China-UK relations – What Do Both Sides Want?

Yudy Wu discusses the relationship between China and the United Kingdom following Brexit and the decision to remove Huawei from the UK’s 5G network.

On 20 July, Dominic Raab announced the decision to suspend its extradition agreement with Hong Kong. While Dominic Raab described the decision as “a reasonable and proportionate response” to Hong Kong’s National Security Law, the current Ambassador of China to the UK, Liu Xiaoming, warns that the UK would “bear the consequences” for “interfering in China’s internal affairs.” 

This was followed by the decision to strip Huawei from the UK’s 5G network. Huawei retaliated saying the decision is one which “threatens to move Britain into the digital slow lane, push up bills and deepen the digital divide”. Regarding the UK Culture Secretary, Oliver Dowden’s concerns on security, Huawei said, “this is about US trade policy and not security”. Which, according to the Observer, Huawei was privately told by the British government. Many have pointed out the risks of this decision, including the cost to the UK in delaying the roll-out of 5G technology. However, despite these risks and accusations, the UK is determined in its stance towards China after Hong Kong’s National Security Law. “The United Kingdom is watching, and the whole world is watching,” says Raab.

2020 has been an intense year in China’s diplomatic history. Despite its bumpy relationship with the UK, tensions between China and the Trump Administration have been increasing since the beginning of this year. However, just like the UK, Beijing does not want to ease up on any of its diplomatic policies. On 20th July, the Xi Jinping Thought on Diplomacy Research Center was established in Beijing. This is the 22^nd research center in China that focuses on ‘Xi Jinping Thought.’ To compare, eight research centers in China focus on the theories of Deng Xiaoping, the man who led China after Mao and directed Chinese economic reform. China’s Minister of Foreign Affairs, Wang Yi, said the center was to “strengthen the centralized, unified leadership and coordination of the CPC over external affairs.“

Whether it’s on Hong Kong’s National Security Law, or ‘Xi Jinping Thought on Diplomacy Research Center’, CCP is now, more than ever, set on its “unified leadership” in China. Taking Hong Kong as an example – Beijing’s interest in keeping Hong Kong’s special identity has changed rapidly in the past few years. In 2014, during the second year that Xi stepped up as the president and when the ‘Occupy Central with Love and Peace’ movement took place, Xi implied Beijing was not interested in violent enforcement and emphasized Hong Kong’s independence in common suffrage. In 2017, however, this narrative changed when Xi delivered a speech on the 20th anniversary of Hong Kong’s handover, which focused on the ‘unity’ of ‘One China.’ Then, the National Security law in 2020 made a declaration of Beijing’s authority in Hong Kong. Behind Beijing’s action is the change in economic narratives around Hong Kong. 30 years ago, Hong Kong accounted for 27% of China’s economy, however in the present day, explosive economic growth in the mainland has lowered this percentage to less than 3%. According to analysts, “getting Hong Kong to fall in line is a hugely popular mission among the general population“, with the Chinese public’s anger towards western colonial histories, including Hong Kong’s colonial-era, Beijing’s action is “a quick fix to repair its image at home” as China’s GDP growth has been slowing down.

For the past few years, the special identity of Hong Kong has made it one of the UK’s largest sources of foreign investment and an attractive outbound investment destination.

Such actions have, however, increased uncertainty surrounding the economy of post-Brexit Britain. Many British business enterprises have previously recognized Hong Kong as a great starting point for expanding their business to China, not only because of Hong Kong’s low tax rates and proper levels of English, but also its justice system which is based on British common law, and allows judges of the UK Supreme Court to serve in Hong Kong. For the past few years, the special identity of Hong Kong has made it one of the UK’s largest sources of foreign investment and an attractive outbound investment destination – especially after Brexit, and many small and medium-sized enterprises consider Hong Kong as its new destination for global growth. However, in Hong Kong’s National Security Law, Beijing’s vague indication of what “punishment for the offences of… terrorist activities, and collusion with a foreign country… endanger national security” means and could include, sparks concerns for international companies in Hong Kong around privacy, cybersecurity, and trade control. For the UK, the law also puts danger to its judges in Hong Kong – which used to play a vital role in British business’ confidence in Hong Kong.

Both China and post-Brexit UK face major tasks of reassessing their images and persuasion of wealth; no predictions could be made until Beijing make up its mind on the implication of National Security Law – whose stance would not likely be revealed until the end of US general election.