Osborne’s New Model of Minor Power Supplications

British chancellor has toured China this week, seeking investment and pledging £10 million in public funds to promote football and British arts there. In an op-ed at The Guardian last weekend, he summed up his vision for a “golden relationship”:

[…] There are those who say we should fear China’s rise – that we should somehow guard ourselves against it. But we reject such thinking, which would simply leave the UK slipping behind.

Instead, we should embrace it. We want a golden relationship with China that will help foster a golden decade for this country. It is an opportunity that the UK can’t afford to miss. Simply put, we want to make the UK China’s best partner in the west.

[…] We hope our dialogue with China’s leaders will pave the way for a successful Chinese state visit next month – the first for a decade – when the Queen and prime minister will welcome President Xi to the UK. We are at a critical moment in our relationship with China. We need to double our efforts to strengthen our economic links, help British firms enter the market there, and attract more investment into the UK and the northern powerhouse. Rather than standing back and being left behind, we must make the most of the opportunities that a growing China presents to us. [Source]

The chancellor also discussed China in an interview with The Economist’s Bagehot columnist, from his memories of traveling there in the early 90s to his determination to “broaden[…] this relationship on every front.” In a separate commentary, Bagehot described Osborne as “perhaps the West’s most pro-Beijing statesman of his stature,” and warned that “Britain is sleepwalking into a much closer relationship with China”:

That this shift is so little discussed in Britain is remarkable. It could transform the country’s role in the world. The Foreign Office is already diverting resources from Europe to China; from political desks to trade ones. Britain’s growing friendship with Beijing appears to be losing it pals in Washington. Its new commercial links hardwire its economy into that of a vast partner whose stockmarket has fallen by almost 40% in the past three months. Mr Osborne points out that Britain is bound to the EU, too. But it is about to have a year-long debate, followed by a referendum, about that relationship. Where are the parliamentary wrangles over China? The prominent sinologists in Britain’s public life? The headlines about the intrusions on British sovereignty by the economic giant to which Britain is, for better or worse, tethering itself?

Though unconvinced that stern words in private will stop Beijing from being beastly to its liberals and minorities, Bagehot otherwise accepts the chancellor’s main argument: that China is now too big a power for a global entrepôt like Britain not to embrace. But the country is doing so by default; a change from which much of its establishment (let alone its electorate) is disengaged. As it plunges into a bunfight about its membership of the EU, it is up to the likes of the chancellor to forge a parallel debate about its much less certain, but increasingly close, relationship with the world’s new superpower. [Source]

An editorial in The Guardian expressed similar concerns:

The reluctance to be explicit about the strategy carries big political and democratic costs. It means that Britain does not discuss the proper limits of Chinese penetration of UK infrastructure, including national energy needs. It means that the British economy is placed in a more dependent relationship with China, at a time when China’s growth is stalling and its stock market faltering. It means that Britain, its foreign policy increasingly in the hands of the Treasury rather than the Foreign Office, has an interest in not challenging Beijing on issues such as human rights. None of these strategies have been seriously debated outside the corridors of Whitehall. They should be, even though the horse has bolted and the stable door is wide open. […] [Source]

So too did the newspaper’s political columnist Rafael Behr, who added that Osborne appears quite “unburdened by moral or ethical considerations”:

This gamble is born partly of necessity and partly of conviction. Osborne is not a laissez-faire fundamentalist. He has an appetite for intervention, with a particular interest in building things. He may have cultivated a political brand as a fiscal disciplinarian, but he would also like his legacy to include the honour of having refurbished Britain, making it fighting fit for the economic future. The two ambitions collide. Infrastructure costs money but he has made a taboo of public borrowing. Chinese cash is meant to bridge the gap. In exchange he offers Britain’s expertise in finance and high-skilled services.

A strategic punt on this scale ought to be the subject of intense political scrutiny. Yet the question of whether authoritarian China will be a trustworthy or morally decent shareholder in UK plc is hardly discussed. Beijing does not plug capital shortfalls in Europe, nor open its markets to imports, out of charity. There is a diplomatic as well as an economic quid pro quo. Osborne slipped a reference to Britain’s status as a democracy into his Shanghai speech, but as a minor cultural difference between friends, to be handled with “mutual respect”. This is liberalism stripped of the cumbersome apparatus of civil rights and political freedom to be more economically streamlined. [Source]

Osborne’s decision to promote economic partnership in the troubled western region of Xinjiang, where China has enacted draconian security measures and cultural restrictions, only sharpened the impression that he is unconcerned with human rights. BBC economics editor Robert Peston described the excursion—which coincided with news of a bloody attack at a coal mine in which as many as forty people died last week—as “blowing a raspberry at human rights campaigners.” From Tom Phillips at The Guardian:

Osborne was in ’s capital, Urumqi, on day four of a five-day trip designed to boost economic ties between Britain and China.

