Dr Alessio Patalano, Senior Fellow, Policy Exchange - Written Evidence (TRC0026)
The UK’s Security and Trade Relationship with China
Submitted to: International Relations and Defence Committee, Lords Select Committee
Submitted by: Dr Alessio Patalano
Senior Fellow, Policy Exchange
Reader in East Asian Warfare and Security, Centre for Grand Strategy, King’s College London
This is a submission in response to the House of Lords International Relations and Defence Committee inquiry on the UK’s security and trade relationship with China. It relates to the UK policy to strengthen its engagement with the wider Indo-Pacific region , known as the ‘Indo-Pacific Tilt’, by addressing the questions indicated below.
This submission addresses the questions of how UK policy towards China has changed under recent conservative governments, what the UK security interests vis-à-vis China encompass, what resources the UK has to meet them, and how a UK membership to CPTPP would affect UK trade relations with China. In addressing the above questions, this submission makes the following specific points:
UK policy towards China has changed significantly under the Boris Johnson’s government. In 2020, public scepticism in the UK about the Chinese government’s domestic and foreign policy practices set the context for a policy ‘reset’ in relations with China. Sceptical views were fuelled by negative perceptions across the British political spectrum and public opinion about Beijing’s initial management of the Covid-19 pandemic. This was coupled with the introduction of a new security law that, from a British perspective, undermined the spirit of the 1997 Sino-British Joint Declaration on Hong Kong. The Financial Times noted that the relationship had de facto moved from a ‘golden era’ to the ‘deep freeze’. The ‘golden era’ terminology refers to a policy initiated under the Cameron government in the aftermath of President Xi Jinping’s state visit in 2015 that aimed at developing trade and economic ties with China.
UK policy towards China has changed to reaffirm British values and international order. In July 2020, the British government’s final decision to eliminate ‘high-risk vendors’ such as Huawei from its 5G network gave a strong signal of the ways in which UK policy towards China was changing. The UK government’s position is today one in which the desire to maintain a positive relationship with China, especially to tackle climate change and ensure international prosperity, is counterbalanced by a ‘clear-sighted’ understanding of the challenges that China presents to UK national security and values. In the Integrated Review, the government has made clear that values and prosperity are intertwined, the former informing how the latter is pursued. The existing international order rests upon the respect of institutions, laws, and norms that allow open societies and economies such as the UK to prosper. UK policy towards China has been aligned to support a form of engagement that does not weaken the existing international order and does not undermine human rights and civil liberties. Accordingly, the UK government has been vocal in condemning human right abuses against the Uighur Muslims in Xinjiang and politically active to object to the deterioration of democratic standards in regards to Hong Kong.
Three drivers have underwritten changes in UK China policy. For the UK government a strong and close relationship with the United States remains a primary security interest. The Trump and Biden administrations have approached policy towards China in more competitive terms. This has, in turn, put pressure on the UK government to maintain polices that are compatible with changes in Washington, the example of elimination of Huawei from the UK 5G network being a case in point. British public opinion is a second driver to the current policy shift. In 2020, an authoritative poll of the UK public revealed that 74% of those interviewed held a negative image of China.  A subsequent study of British public opinion added further granularity indicating that only 13% of the British public supported any Chinese involvement in the UK’s infrastructure, whilst 40% of those interviewed believe the UK should challenge China on human rights record. Both factors are compounded by, and in part a reaction to, a third important driver: structural changes in Chinese foreign and domestic policies under Xi Jinping. To strengthen his rule and increase party stability, XI has make the country less tolerant and inclusive domestically, more assertive politically and militarily in the Indo-Pacific region, and diplomatically more confrontational internationally.
As consecutive Policy Exchange reports have stressed, UK security interests vis-à-vis China have to be understood within the broader context of the country’s interests in regards to the Indo-Pacific region. In particular, UK interests in the region are underwritten by the fact that the region is home to 1.5 million British citizen. Within this context, the UK has four primary security interests vis-à-vis China:
The key threats to UK security interests as defined above revolve around two sets of issues.
