GO EAST, YOUNG MEN
David Cameron’s trip to China exemplifies his trade-oriented foreign policy
Nov 11th 2010
“IF WE could only persuade every person in China to lengthen his shirttail by a foot, we could keep the mills of Lancashire working round the clock.” So said a nameless British businessman (or economist, nobody seems quite sure), pondering the commercial possibilities offered by China in the 19th century. Lancashire’s mills have been quiet for decades, but the general idea survives. Like their counterparts across the world, Britain’s businessmen are awed by the commercial possibilities inherent in a country of 1.3 billion people, busily enriching themselves at the rate of nearly 10% a year.
On November 8th 50 of those businessmen boarded a plane with David Cameron and four of his cabinet ministers to spend two days in China, as part of the biggest trade delegation Britain has ever sent there. The government has already announced several deals arising from the visit, from a $1.2 billion contract for Rolls-Royce to supply jet engines to China Eastern Airlines, to a £45m ($73m) deal to export breeding boars. Mr Cameron hopes to double British trade with China over the next five years, and to begin closing the huge gap between imports and exports, currently £19 billion a year.
To some observers, Mr Cameron’s China mission, like his trip to India in July, suggests a revamped foreign policy that prioritises trade and commercial interests. Of course, using diplomacy to promote trade is scarcely new; the notion that trade is a grubby matter beneath the attentions of diplomats has always been naive. Diplomats speak with pride of their efforts to help British companies do business abroad. Indeed, Tony Blair—more renowned for mongering wars than jet engines—led a smaller delegation of businessmen to China in 2005.
But Mr Cameron’s approach differs from that of his immediate predecessors in two ways. First, in scale and co-ordination: foreign-policy watchers suggest the prime minister may be emulating the French, whose firms and ministers present a common front, and whose president actively touts French products. That method led to agreement on deals worth around $20 billion when Hu Jintao, the Chinese premier, visited Paris earlier in the year.
Second, advertising British business abroad has taken on a new urgency in today’s austere times. With domestic consumers squeezed by heavy debts, stagnant house prices and the prospect of sharp cuts in public spending, British firms must look elsewhere for demand for their goods. The government is hoping that its revved-up salesmanship will persuade more foreign firms and consumers to buy British, fostering an export-led recovery.
There are several problems with this approach. Unsurprisingly, the idea of export-led growth is popular elsewhere too. Politicians from Barack Obama to Angela Merkel want the same thing. Perhaps more important, says Andrew Goodwin, a China-watcher at Oxford Economics, a consultancy, is the fact that Britain does not make many of the goods that the world’s fast-growing, developing economies are most interested in.
Germany—which specialises in the sort of machine tools and industrial materiel that Chinese factory managers are keen on—sold $55.8 billion worth of goods to China in 2008, putting Britain’s $9.5 billion in the shade. Other similarly sized countries, such as France ($15.6 billion) and Italy ($11.6 billion) also sell more to China.
That is not to say that the cause is hopeless. “Britain specialises in services, not metal-bashing,” says one former diplomat. He points out that growth in developing markets such as China and India is adding tens of millions of people to a global middle class keen to consume the financial advice, high-quality education and slick retailing that Britain does well. One of the first places that Mr Cameron visited on his trip was a Tesco supermarket: the British chain (the world’s third-largest) runs 100 stores in China and is expanding rapidly. More Indians attend British universities than American ones, and the sons and daughters of the Chinese and Indian business classes are increasingly well-represented at the posher independent schools.
Many businessmen are pleased with Mr Cameron’s enthusiastic backing, but others see the emphasis on trade as a retreat from the ethical stance they feel Britain should adopt. Mr Cameron was the first Western leader to visit China since Liu Xiaobo, a dissident currently serving an 11-year prison sentence for “inciting subversion of state power”, was awarded the Nobel peace prize in October. A chorus of lobbyists, columnists and NGOs encouraged the prime minister to raise human rights on his visit. Mr Cameron was in an awkward spot: both he and his education secretary, Michael Gove (who also made the trip) have in the past criticised the Chinese government in very direct terms. In 2009 Mr Gove compared China to the fictional totalitarian state in George Orwell’s “1984”.
It is hard to be both a supplicant and a critic, but Mr Cameron did his gymnastic best. He told an audience of students at Peking University in Beijing that, although China’s growing economic power was welcome, democracy and civil rights were “the best guarantor of prosperity and stability”. The speech was full of airy abstractions that went down well at home, while lacking in the sort of concrete details that might offend his hosts (although officials say Mr Cameron raised Mr Liu’s case in private). His government’s intensified desire to promote British business around the world means that this is the sort of verbal tightrope the prime minister will have to get used to walking.