[…] “China’s emerging regions, like Xinjiang, hold enormous potential in the years ahead,” the chancellor said. “That’s why I wanted to come here today to see this place for myself, and highlight Britain’s absolute commitment to support the growth of Urumqi together with the whole of the Xinjiang region.”

[…] “One of the things we can bring to a province like Xinjiang … is economic development and rising prosperity and higher living standards because we’ll be investing through British companies in infrastructure there, and in education there … and that has got to be a good thing.”

Nicholas Bequelin, Amnesty International’s east Asia director and a Xinjiang expert, said resource-rich Xinjiang had long had one of China’s fastest-growing economies. “The question is: who benefits from this?” [Source]

In a previous Guardian report, Bequelin commented:

Bequelin questioned whether Osborne’s decision to travel to Xinjiang was an attempt to “ingratiate” the British government with Beijing. He urged the chancellor not to “walk blindly and naively into a very complex and tense political situation and just pretend that it doesn’t exist”.

He said: “That seems to have been the whole of Osborne’s approach to China: that hubris and sheer willpower can somehow change reality. He seems to be so determined to ignore any kind of information that doesn’t really sit with this happy story of the UK being such a great partner [of China and] finding economic opportunities that are a win-win for everybody.”

[…] He said: “What better example of the fact that the west and the UK don’t care at all about human rights than to get the chancellor [to visit Xinjiang] on the very day [Tohti] was unjustly sentenced to life imprisonment for raising issues that are directly related to the economic development of the region?” [Source]

Osborne did eventually yield to persistent pressure to publicly comment on rights concerns. In general, he has defended the practice of reserving such issues for private meetings. From his Bagehot interview:

With any friendship you can always raise issues of concern, and I’ve done that on that trip, but I’ve done it privately; I haven’t used megaphone diplomacy. And I’ve also been a respecter of the fact that China is a country that contains one fifth of the word’s population and has a civilisation stretching back 5,000 years. You can have a dialogue with the Chinese on many different levels. And just as it wouldn’t be right to only to have an economic dialogue with China, equally you shouldn’t restrict your dialogue solely to issues around, say, human rights. You can raise all those issues, and that is what reflects a mature discussion. So I don’t think essentially we have to choose between being partners in China’s economic development and being proud defenders of British values. [Source]

Many rights activists, though, question the value of such private talks. From Tom Phillips at The Guardian:

“When does the west plan to stop making concessions on human rights?” Hu [Jia] asked. “I know sometimes foreign leaders and diplomats would rather communicate their concerns in private rather than make them public, but this is exactly what the regime wants. It only encourages the regime to be more blatant in its crackdown on human rights.”

[Hong Kong democracy campaigner Martin] Lee said: “The Chinese government is very smart – much smarter than the British. The Chinese government makes the British government think that if they behave properly by keeping quiet on these sensitive issues then they get more business. And the British government, of course, takes that line.” [Source]

An anecdote revealed by Jonathan Mirsky after Prime Minister ’s “craven surrender to China” in 2013 illustrates some of the cause for skepticism. From The Spectator:

In 1991 when John Major became the first international leader to visit Beijing after Tiananmen, he asked me for a list of several hundred political prisoners that Amnesty had given me. After he saw Premier Li Peng, Mr Major told the British journalists waiting outside the room that he had virtually banged the table about human rights and handed Mr Li the Amnesty list. That evening Foreign Secretary Hurd underlined for me how Mr Major had laid it on the line with Li Peng. All of us wrote admiring pieces about Britain’s principled stance. The Observer gave my piece a gratifyingly prominent spread. A week or so later an official who had been in the room told me that no mention whatsoever was made of human rights and no list of prisoners came out of Mr Major’s pocket and into Li Peng’s hand. [Source]

China’s state media, at least, has conveyed appreciation for Osborne’s reticence. From the BBC:

The Global Times said he was “the first Western official in recent years who focused on business potential rather than raising a magnifying glass to the ‘human rights issue’”.

