Belt and Road Initiative (BRI) is a Chinese global development program, which could also be considered as an instrument of soft power. BRI’s primary goal is to connect Asia with Africa and Europe, loosely following the path of the old silk road. At the moment, the Chinese government signed “cooperation documents” regarding BRI with 126 countries and 29 international organisations. That means a lot of trade deals, as well as infrastructure developments, production and education, among others.
But how does it work in the context of Chinese relations with Britain? Well, apparently, when the government is not busy with Brexit, it is trying to make London “the last dot on the map”– essentially, a financial hub.
And here are some reasons why it is extremely relevant for UK:
First, Brexit. There is already a huge change in the dynamics of capital (and human resources) flow. While investors are still willing to invest in various projects, they do tend to avoid long-term projects. Companies and individuals in UK are generally scared to start long-term projects involving either investing a lot of money (do you remember how the pound/dollar rate dropped to the 30 years-minimum?) or a lot of time. Can’t blame them.
An opportunity to “sell” London, as a main financial centre, to China, looks attractive. China is very, very stable. China is very rich. Even if Britain would to leave EU without a deal (which is, unfortunately, possible — looking at the current list of candidates to PM), China is still will be there as a massive and growing trade partner, and, maybe, a friend. As of 2018 UK-China trade combined was worth more than £59 billion; that makes it sixth largest export and fourth largest import market for UK; figures are presumably to rise after Brexit.
Second, Trump. As of right now (June 2019), there is a massive trade war going between US and China (In July 2018 President Trump imposed tariffs on $250 billion on trade goods, and the People’s Republic of China did respond with imposing tariffs of similar value). While there is a hope that eventually the deal between the two great powers will be achieved, it’s unlikely to happen soon. And even worse, there is still a chance that US would go full on protectionist politics, implementing the tariffs on the majority of the international trade.
That could harm Britain significantly: in 2018 US goods imports from UK came to $60.18 billion. While that does not sound like a very significant number, that makes UK the 7th largest trade partner for US. Vehicles are the largest category ($11 billion), followed by machinery ($9.3 billion). President Trump promised to protect both of these industries — to make America great again. If US implemented protectionist tariffs on these goods, UK would lose one of its biggest markets. On top of that, UK will already be troubled with re-establishing bilateral and multilateral trade agreements, as soon as it leaves the EU.
For the post-Brexit UK, that means establishing complicated trade deals with everyone, including US, outside the normal arrangements for EU. However, if UK is to become the last point of BRI, that would simplify its relations with other 126 member-countries, as well as would further link it with the second-largest economy in the world.
Finally, you don’t know it, but it’s already happening. British Finance minister Philip Hammond called BRI a “vision” and suggested British expertise in project financing. However, there is more to it than just guys in City. UK also has expertise in project design, technical and legal services.
If UK would get the status of the end-point of BRI, that could be the collaboration of the century; but what about the dark side of the offer? First, what are the long-term risks and what consequences should we contemplate on? Second, should UK ignore all human rights violation conducted by China (think Uyghurs and lack of freedom)? Some voices have already been raising against such a friendship. I will devote my next article to consideration of these points.