In for a Yuan, in for a Pound: Is the United Kingdom Making a Bad Bet on China?

What exactly is the objection to UK Chancellor George Osborne’s desire for the United Kingdom to be Beijing’s “best partner in the West” and to have a “relationship that is second to none”? After all, there is not a country on earth that does not want to have a robust trade and investment relationship with China, the world’s second largest economy. Yet critics in and outside the United Kingdom seem taken aback by Osborne’s willingness to state up front what many countries also so clearly desire—a direct line into an economy that is one of the world’s most significant engines of growth.

In many respects, Osborne is only seeking to strengthen an already fairly dense set of UK-China economic ties. British banks have the largest exposure to the Chinese economy of any banks in the world: by the end of August 2015, they had $221.2 billion in outstanding loans to China, roughly two-and-a-half times the amount held by American banks. Chinese also represent the largest overseas purchasers of luxury real estate and the largest source of overseas students in the United Kingdom. Moreover, the United Kingdom is China’s largest recipient of foreign direct investment in the European Union. And the two countries appear to have reached consensus that London will become a “centre for renminbi trading, clearing and settlement.” Where the United Kingdom falls down a bit is on trade: China is only the United Kingdom’s seventh-largest market for exports (although it is the United Kingdom’s second-biggest supplier of imports).

So what is the fuss? It is, in part, as Philip Stephens has noted in the Financial Times, that the “United Kingdom assumes an economic relationship requires submission on everything else.”

Most obviously, as a result of Osborne’s economic focus, human rights issues appear not just lower on London’s agenda with Beijing, but not on the agenda at all. Although Prince Charles has at times spoken out in support of the Dalai Lama and Tibetan rights, and Prince William recently recorded a speech calling for China to do more to end the illegal ivory trade, the UK government has not displayed a similar willingness to publicly raise concerns with China. Over the past two years, Prime Minister Cameron refused to meet with the Dalai Lama; Chancellor Osborne traveled to Xinjiang, one of the most politically repressed regions of China, without mentioning human rights; the British ambassador to China refused to grant Chinese artist Ai Weiwei a six-month visa (a decision that was later reversed); and the United Kingdom agreed to move its exhibition in Beijing of the Magna Carta—a document that represents a cornerstone of democratic principles, guaranteeing individual rights and the rule of law—from an agreed upon exhibition space at Renmin University to a far smaller space for only a few hours at the British ambassador’s residence.

There are also security concerns at stake. If indeed Beijing is to be London’s new best friend in the West, what does that mean for defense consultations between London and its traditional treaty allies? Will the United Kingdom become a proxy for Beijing in discussions about security in the Asia-Pacific?  Already, Prime Minister Cameron refused the opportunity while in Singapore to offer his thoughts on Asian security issues—despite the United Kingdom being a member of Asia’s Five Power Defence Arrangement—apparently afraid of offending Beijing.

Last but not least, there are simply the optics. Osborne could no doubt have realized the same degree of Chinese investment and trade opportunities without sacrificing a healthy chunk of the United Kingdom’s international image and perhaps self-respect. Many countries, Germany and the United States among them, manage to have robust trade and investment relationships with China yet are not afraid to press China publicly to recognize the basic political rights the Chinese constitution grants its citizens. Those countries that do not—Zimbabwe, Pakistan, and Russia, for example—hardly seem the kind of company that London wants to keep.

Financial Times columnist Gideon Rachman offers a very thoughtful essay considering how the United Kingdom’s China policy might affect the U.S.-UK relationship, and I agree with much of what he says. But in truth, the United Kingdom’s decision about how to balance its relative political, economic, and security interests and define its policy toward China is not about the U.S.-UK or U.S.-China relationships. It is about the United Kingdom: the character of the country and, even more, of the people who lead it.