Britain and China’s relationship in 2022 will offer a continuation of themes and issues we have seen developing over 2021. Geopolitically, the tensions between the US and the People’s Republic will continue to overshadow everything else. Having signed up to the AUKUS (Australia, UK, US) security pact in September, and framed China as a strategic competitor both at the G7 summit in June and in its own Integrated Review of Foreign Policy which came out in March, the UK has shown which side it is on in this.

There are no surprises here. The UK’s closeness to America is longstanding. The question is to what extent a significant deterioration of US-China relations will impact the UK’s attempts to craft at least some space for autonomy in bilateral relations with Beijing. Put more simply, will the UK be willing to take at least some risks in the relationship with China, or will it wholly toe the line issued from Washington.

One way of trying to work out what might be more likely to happen is to look at some fundamentals. China UK trade in 2021 saw a 10% increase over the year before. But despite this, the imbalance in favour of imports from China rather than exports to it worsened, with the former rising 39%, and the latter falling 30%. As the UK moves more into the era of Global Britain post-Brexit, this imbalance will need to be addressed. Rising trade has long been an aspiration London has harboured. But not where the exports are falling. The perennial quest to sell goods and services to China continues, with current efforts to date being highly limited in their outcomes.

If the economic situation in the UK does deteriorate markedly in the coming 12 months, that may have an impact on views towards China, creating more pragmatism, and more clarity about what the UK wants from the country. It may finally make the potential role of China far clearer in the UK, after years of speculation and lack of focus.

This is particularly the case in the Xi-era of common prosperity and dual circulation. China’s rising middle class need to continue being better consumers. But the pathways to selling them things has been complicated by the imposition of new restrictions and impediments by a Chinese government increasingly defensive and distrustful of the outside world. Without the Covid-19 era complexities and challenges diplomatically, for the UK to try to economically increase, and rebalance, its relations with China would have been challenging. Events over the last 18 months have only made this even more difficult. This implies that if Britain wants this situation to change, a radical new strategy needs to be put in place.

One area to look at to supply this is environmental co-operation. COP26 in October in Glasgow resulted in an outcome that, while less than many had been seeking, at least gave the world something to work on. The UK and China have been collaborating in this space for many years. Now they have a clearer framework, and the UK has issued such a strong declaration of intent that it wants to take an international leadership role here, work with China should theoretically stand a good chance of increasing.

For both these practical areas – trade and environmental collaboration – the main barrier will continue to be political. Domestically, concern about ongoing issues in Hong Kong and Xinjiang, along with the diplomatic boycott of the Winter Olympics in China, mean that while the Johnson government continues to say that it is pro-engagement, finding unproblematic areas in which to practice this will continue to be difficult. To add to the mix, the UK has a lack of consensus and coherence in terms of its policy and practice towards China, with divisions between those who are deeply critical of even the most tepid links with the PRC, and those who want more effort to be made to bridge the trade gap referred to above. Only 0.2% of Foreign Direct Investment stock from 2020 to 2021 into the UK came from China. For those stressing practical engagement and self-interest, this sort of poor performance is more key than, for instance, trying to pick on areas to fight over.

The UK’s economic situation in 2022 will determine a lot of how this debate between the pro and anti-engagement groups in Britain goes. Britain’s own GDP growth in the third quarter of 2021 nearly ground to a halt. Buffeted by continuing efforts to combat Covid-19, and the issues of leaving the EU and what long term impacts that is having on trade and investment, there are high levels of uncertainty as 2021 comes to an end. Politicians may speak in a different way if the economic situation in the UK does deteriorate markedly in the coming 12 months. That may have an impact on views towards China, creating more pragmatism, and more clarity about what the UK wants from the world’s second-largest economy. It may finally make the potential role of China far clearer in the UK, after years of speculation and lack of focus.

The view from Beijing over 2022 will be framed by how China’s government addresses the list of policy challenges it laid out at the Plenum meeting held in Beijing this October. Long-standing issues like the provision of social welfare, public health, environmental improvements, and addressing inequality stand out. The mantra of ‘common prosperity’ will continue to be key. While the political focus will be on the Party Congress, held every five years, around the end of the year, expected to mark Xi Jinping’s reappointment as party leader, what policy adaptations and changes the government makes to meet its domestic agenda, and what sort of space it might consider for an outside partner like the UK, will be key. It too will be experiencing economic challenges. These will also push it into thinking and acting in a more pragmatic way. For this reason, while the UK and China start 2022 in a combative and divided situation, it is possible their respective domestic problems over the following twelve months will give them the grounds to co-operate in surprising ways. That, at least, is one of the core lessons of the whole Covid-19 era – to expect surprises. That is what we should expect when we look at the UK and China in 2022.

