Behind the UK-China-EU ménage à trois
- By Dan Steinbock
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E-mail China.org.cn, October 22, 2015
"Let's stick together and make a golden decade for both our countries," said UK Chancellor of the Exchequer George Osborne.
Indeed, the "Osborne Doctrine" preceded President Xi Jinping's UK state visit in September, when the Chancellor visited China and announced the British government’s intention to make the UK China’s “best partner in the West.”
However, the foundation of the bilateral golden decade was set up in spring.
How the UK changed the AIIB game in Europe
In late 2013, Chinese leaders put forward the proposal for the Asian Infrastructure Investment Bank (AIIB). It originated from frustration.
For years, China, along with other large emerging economies, had grown exasperated with the slow pace of reforms in the global multilateral financial institutions (for example, the IMF, the World Bank, the Asian Development Bank), which remain dominated by American, European and Japanese interests, as reflected by their voting quotas, investment allocations and the nationality of their leaders.
Despite US pressure against the membership, most countries in South, Southeast and East Asia joined the AIIB, whereas EU members initially stayed out.
The game changer was the UK’s decision to join the AIIB, as the “first major Western country,” which triggered a riled response from the Obama White House.
In short order, other core EU economies - Germany, France, and Italy - followed in the UK's footsteps, along with the rest.
Unlike the US, the UK does not have critical military interests in Asia. What it does have, however, is a great interest in the evolving multipolar world economy and a determination to be a central part of it.
Chinese capital for UK infrastructure
To Prime Minister Cameron and his Chancellor, the AIIB move was a part of a long-standing effort to establish an edge over the UK's US and European rivals in attracting Chinese investment.
Reportedly, deals worth over US$60 billion are to be signed during Xi's visit, covering industries such as retail, energy, financial services and aerospace.
During his visit to China last month, Chancellor Osborne opened bidding for the ￡11.8 billion High-Speed Two (HS2) rail link contracts.
In turn, the UK’s Hinkley Point nuclear power station, which has major backing from China, will be the first nuclear plant in the UK for 20 years. Hinkley Point C in Somerset could reportedly generate up to 7% of the UK’s electricity needs, while creating thousands of jobs. Its construction costs are estimated at ￡24 billion and are associated with additional technology and cost risks.
Today, Chinese companies are the world’s largest builders of nuclear plants. In China, there are 24 nuclear reactors in operation with another 25 under construction.
Indeed, in the past 12 years, UK exports to China have soared fivefold, taking the mainland from 9th to 6th place among the largest markets for UK goods and services. Now Osborne’s objective is to make China the UK’s second-largest trading partner by 2025, after the U.S.
