How can Britain trade with China while declaring a new Cold War?

Speaking in the Commons yesterday, the Prime Minister said something potentially significant: “Those who call for a new Cold War on China or for us to sequester our economy entirely from China (which seems to be the new policy of the Opposition, weaving as they generally do from one policy to the next) are, I think, mistaken.”

Leaving aside the partisan parenthesis — plenty of Tory MPs share the view Boris Johnson here attributes to Labour — what does this comment tell us about the future course of the Sino-British relationship? The Integrated Review, a debate on which was the occasion for the Prime Minister’s remarks, has much to say on the subject, but it is silent on the question raised here: is it right to trade with a state that is known to be abusing human rights on a colossal scale?

In his comments, Boris Johnson appears to assume that a “new Cold War on China” would imply a trade embargo, perhaps even a blockade. Or, in his typically colourful language, that the UK (and the rest of the West) should “sequester our economy entirely from China”. Would such a Cold War continue until such time as Beijing desists from its genocidal treatment of the Uighurs and its suppression of democracy and the rule of law in Hong Kong?  If one accepts the premise, that trade with an authoritarian or totalitarian regime that commits crimes against humanity is wrong in itself, then there is no obvious point at which sanctions should be lifted, unless there is a change of regime.

Yet this is not what happened in the actual Cold War, as opposed to this hypothetical one. Let us consider what Winston Churchill — the man who coined the phrase “Iron Curtain” and hence perhaps the first “Cold Warrior” — had to say while Prime Minister in 1954, at the height of the Cold War.

“The more trade there is through the Iron Curtain, and between Great Britain and Soviet Russia and the Satellites, the better will be our chances of living together in increasing comfort. The more the two great divisions of the world mingle in the healthy and fertile activities of commerce the greater is the counterpoise to purely military calculations. Other thoughts take up their place in the minds of men.”

In other words, those who led this country during the Cold War saw no contradiction between an arms race, which at times led to military confrontation or even proxy wars, and a trading relationship between East and West that was limited only in strategic technologies. Of course, there is no comparison between the volumes of trade then and now. Even after the 1959 trade agreement between the USSR and the UK, their commerce represented only a tiny percentage of either country’s imports and exports. The same was true of the US and most other Western countries. The main limiting factor was never concerns about human rights, however, but the simple fact that neither the Soviet Union, nor Communist China, nor their allies were capable of producing goods or services which could compete in Western markets.

The situation is, of course, reversed today. Any attempt to suppress trade with China, and to a lesser but still considerable extent Russia, would cause chaos in the West. The sheer scale of our economic interdependence renders such an interruption unthinkable — whether in the name of humanitarian sanctions or that of protectionism, as Donald Trump proposed. Even if the British Government were to decree a total embargo on Chinese imports, does anyone suppose that such a ban could be enforced?

Instead, we need to think in terms of identifying and targeting individuals, political organisations or corporations that can be reliably linked to specific violations of human rights. The UK has already imposed such sanctions on Russian intelligence officers deemed culpable in the Salisbury poisoning affair. The Biden Administration has applied similar sanctions to Chinese officials believed to be responsible for policy in Xinjiang and Hong Kong, though the British have yet to take this step — perhaps because they fear reprisals against Hong Kong holders of British Overseas National passports, who might be deprived of their right to emigrate to the UK.

In the Commons yesterday, the deeply knowledgeable and experienced Conservative MP Julian Lewis — who remains Chairman of the Defence and Security Committee despite efforts by Government whips to unseat him — was scathing about the Integrated Review’s thinking on China. He strongly disagreed with the Review’s expectation that trading links with the People’s Republic were likely to deepen, in spite of our strategic “competition”. Pointing to the apparent contradiction, Lewis denounced the complacency of attitudes in Whitehall and Westminster, past and present: “Doesn’t that unfortunately demonstrate that the grasping naivety of the Cameron-Osborne years still lingers on?”

Lewis, as usual, makes a powerful point. The imbroglio over Huawei is all too well known. It is questionable, if not indeed embarrassing, that a former British Prime Minister has a (presumably highly paid) post working for the UK-China Fund. Although such initiatives nominally belong to private sector, they are bound to give the impression that Beijing’s tentacles reach deep inside the British Establishment. As for whether anything has really changed: the revelation that the new Situation Room in Downing Street was designed by a Russian firm has raised eyebrows, to say the least. Alarm bells had been ringing about “strategic competition” with China and Russia long before the present panic. Yet there are plenty of senior politicians and civil servants who don’t seem to have got the memo.

Where China, in particular, is concerned, HMG has no easy options. The former head of MI6, Sir Alex Younger, sees the challenge posed by this economic as well as military superpower as “a generational threat” which will only grow. The UK is engaged in “a fierce competition and in some cases a vital contest”. “Whoever loses will face reduced control over their own future.” 

Such a view, widely held in the intelligence community, assumes that the West and its authoritarian rivals face a zero-sum game which only one side can win. Boris Johnson disagrees, arguing that a balance must be struck between strategic and commercial imperatives. He is right to be cautious. If there is a new Cold War, it is still undeclared. If there are parallels with the postwar era, they should not be taken too far. There are no equivalents today to the Korean and Vietnam Wars, the Cuban Missile Crisis, or the Berlin Wall.

It is, however, worth remembering that the word “competition” — as used in the title of the Integrated Review: Global Britain in a Competitive Age — is double-edged. Competition in military matters is negative, implying confrontation and conflict; in business, by contrast, competition is entirely positive. British leaders, like their counterparts in our Atlantic and Pacific allies, will find both kinds of competition with the Chinese unavoidable over coming decades. The national interest requires us to keep two seemingly incompatible ideas in mind simultaneously: the need to encourage the benign aspects of Sino-British relations, while keeping the malign ones at bay. Where China is concerned, we should keep a sense of proportion: trade and investment must be scrutinised but do not necessarily mean complicity in genocide. A new Cold War may be inevitable; it does not need to escalate into a hot one.

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