U.S. tightens exports to China’s chipmaker SMIC, citing risk of military use
As another winter descends on a dark and damp Britain, still nobody really knows what Brexit will bring.
However, there are a couple of certainties: One is that the topic will continue to devour daily political life as it regularly makes Prime Minister Theresa May appear as embattled and isolated as the country itself.
The other is how the whole drawn out, graceless and gaffe-ridden process is pushing London inexorably closer and closer to Beijing.
An annual foreign policy speech delivered by the Prime Minister last week is a case in point.
This year May used the occasion primarily to call out Russia and its alleged propaganda machine that, she said, has been mounting “a sustained campaign of cyber espionage and disruption” against the West.
When May said Russia intended to “weaponize information,” she was not – implicitly at least – talking Washington or Donald Trump.
Moscow has been “threatening the international order on which we all depend,” said the British Prime Minister and this apparently included ten of thousands of Russian twitters ‘bots” that tried to influence – what else – the UK’s Brexit vote.
May’s parting message was unequivocal. “We know what you are doing and you will not succeed.”
Yet her tone to Beijing, in the same foreign policy address, could not have been more different.
Warm & fuzzy
May stressed the UK’s commitment to “maintaining the golden era of our relationship” and said China was valued “not just as a vital trading partner but also as a fellow permanent member of the Security Council whose decisions together with ours will shape the world around us.”
This so called “golden relationship” between Beijing and London turned two years old at the end of October. There was no official marking of this anniversary but really there didn’t need to be. The mutual love-in that is the China-UK trade show seems these days to be running 24/7.
Just take the week that preceded May’s speech. Two days before her talk, the PRC’s Ambassador to the United Kingdom, Liu Xiaoming, took the time to pen a piece for the British Daily Telegraph newspaper that ran under a “China-UK ‘golden era’ has new chance to bear fruit,” headline.
Liu wrote somewhat gushingly that the relationship “will enable closer communication and mutual learning between the East and the West and set an example of harmonious co-existence between different civilizations and between countries with different social systems.”
On the very same day that Liu’s piece was published, a body called the “Manchester China Forum” released a report with a somewhat similar theme. Entitled “The China Dividend.”
This slickly produced, lengthy – and often repetitive – 80-page report set out ostensibly to gauge the benefits that the direct Hainan Airlines route between Manchester and Beijing, that started in June 2016, have brought, but actually more broadly examined the effect that Chinese investment has had on the British Government’s “Northern Powerhouse” rejuvenation program.
Unsurprisingly the report was very positive. Manchester-China exports have gone up by more than 200% while Chinese UK-bound investment, tourism and student enrolment have all also risen dramatically.
While this is of course to a large extent PR spin – Chinese investment and outward bound travel has increased in every corner of the world – the backstory behind the report is certainly revealing.
Manchester Airport has ambitious expansion plans and these include a US$1 billion business park development that is 20% owned by China-state owned Beijing Construction Engineering Group.
The site will contain a 5,000 square metre “China Cluster” that is centred around two so-called campuses – cutely named Shenzhen Gardens and Wuhuan Square – that are explicitly designed to house Chinese businesses.
The Airport development actually sits in a much grander set of regional plans that include the Ocean Gateway masterplan – GBP 50 billion spent on 50 mega projects over 50 years, runs the project’s bold tag line – that, it is hoped, will be partly funded with more Chinese money.
The Foreword of the China Dividend report was penned by Lord Jim O’Neill.
A former Goldman Sachs economist and the proud inventor of the BRICs “Brazil, Russia, India, China” acronym, O’Neill was more recently one of the architects of the Northern Powerhouse and the “golden relationship” when he was brought into government as Commercial Secretary to the Treasury by his political pal, First Secretary of State George Osborne.
China gets it
“China ‘gets’ the Northern Powerhouse,” wrote O’Neill in his Foreward, “because the concept of transformation via investing to create a new and better economic geography is so familiar.”
As if to back up his words, as the “China Dividend’ was being published in Manchester, some 60 kilometres down the road in Sheffield, a Swiss think tank, the Horasis Institute, was having its annual “China Meeting.”
This brought together 300 business and government delegates from around the world to Sheffield for two days to discuss – in a multitude of different forums, discussions and dinners – basically how the world can trade better with China.
“We chose Sheffield because the Chinese delegates want to explore investment opportunities outside London,” Horasis Chairman Dr Frank-Jurgen Richter told the Asia Times. “Brexit doesn’t seem to stop their appetite to invest into the UK.”
There was one more headline-hitting event in the same week that showed, perhaps more that anything, the entwining of London to Beijing.
It came from the leak of 13.4 million files, the so called Paradise Papers, and it concerned former government minister Lord James Meyer Sassoon who had, according to the leaked files, been a beneficiary of a US$250 million Bahamas family trust set up by his grandmother in 1957.
Sassoon was quick to point out that the trust was established outside of the UK so there was “no question of assets having been ‘moved offshore,” because of Sassoon’s previous high profile government position, the leak received a lot of publicity in the UK.
What was not covered was where the Sassoon family wealth had come from.
Old (Chinese) money
Lord James Meyer Sassoon is a fifth generation descendent of David Sassoon who hailed from Baghdad but moved to Bombay in the early 19th century to become the patriarch of an extended family that went on to establish a highly lucrative textile and opium trading business.
The Sassoon’s were fundamental in the early formation of colonial Shanghai and Hong Kong. They were the founders of HSBC bank and a Sassoon drove the development that built Shanghai’s famous Bund waterfront.
Today James Meyer Sassoon’s links with China remain strong. He is Chairman of the China-Britain Business Council, the organisation that sits at the heart of this “golden relationship” and, incidentally, the sponsor of O’Neill’s China Dividend report.
And, just like Jim O’Neill, Sassoon earlier served as Commercial Secretary to the Treasury as George Osborne crafted his China policy.
It’s intriguing to see that Lord Sassoon is also an executive director of that most British of Hong Kong trading houses, Jardine Matheson and a director of core Jardine companies Hongkong Land, Dairy Farm and Mandarin Oriental.
So, as the UK fiddles and fusses over Brexit, and fumes at Moscow, its links to China do seem to be old, strong and, yes, golden.