China wields economic weapons over tensions with UK
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BEIJING: Just five years ago, Britain was predicting a “golden era” in trade with China. Today, the shine has faded as the two countries square off over Hong Kong, Huawei and human rights.
Beijing is now threatening “consequences” after London withdrew its extradition treaty with Hong Kong, a former British colony. That followed Britain’s decision to blacklist the telecoms giant Huawei.
China is also angry at British criticism of its treatment of ethnic minority groups in the northwestern region of Xinjiang.
China could close its borders to British products as it did with Norwegian salmon to punish Oslo after the Nobel committee awarded its Peace Prize to Chinese dissident Liu Xiaobo in 2010.
Last year, Britain exported 30.7 billion pounds (34 billion euros) worth of goods and services to China — a record that has been growing steadily for four years, according to the Office for National Statistics.
Beijing is London’s third-largest customer after the European Union and the United States. The Asian giant is also the UK’s fourth-largest supplier of goods.
China has ploughed nearly $60 billion of investment into Britain over the past decade, according to data from Dealogic. That includes marquee companies such as Heathrow Airport, British Steel and the manufacturer of London’s iconic black cabs.
British exports to China last year were topped by gold — used especially in nanotechnology — plus petroleum products, vehicles and pharmaceuticals.
These four sectors accounted for two-thirds of British exports, according to UK data.
In the services sector, accounting, legal and consulting activities — as well as tourism and transport — were the most in-demand by China in 2018, the year of the latest available data. These activities in China earned Britain some 2.8 billion pounds.
The Global Times, a nationalist tabloid, said on Tuesday that Beijing may “have no other choice” but to strike at British-linked companies such as HSBC and Jaguar Land Rover. Some British firms are very dependent on the Chinese market.
Pharmacy behemoth AstraZeneca generates 20 percent of turnover in China, its second market after the United States.
China accounts for around 20 percent of sales for Jaguar and Land Rover, now owned by the Indian group Tata.
Standard Chartered Bank, which plans to invest $40 million over three years in China, last year achieved 40 percent of its revenue in north Asia, which includes China.
Its competitor HSBC, historically linked to China and which employs 30,000 people in Hong Kong, has already publicly supported a controversial national security law imposed by Beijing on the former colony.
Before the Covid-19 pandemic some 120,000 Chinese nationals were studying in Britain, paying large tuition fees — a key source of income for UK universities.
Chinese tourists are also big spenders, bringing in over 1.71 billion pounds in expenditure last year.
More than 883,000 Chinese visited Britain last year, according to the VisitBritain tourism agency.
The agency even launched a campaign five years ago inviting Chinese tourists to pick names in Mandarin for more than 100 of the top British icons, from Buckingham Palace to Mr Bean. This spending power could be a potential pressure lever for Beijing.
Published in Dawn, July 22nd, 2020
