuse to replicate, in a post-Brexit UK trade treaty, the terms of agreement that Japan recently reached with the European Union (EU). Tokyo is, instead, reportedly seeking a tougher stance amidst the alarm of many Japanese firms, who employ some 140,000 UK-based employees, over the prospect of a no-deal Brexit withdrawal next month.
The diplomatic damage, however, with China could be even more significant for the UK, at least in the short term. A trip last week by Chancellor of the Exchequer Philip Hammond to Beijing was cancelled after Defence Secretary Gavin Williamson made earlier this month what was perceived by Chinese officials as a sabre-rattling speech in which he asserted that London could deploy an aircraft carrier in the Pacific for its first operational cruise in 2021. Such a move will be sensitive for Beijing, in part because it is involved in disputes with neighbouring countries over territorial claims in the South China Sea.
While there has been no public confirmation of the London-Beijing spat, the Chinese ambassador reportedly raised his concerns with the UK Foreign Office about Williamson’s speech. Moreover, former Chancellor George Osborne, who was a key architect of the so-called UK-China “golden era” in relations since 2015, has criticised the mixed messages coming from British Prime Minister Theresa May’s team over whether Beijing is an economic partner or military threat.
While Hammond’s trip could yet be re-scheduled, the latest skirmishes with Tokyo and Beijing highlight the delicate diplomatic balancing act that London is engaged in with its post-Brexit diplomacy. China is a good case in point given that the 2016 Brexit vote has only increased the emphasis the UK is putting on consolidating ties with Beijing with the March 29 Brexit deadline looming.
Through this Brexit lens, the most important element of the bilateral relationship with Beijing is economic. The UK received in recent years the largest amount of Chinese foreign direct investment of any EU country, and China has been one of the UK’s largest trade partners in Europe, after Germany.
The pre-eminence of economics in bilateral ties has been heavily underscored in recent trips to China by UK functionaries, including one by May last year, that sought to demonstrate the potential for post-Brexit trade ties from infrastructure, and green finance and technological innovation. Take the example of UK energy and technology businesses that are eager to gain market opportunities in the massive Chinese market, and where the UK is well-positioned as a leader.
Yet, important as the economic realm is in bilateral relations, security issues are important too. Here, China has tried to expand military cooperation with the UK, including for the first time last year sending warships to London. It is in this context that Williamson’s speech this month will have troubled Beijing.
For many, it might appear that the bilateral relationship is overwhelmingly one-way traffic, especially given that Chinese economy is now a multiple of that of Britain’s. However, for all that Beijing may be the more powerful partner, it is grateful to the Conservative Government for ratcheting down, in public at least, human rights concerns about China, especially after bilateral relations temporarily went into a deep freeze in 2012 when then-prime minister David Cameron met the Dalai Lama.
While this stance is certainly not without controversy, including with Labour leader Jeremy Corbyn, who raised human rights issue with Chinese President Xi Jinping in 2015 in London, Brexit means that the May team increasingly believes that enhancing ties with Beijing is in UK’s national interest. Barring ill health, Xi will be in power well into the 2020s, and, especially with Brexit, it is widely viewed by Conservatives that there is an opportunity to develop a relationship for years to come.
In this context, Washington had previously raised concerns about the degree to which London was perceived to be cosying up to Beijing, especially under the previous government of Cameron when Osborne pledged to make the UK “China’s best partner in the West”. This ruffled the feathers of the then administration of United States president Barack Obama, following the UK’s decision to become a founder member of the Asian Infrastructure Investment Bank, with an unnamed senior Obama official warning “about a trend toward constant [UK] accommodation of Beijing, which is not the best way to engage a rising power”.
The recent spats with Beijing, and indeed Tokyo, underline the post-Brexit balancing act that the UK government faces in its desire to warm ties. With the dominance of economics in bilateral relations with China, security and human rights issues will continue to prick Beijing, as Williamson’s speech showed, and the UK government remains under domestic and international scrutiny on these issues.
Andrew Hammond is an Associate at LSE IDEAS at the London School of Economics.