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Political analyst and academic Kerry Brown explains that the Opening up and Reform has led to legitimise China’s political leadership

December 2018 will mark a big moment in China’s calendar of anniversaries of major events. Around 20^th December 1978, increasingly influenced by the veteran leader Deng Xiaoping, but officially under the Chairman’s chosen successor Hua Guofeng, a newly reinvigorated (for the second time) post-Mao era leadership declared that Communist members needed to liberate their minds. They needed to make practice the sole criterion for truth. They needed to embrace the Four Modernisations of industry, agriculture, science and technology, and defence, and accelerate the development of their massive, but still largely rural, agrarian and backward country. The era of reform and opening up had started.

Just as we still live in the Western era of later modernity, so China still lives in the period that started after the 1978 meeting and its declaration. For all the talk of Xi Jinping being a uniquely powerful and ambitious leader, he made his commitment to the Dengist vision of reform clear from his first weeks in power in 2012, when he visited Shenzhen to signal his complete alignment with the Deng consensus. This southern city bordering Hong Kong figures as one of the holy sites of the reform era, a place of almost spiritual significance.

It was here that the most important of the early Special Economic Zones was set up, pioneering the export-orientated, manufacturing model that was to be the initial impetus that led to the immense growth achievements of the following four decades. If one place can symbolise the renaissance of China, then Shenzhen is it, transformed from a small fishing town to a major modern city with some of the world’s tallest buildings. This place is Chinese reform made flesh, the realisation of the ambitions for modernity which had been dreamed about by the Chinese for over a century, but which finally seemed to become reality in this birthplace of `capitalism with Chinese characteristics’.

“It was through being able to deliver tangible improvements in people’s daily lives that the Party was able to forge a new social contract”

The reform and opening up movement gave the Chinese people the ability to unleash their entrepreneurial energies. We see the spectacular results of that continuing to this day. But it also gave the Communist Party a new source of legitimacy. Disorientated and disorganised after the Maoist onslaught from 1966 during the Cultural Revolution, it was through being able to deliver tangible improvements in people’s daily lives that the Party was able to restore its image in the eyes of the public. In forging this new social contract, it could point to double-digit GDP growth as irrefutable proof that despite the trauma of the early years, it was now giving Chinese people what they wanted. Reform and opening-up was a vast experiment, designed to save China from a perpetually underperforming and frustrated economy. In the end, through the fact that it worked, it was also able to save the Party.

The Party under Xi continues to use the language of reform and issued a whole new list of reform targets at the Party Plenum of 2013. Reform continues and is set perhaps to continue perpetually in China. But the question remains of what a real kind of new reform might look like. The targets Deng set have long been achieved. By 2021, China will, far ahead of the time he predicted, be a middle-income country with per capita GDP of US $13,000. But reform in a middle-income China with a large, urban living middle class, is very different from that which was embarked on in 1978 when 80 percent of Chinese still lived in rural areas. The simple fact is that Xi’s China is now wrestling with the complex legacy of Deng era reforms, as it moves forward to become the kind of great, powerful nation that previous leaders only dreamed of, but China today sees veering into view.

Kerry Brown

Kerry Brown is Professor of Chinese Studies and Director of the Lau China Institute at King’s College, London, and an Associate of the Asia Pacific Programme at Chatham House. His latest book is `China’s Dream’s: The Culture of the Communist Party and the Secret Source of its Power.’

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In December 1978, China’s leader Deng Xiaoping, announced that China would start a period of ‘Reform and Opening Up’. This policy sees a de-collectivisation of agriculture, allows foreign investment into the country, and permits entrepreneurs to set up private businesses. By the early 1990s, certain policies and regulations were lifted and state-run businesses were privatised allowing the private sector to boom. The transformation was, as Lord Michael Heseltine says “on a scale without human precedence.”

Year on year, double-digit GDP growth was the norm for much of the 1990s and 2000s and over the last decade, the Chinese economy has tripled in size. Britain has benefitted from China’s growth over this time, with UK-China trade more than doubling from £32 billion in 2008 to £67 billion in 2017.

“The reform and opening up creates huge opportunities for China’s international trading partners and the UK benefits deeply from that,” said the UK’s Ambassador to China, Barbara Woodward.

“The UK economy is very strong in financial services, legal services, education, tourism services and so on. As China opens up in years ahead, that will really help UK-China trade and investment grow even further,” she said. “As the Chinese economy opens to the services sector it will obviously be beneficial to the UK but also for China because it will then be able to develop a more balanced economy and indeed a more cutting edge one.

“As China opens up or relaxes its restrictions on Intellectual Property development, R&D collaboration and demonstrates that it really can protect intellectual property then I think there is more scope for collaboration between UK and China in that area.”

During last month’s British Business Awards, organised by the British Chamber of Commerce in Beijing, a new award was established to celebrate the anniversary of China’s Opening Up.

The winner of the 40 Years of Reform Award was Rolls Royce. The engine maker has been operating in China since 1963 when it was making engines for China’s Vickers Viscount aircraft. Today, China has become the company’s second largest market making up 12 percent of its global revenue.

