Simon Haskel on the need for Britain to have a more reciprocal relationship with China
When China announced their open door policy in 1978, I was one of the first business people to go there. I sold them the equipment and technology to make some of our textile products and carry out some of our processes so that they could supply markets that were closed to us. So began my 12 year long business association with China.
I was interested when Boris Johnson and George Osborne announced their successful business deals in China last month. They were obviously made to feel good about their visit. The Chinese press reported that business had been done because the Prime Minister had admitted that he had mishandled or misunderstood Tibet. Here some newspapers described the business resulting from this visit as kowtowing to the Chinese. To me, it looked more like desperate salesmen doing reckless deals to achieve their quotas.
Indeed, the signs are there. The Chancellor announced measures to make it easier for Chinese banks to operate in London, by opening branches which are regulated from Shanghai rather than subsidiaries regulated in London. This is exactly what helped precipitate the 2008 crisis. We said never again. Of course as China’s financial rules are likely to be reformed, it would be good for the City to have a bank clearing Chinese currency in London. But at the cost of bending our new banking regulations?
It was also announced that two Chinese state owned nuclear power companies will take a 30-40% stake in Hinckley Point, proving once more that our government is happy about state ownership of British assets. As long of course, as it’s someone else’s state.
Ministers are taking the money and then depending on the regulators to ensure tough scrutiny over security, safety, investment and financial issues. Do the British public have faith in this concept? I doubt it after their recent experience with regulation in the banking, energy, care quality and, now, water sectors. And Parliament itself has criticised the system put in place to oversee Huawei’s operation here. When the Chancellor visited its headquarters in China, was it to demonstrate that those concerns are misplaced?
In this era of globalisation our relations with China are complicated. The modern supply chain is so involved that it is almost impossible to track. You don’t know if firms are trading within their own group or at arms length. Harmonisation of standards is virtually impossible, which means careful mutual recognition of regulation. This applies as much to intellectual property rights and data protection, as to trade in goods and services. The rules of country of origin are becoming meaningless. All of this makes dispute resolution highly complicated. In China, foreign companies are sometimes singled out for investigation and smear campaigns.
This is why our relationship must be reciprocal, based on bilateral cooperation not reckless dependency. These are all economic pressures on our business relations with China but we have to think them through before doing more deals that we may come to regret.
Lord Simon Haskel is a backbench Labour Peer in the House of Lords
Published 7th November 2013