[…] In an editorial (in Chinese), the Global Times praised Mr Osborne’s “pragmatism regarding his China policy”, adding that “it should be diplomatic etiquette for foreign leaders not to confront China by raising the human rights issue”.

“Keeping a modest manner is the correct attitude for a foreign minister visiting China to seek business opportunities. Some Westerners believe their officials should behave like a master of human rights to show their superiority over China and the East.” [Source]

But The Financial Times’ Philip Stephens wrote that Osborne’s accommodation is unlikely to win much respect from the Chinese government itself:

Some will say that Mr Osborne is far from alone in his eagerness to grab a sizeable share of China’s newfound wealth. Angela Merkel is forever leading German trade missions to Beijing while the US has not let arguments with Beijing get in the way of an expansion of business between the two nations.

That is true. What is curious is the British assumption that a healthy economic relationship demands a submissive stance on everything else — whether human rights or China’s contested territorial claims in the western Pacific. US President Barack Obama will feel no such compunction during his meetings with Mr Xi this week.

Those who know China well say there is no evidence anyway that kowtowing, as such self-abasement used to be called, wins favourable treatment. To the contrary, Beijing tends to disdain those it perceives to be supplicants. [Source]

Citing details revealed in a new biography of Cameron (not that one), The Spectator’s Fraser Nelson explained the origins of the current supplicant posture:

The Chancellor is being so craven because he is still now seeking to atone for what he believes was one of Cameron’s worst diplomatic mistakes: meeting the three years ago. It had been a low-key event, not in No. 10 but in St Paul’s Cathedral — a venue chosen to minimise Chinese anger by framing this as a meeting with a religious man, the leader of Tibetan Buddhism. Osborne was against the meeting but the Foreign Office (which had arranged a similar one for Gordon Brown) assured him that Beijing would get over it in a few months. And anyway, since when could an authoritarian communist regime dictate who the British Prime Minister sees?

But things had changed. Beijing sensed that it had more leverage over a prime minister with such a visible appetite for doing Chinese deals. […]

A year later, Cameron was still in Beijing’s sin bin. ‘This is ridiculous,’ he told officials. ‘I have made overseas trade a cornerstone of my premiership and I’m not being allowed to go to China. I’ve got to go to China!’ He berated them about the ‘heavy price’ he was being made to pay for ‘doing what I was told would not become a major incident’. The Foreign Office had not just misjudged Beijing, it had misjudged No. 10. The Prime Minister was quite serious about his mercantilist foreign policy, and his Chancellor was hellbent on setting up Chinese deals for British companies. Relations with the Dalai Lama were, to put it mildly, a lower priority. [Source]

Cameron’s efforts to repair the rift led to accusations of having “sold the store,” “surrendered,” and “totally capitulated” to China, delivering an “embarrassing” and “painful lesson in how not to deal with” the rising power. The campaign has irritated American allies: after the British-led break with the U.S. over China’s Asian Infrastructure Investment Bank, in which Osborne played a key role, President Obama complained about the U.K.’s “constant accommodation” of Beijing. Asked on Wednesday about Osborne’s “effusive” praise for the Chinese, though, White House spokesman Josh Earnest sounded more dismissive than annoyed. Via Graham Webster:

I did spend a decent amount of time preparing for the briefing today on a range of priorities, but this particular issue didn’t come up in any detail. So I’m not aware precisely of what the individual that you referred to may have said. So that may give you an indication of how concerned we are about any of the positions that he may have taken over the course of this trip. [Source]

The increasingly ostracized Dalai Lama, meanwhile, commented on Britain’s current China policy in a conversation with Jonathan Mirsky this week. From The Spectator:

The Dalai Lama is a connoisseur of absurdity. When we met in London on Monday I reminded him that two years ago, desperate to resume relations with China, No. 10 said it had ‘turned the page on that issue,’ by which he meant the Dalai Lama. He responded with his celebrated chuckle but it became clear that he’s far from sanguine about being snubbed by Britain.

He agreed with me that not even Beijing could have thought up a phrase like ‘turn the page’. And in case Beijing didn’t get that craven message, Mr Cameron’s team spelt it out: the Prime Minister has ‘no plans’ to see the Dalai Lama again. In return, Beijing may agree to make London the offshore centre of choice for trading in its currency, the renminbi, and invest in our nuclear energy — a bad idea considering China’s dismal record in everything from high-speed trains to school buildings.

