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  • Writer's picturePaul Hansbury

CHINA THREAT?

It was less than a decade ago that George Osborne, at the time Britain's chancellor of the exchequer, spoke of a 'a golden decade for the UK–China relationship'. A few weeks later prime minister David Cameron shared a pint of ale with Xi Jinping in a Buckinghamshire pub. Osborne's 2015 speech is worth reading in full, just to realise how far perceptions have changed. In those days it seemed that everyone wanted to be friends with China and to attract its investment.


Last week the UK revealed that a Chinese hacking group (APT31) was 'almost certainly' behind attacks on MPs email accounts in 2021. GCHQ's National Cyber Security Centre noted that the Chinese group, which the US has identified as affiliated to the Chinese state, targeted MPs critical of China and who have called for the UK to adopt a harder line towards Beijing. The UK responded to GCHQ's findings by imposing sanctions on China and summoned the country's charge d'affaires to the foreign office in diplomatic protest.


I am not well placed to assess the severity of China's cyberespionage activities against the UK. It is incontrovertible that China engages in mass surveillance of its own citizens and it would be strange if it didn't engage in extensive spying abroad, including using its sophisticated cyber capabilities (as well as more rudimentary methods – though the 2023 'spy balloon' incident apparently failed to gather any information from the US). Indeed, as I revise this text this morning, the UK news headlines report a 'spear–phishing' attempt targeting British MPs, with suggestions that a 'foreign state' is responsible which likely means China or Russia.


There are reasons to be cynical about specific allegations against China, however, while still concluding that the UK is being a little naïve and responding inadequately to China's challenge.


A song and a dance?


A few years ago, the conversation was all about Huawei. The Americans lobbied allies hard to block Huawei from supplying any 5G infrastructure, arguing that the company builds backdoors into its hardware and that it has links to the Chinese government. The US threatened to stop sharing confidential information with the UK if it allowed Huawei to provide 5G infrastructure because of the 'risk' created. The cynic in me wonders if it was partly hot air; it certainly helped American companies to see a Chinese competitor excluded from key marketplaces. It seems to me the security threat was more about the potential than the reality, which is all well and good but policies founded on that basis alone can quickly become excessive.


A recent brouhaha about Chinese electric cars falls into the same category. It is claimed that China could shut down many of the electric vehicles on our roads remotely and, by doing so 'at strategic points', could cause gridlock in UK cities. It may be true but that doesn't mean it's likely. I can't help but notice that the claim originates with the Institute of the Motor Industry; a UK–based professional association for motor industry employees and, therefore, fairly described as representing its members' interests. I'd wager they don't have many Chinese members: the institute's board won't win any prizes for internationalism or diversity.


Another Chinese company in the spotlight is TikTok. The United States' debate about banning the platform rests on alleged security concerns. As with other social media platforms, TikTok collects a lot of information on its users and there are fears the Chinese state could harvest that data; US legislators therefore propose a nationwide ban on the app if its Chinese parent company, ByteDance, does not sell its stake. ByteDance is effectively being viewed as an agent of the Chinese state.


The company behind TikTok points out that users agree to its terms prior to using the app, which is not disputed – but how many people read through lengthy end–user licence agreements? All social media apps have a similarly insidious grip on our lives through the data they collect. The substantive difference between, say, Google and TikTok is that one is accepted as a private company, the other accused of working for the Chinese state.


The most startling thing that has caught my attention in the TikTok debate is that TikTok is severely restricted in China because of concerns for users' well–being. The Chinese state restricts the social media platform and the Chinese instead make do with something called Douyin. To conform to Chinese regulations, Douyin limits children's use of the app in multiple ways. If China itself is wary of TikTok, it seems perverse we are oblivious to its malign influence on our society, even if the effect is to mental health rather than data collection by the Chinese state. And yet the US debate, which is seeping into UK conversations, still somehow feels like a song and a dance – invoking 'security concerns' a little disingenuously.


China rising: The bigger gambles


It seems to me that the real threat to the UK comes from letting the Chinese state take ownership of critical industries. By this, I mean giving China a stake in our nuclear industry and strategic industries like steelmaking. I admit that I do not follow either industry closely and if I am mistaken on the facts, then I am happy to be corrected.


As Britain expands its use of nuclear power, building new nuclear power stations, it has allowed the state–owned China General Nuclear Power Group (CGNPG) a role. CGNPG has a stake in Hinkley Point C in Somerset, which is under construction, and also in a prospective new plant at Bradwell in Essex. The UK government has bought out CGNPG's stake in the construction of Sizewell C in Suffolk. But with the UK government pushing ahead with plans for more nuclear power generation we should be cautious.


Then there is the steel industry. Even if it is loss–making, the UK should own its own steel–making capability because it is so essential if we find ourselves needing to fight a war. Steel is vital for the production of shells, guns and tanks. But news stories over the years alarm me. The two main steel production sites in the UK have long been at Port Talbot and Scunthorpe. The Indian company Tata Steel has owned the Port Talbot site since 2007. British Steel, the owner of the Scunthorpe works, was bought by the Chinese Jingye Group a couple of years ago. How can we expect to fight an extended war if our domestic steel production is reliant on plants owned by companies who may be based in states that are our enemies?


The UK has even allowed China a stake in its water industry. The FT reported yesterday that two Chinese state banks loaned money to the parent company of Thames Water and could acquire a stake in the utility if the loan is not repaid (and it is not expected to be). China's 'debt–trap diplomacy' has not earned it friends round the world; states are happy to receive loans without strings attached, until they are unable to make repayments and have to cede key assets to the Chinese state; a port in Sri Lanka is one of the better–known cases.


I think the UK got it right on Huawei by not imposing the blanket ban that the US lobbied for. Instead the UK blocked Huawei from supplying 'core' technology infrastructure. This seemed prudent and not excessive. But Rishi Sunak's government might be being cavalier allowing Lenovo to build a supercomputer in Cheshire, described as a critical infrastructure component for the UK's AI and nuclear research. China is renown for reverse engineering American and European technologies, but granting it such an obvious snooping capability on cutting edge research looks careless.


China falling?


At the same time, China is not assured to play the leading role in the world as this century wears on. Its economy has slowed considerably and growth is far more modest than it was earlier in the decade. One might interpret this as a result of its stringent Covid–19 policies and expect growth levels to recover, but that seems unlikely. While some do support that view – one scholar labelled China's woes 'economic long covid' – others argue, persuasively to my mind, that the weaknesses were apparent earlier.


China has demographic challenges to contend with, as well. Last year India surpassed it as the world's most populous nation, and China's population has declined in each of the past two years. Despite lifting its one–child policy in 2015 and offering incentives to young Chinese to have more children, the birth rate has kept falling. An ageing and shrinking population limits its ability to consolidate its status as a 'superpower'.


Moreover, China lags far behind US capabilities militarily. It benefits from sitting out the conflict in Ukraine, though it has had to step up its support for Russia over time. (US president Joe Biden complained about Beijing's support for Russia in a phone conversation with Xi Jinping this week. There are signs that China is wary of extending its support to Russia too far with its banks increasing their processes for ensuring compliance with US sanctions to avoid penalties.)


China might not be rising to take America's place. This might not be 'China's century' after all. If we are worried about privacy and data collection, then I'm not sure that the UK should not be singling out China over private US corporations. But nor should the UK aid China by giving it a stake in the country's strategic industries and critical infrastructure. Whatever the true level of threat, the UK lacks a proper strategy on dealing with China. It urgently needs one.

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