“Reform and opening-up has connected China to the world in an unimaginable way,” says Julian McCormack director of Rolls-Royce China.

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One of the frustrations of dealing with China in the decade after it entered the World Trade Organisation (WTO) in 2001 was the ways in which, almost daily, the People’s Republic was clearly an emerging economic superpower but one that continued to act diplomatically like it belonged to the middle ranks. The two sides of this one story didn’t seem to add up.

Part of this imbalance was due to just how unexpected events turned out to be in this era. In the period after joining WTO, China’s economy entered a period of phenomenal GDP growth. We have to remember the assessments of most on the November evening when, after almost 14 years of haggling and hard bargaining, China became a WTO member. For many back then, the consensus was that China would struggle hard to comply with the terms it had agreed. Its domestic companies were likely to fight against foreign competition. Its very inefficient agricultural sector was ill-placed to take on entry by other players. Its state enterprises, in particular, looked doomed. And this was before even talking about the moves towards liberalising the country’s primitive nascent services and finance sector.

It is clear, as never before, that China is now a global power.

Almost two decades on, the augurs of doom look like they are referring to another place. From 2002 onwards, China experienced double digit growth year on year. No economy of similar size and complexity has ever seen anything like it. The Asian tigers all did their own version of miraculous growth but on a smaller scale. China could truly praise itself and say that it marked up figures unlike any other place on the planet. And it did this while fulfilling its WTO commitments.

Visitors in this era almost saw money growing from the ground. On a visit to Inner Mongolia in 2006, a place I lived in in the mid-1990s when it was regarded as backward, smoggy and remote, I remember the amount of wealth that was visibly being generated in the provincial capital Hohhot from the mining boom. This continued so that the autonomous region as a whole had the highest provincial growth rate in the country over this period. One local county even posted rates of over 40 percent. This sort of breakneck development had last been seen when Shenzhen, named a Special Economic Zone, was transformed from a fishing town in the early 1990s.

What was lacking over this period was a geopolitical narrative that originated in China and somehow communicated how the country understood its economic development and the meaning of this to the outside world. There were attempts to speak about “peaceful rise” in the mid-2000s. But this had limited traction in the wider world. As one observer noted to me around the time the phrase appeared, “it sounds slightly ominous”.  It didn’t catch on.

Since 2012, there has been much greater effort to spell out two things. One is what Chinese leaders, speaking on behalf of their country, think its new prominence means. China is now the largest trading partner to over 120 countries. It can no longer speak like a marginal place. It has to use a different language about its ambitions, one that accepts its prominence but does not sound intimidating.

The Belt and Road initiative sounds like an invitation, not an order.

The second thing is to communicate China’s desire to work with partners in the outside world in positive ways. It is clear, as never before, that China is now a global power. Its domestic challenges, particularly its environmental challenges, are ones that the world relates to and is impacted by. If China fails to address its challenges, that becomes an international problem, not just a local one. This is the privilege, and the burden, of sheer size.

The need to have a joint narrative to stress this commonality and to set out China’s case as a global power everyone can work with has never been more urgent. Something too prescriptive, and people get nervous, worrying about an assertive, pushy China. But saying nothing doesn’t work either. Then people start to assume the worst.

The Belt and Road initiative, and its various iterations, is the most important statement regarding China’s view of its global vision, and the first which is starting to have some resonance in the outside world. There are a number of its attributes that are now becoming clear. The first is simply that it avoids being normative by not laying down rules. The clue is in the title: it is an initiative, not a policy. In many ways, it simply clears away a space for those inside and outside China to imagine or propose, how they make the all important link. Do they want to build infrastructure, manufacture, create brands, or service logistic lines? In many ways, the idea raises questions, rather than setting out clear guidelines.

This has been one of the criticisms made of the initiative. Many, myself included in the last few years, have demanded to know what the content of the idea is. Where is the main budget coming from? Who in China has responsibility for it, and what sort of standards will it be judged against? In some ways, however, while that model might have a satisfying solidity, it falls into the trap of exposing China to criticisms by those eager to see the country look like it is laying down the law to the rest of the world.

If the language of the Belt and Road initiative is indeed the way that China intends from now on to speak to the world, then it falls short of the sort of declarations expected by some who are convinced they see a China bent on global dominance. But it also avoids the pitfall of being seen as devious, barbed and ingenuous. China is speaking about partnership, and asking for a dialogue. The question from now on therefore lies with the outside world. Now they know how China wants to speak, and the sort of things it is willing to speak about, how do they respond? This will be the key quest for the next decade or so as this epic idea develops.

Kerry Brown is Professor of Chinese Studies and Director of the Lau China Institute at King’s College, London, and an Associate Fellow of Chatham House. He is the author of “China’s World” which is published by I B Tauris in June.

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