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UK Government Policy

2 October 2020

The UK has no plan for China. This post represents Guanlidao’s current summary of the UK Government’s trade policy towards China with specific interest in how this might influence cross-border M&A, VC investment, enterprise and technology exchange. Like most Guanlidao posts, it is updated from time to time to remain current..

“If the growing rivalry between China and the US is set to define the geopolitics of the next century, then the UK is asleep at the wheel. Today, London finds itself caught between the two powers … without so much as a plan” said The Banker on 24 September 2020. 

The UK needs a single, detailed document defining a national strategy towards China, endorsed at Cabinet level” (Clause 127) and “There does not appear to be a clear sense either across Government or within the FCO of what the overarching theme of a new policy towards China should be” (Clause 126). So concluded an inquiry by the UK Government’s Foreign Affairs Select Committee which started on 21 November 2017 and concluded 4 April 2019 and which serves as one of our best references on the UK’s China policy. 

The bottom line from Guanlidao for all participants in M&A and VC investing is this: everything is viewed through the lens of “national interest” and “national security”. Trade is a mere subset of national security and the two things are talked of as one. This is most forcibly clarified by the National Security Strategy and Strategic Defence and Security Review 2015 Third Annual Report published July 2019 by the UK Government’s Cabinet Office. National Security is not defence or protection. Far from it. The UK’s National Security Objectives are: Protect Our People; Project Our Global Influence; and Promote Our Prosperity (Clause 1.4) with a strategy called “Fusion” which ensures that it embeds itself across every Government department. The rallying cry from the National Security Strategy and Strategic Defence and Security Review 2015 (SDSR), published 23 November 2015, re China was powerful: it cited three priorities for the coming five years which placed “Promote our prosperity, expanding our economic relationship with growing powers such as India and China, helping to build global prosperity, investing in innovation and skills, and supporting UK defence and security exports.” right up there with rules-based international law and dealing with terrorism. (Clause 1.4).  That was 2015. The year of the Golden Era.

China’s Ambassador to the UK, said on 1 August 2020 “To our regret however, this relationship has recently run into a series of difficulties and faced a grave situation“. He also said some UK actions had “seriously poisoned atmosphere of China-UK relationship” He asks if the UK “see(s) China as an opportunity and a partner, or a threat and a rival? Does it see China as a friendly country, or a “hostile” or “potentially hostile” state?” (He said that the solution was respect, engage in mutually-beneficial cooperation and seek common ground – pretty much the ground that Guanlidao hopes to pursue), 

What is the UK Government’s policy towards China today? It’s actually hard to say. It’s mostly negative. There are two parts: the one we rely on to guide us at a macro level is the formal and written policy towards China. This is not in one document, and usually comprises a patchwork of papers and statements from Government ministers through official channels. The other part is the informal one which can guide us at a macro level and which comprises the loud calls and quiet murmurings on the fringes of Government. This article takes a summary view of the formal policy: 

More recently, the UK’s voice on China is more about applying pressure on China [than constructive engagement.  human rights, the South China Sea:

This article refreshes from time to time.

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