So on his nine-day tour to Britain, the 80-year-old Dalai Lama could not expect any hospitality from government ministers. Having become a political untouchable in Britain, as well as in China, what would he say to David Cameron if he were allowed anywhere near him? His answer was clear and simple: ‘Money, money, money. That’s what this is about. Where is morality?’ [Source]

The Spectator’s Nelson commented:

The Dalai Lama’s words should haunt Cameron. It is appalling that he has (in effect) ruled out meeting him again to assuage the Communist Party in China: our foreign policy should not be for sale. The Dalai Lama’s intervention is a rare slip: he normally avoids such direct criticism. But China is upping the stakes in the war against him, and exacts ever-tougher penalties on any western leader who gives him the time of day. Academics have identified a ‘Dalai Lama effect’ which shows how China cuts exports to countries who receive him. Beijing uses its trade as a foreign policy tool, and it seems to enjoy having people like George Osborne dancing a jig. This week, the Chancellor even said that Britain will take Chinese civil nuclear plants – em, why? The  Chinese are hardly known for their expertise in this area, which is why only countries like Pakistan and Romania have bought their nukes. [Source]

The Guardian reported comments this week from Chinese nuclear scientist He Zuoxiu, who warned of the “insane” expansion of the country’s nuclear power program. “China currently does not have enough experience to make sound judgments on whether there could be accidents,” he said. “Nuclear energy costs [in China] are cheap because we lower our standards.”

The nuclear power projects in question in the U.K. have proved particularly contentious. From The Economist:

[…] Already the £24.5 billion project to build a station called Hinkley Point C in Somerset is expected to finish over-budget and beyond the projected start date of 2023, if it ever starts at all. But on September 21st, after unveiling in Beijing a £2 billion inducement to China to help finance Britain’s first reactor in 20 years, he exposed himself to further criticism. The country should lead the way on as it did in the 1950s, he said. But the implication was, it could only do it with China’s help [….]

[…] Analysts say Mr Osborne is engaged in a complex manoeuvre to ensure that two Chinese firms help finance EDF. The £2 billion guarantee is one inducement. Another is an offer for China to build a reactor of its own at Bradwell in Essex. That has set off further alarm bells, though. Not only would it test confidence in Britain’s Office for Nuclear Regulation, it would also put a critical part of the nuclear industry and the national grid into Chinese hands. [Source]

In the Bagehot interview, Osborne defended the deal:

There’s another concrete advantage for British people […], but the fact is I do not need to stump up billions and billions of pounds of taxpayers’ money to build a new nuclear power station, as all previous nuclear power stations have been built—money I can’t then spend on the health service or can’t then spend on the education system or can’t use to cut taxes. This approach means I’ve got Chinese investment doing that for me and I don’t need to use taxpayers’ hard-earned cash for it. So it’s a bit more intangible but it affects every single taxpayer in the country. [Source]

At chinadialogue, Isabel Hilton highlighted concerns about Hinkley’s “bloated costs and unproven technology,” noting that “the design […] has never been successfully built, and the contractor Electricite de France (EDF) seems increasingly uncertain that it is possible.” An editorial in The Guardian described the project as “the wrong nuclear option,” while columnist Simon Jenkins attacked it in even stronger terms:

It is the costliest white elephant in history. No power station, perhaps no building, so expensive has ever been built anywhere. In a modest meadow overlooking the Bristol Channel is to rise a structure that will outstrip in extravagance the Three Gorges dam, St Peter’s Basilica, the Taj Mahal and probably the pyramid of Cheops. It is to be built – you guessed it – by the British taxpayer. You can accuse George Osborne of many things but not of austerity. Hinkley Point C marks a new high watermark in public sector extravagance.

[…] To get Hinkley off the ground the energy department had to promise to pay investors a guaranteed, index-linked “strike price” of £92 per megawatt hour, or double the current market price, and do so for an incredible 35 years. It had to pretend to Brussels this was not a subsidy because consumers, not taxpayers, were the ones being ripped off. It also had to pretend that guarantees were not subsidies. The Chinese wanted not just a return of 10% but a guarantee of 10%. Osborne has in effect borrowed £2bn for Britain from China at five times the cost of public sector bonds. [Source]

Jenkins wrote that “Hinkley Point competes with HS2 [a proposed high-speed rail link between London and northern England] for the title of ‘world’s stupidest megaproject’.” Osborne opened bidding for Chinese investment on the latter on Thursday.