There were more rumblings, reported in today’s US print edition of the Financial Times (See ‘UK allies baffled by red carpet treatment for Xi‘). It seems that UK allies, including the US, are raising eyebrows at the thought that Britain is rolling out the red carpet to the Chinese Premier, and generally budding-up to the Chinese too much. Frankly I don’t see what the fuss is all about. The move seems a little excessive but perfectly within the bounds of what such a trading nation should/could do.
Think of the following:
- China will soon be the largest economy in the world. It has become the largest single-factor in driving global economic growth
- The UK-Chinese trading relationship has only one way to go – up (since there is so little taking place today). The only bright spot is that China is the UK’s sixth largest export market, well behind US, France and Germany
- The global monetary system will likely continue to slowly pivot to Asia and China specifically in the next 5-10 years
- The rest of the West seems incapable of any strong change in economy policy that would be needed to push the US to drive the global growth (thus the Western allies look soft and meandering)
- The UK is a trading and market-based economy – it requires connections and collaborations with other likeminded nations
Of course, the UK is not doing any of this for the good of mankind, other than the fact that it should be good for both parties. They know how far then can trust the Chinese – but that’s not the point. It’s good politics and it’s good economics. Does it benefit the Chinese more in the short term in terms of exposure to the West? So what. Someone will do this at some point, why not the UK now?
Cameron and Osborne have said that there is risk here, and they are right. The Chinese economy could blow up (very small probability); the US could suddenly put a Republican in the White House and the right-wing might settle their differences and change course and become responsible (again, very small probability). Britain is taking a smart, calculated risk. History should, I would argue, vindicate their actions in time. I say “go for it” to them and I wish them well in their efforts.