The first concerns acts of ‘normative revisionism’. These acts are aimed at weakening, or altogether disposing of, the norms and principles that guarantee the freedoms of domains that are key to open economies and societies. Chinese actions undermining freedom of navigation and overflight in the South China Sea fall within this category, given the global relevance of trade route across this basin. Specific actions can include the manipulation, disregard, or misapplication of the law of the sea, or the adoption of principles that are inconsistent with, or indeed incompatible with, international norms. The so-called ‘Nine-dashed line’, for example, represents a case in point of a Chinese notion that the 2016 award considered incompatible with UNCLOS provisions. Actions within this category can also include the use of military, constabulary, and paramilitary capabilities to obstruct the exercise of freedom of navigation in a fashion consistent to the law of the sea and its application on the high seas and in Exclusive Economic Zones.
The second set of threats to UK interests pertain to ‘geopolitical revisionism’. This includes activities aimed at advancing Chinese claims against UK security allies and close partners, which in turn endangers geopolitical stability and operational balance, as well as the pursuit of economic prosperity. Chinese attempts at changing the status quo of outstanding maritime boundary delimitations or maritime territorial disputes with non-peaceful means are included in this category. In particular, Chinese behaviour in the East China Sea in regards to its claims over the Japanese-controlled Senkaku islands, known in China as Diaoyu, is a case in point of this second type of threats to UK interests. By a similar token, attempts at changing the status quo across the Strait of Taiwan – including the status of offshore islands under Taiwanese control – through military coercion or the use of force also fall within this category.
The UK has an expanded diplomatic network requiring dedicated political leadership. In October 2018, then-foreign secretary Jeremy Hunt announced the ‘biggest expansion of Britain’s diplomatic network for a generation’, including 12 new posts worldwide and nearly 1,000 more personnel. The Indo-Pacific featured prominently, with new High Commissions established in Samoa, Tonga and Vanuatu, and a new British mission to the Association of Southeast Asian Nations (ASEAN) headquarters in Jakarta. The strengthening of the UK diplomatic resources has been coupled by the restructuring of the defence network around a British Defence Staff (BDS) for Southeast Asia based in Singapore. These diplomatic and security resources represent a strong basis to deliver UK interests and influence. However, as the region grows in security, political, and economic importance to the UK, this expansion is likely to require dedicated political guidance for post-Brexit ambitions to be maximised. As Policy Exchange recently argued, it is in this respect desirable to establish a dedicated ‘Special Envoy’ for the Indo-Pacific with a political mandate to ensure greater integration and impact of these resources across China’s neighbourhood and a dedicated Indo-Pacific sub-committee within the National Security Council.
The UK has plans for sufficient resources for a tailored defence engagement. From 2013−17, tensions in China’s neighbourhood increased significantly in light of North Korea’s missile and nuclear brinkmanship and Chinese behaviour in maritime disputes in the East and South China seas. As a result, close UK defence partners – notably Japan – faced heightened security challenges, and deployed British military power in the region was notable by its absence. From 2018-20, consecutive, and at times, overlapping deployments by Royal Navy ships did much to address the UK’s prior absence, enabling defence planners to test the requirements for a more persistent presence. The maiden deployment of HMS Queen Elizabeth carrier strike group (CSG) in 2021 will cement and further enhance progress made thus far. Beyond 2021, the Command Paper confirmed an ambition to forward-deploy one Offshore Patrol Vessel (OPV) and one Littoral Strike Group (LSG) in the Indo-Pacific. This set of capabilities should be sufficient for a persistent form of presence, albeit one optimised for non-combat missions, focusing on tasks such as maintenance on alliance management, good order at sea, capacity building, evacuations of nationals overseas, and disaster management and response. Such allocation of resources would allow to perform important ‘shaping’ functions to promote regional stability, requiring additional resources in case major crises or military escalation occurs.
UK engagement should aim to be partner-centric and campaign-oriented. In a maritime centric regional space such as the Indo-Pacific, the above set of capabilities offers considerable flexibility and potential for engagement in support of UK interests with affordable costs. Coupled with UK logistical support facilities in Duqm and Singapore, and the British Army Gurkha Garrison in Brunei, this core of capabilities will achieve greater effect if employed to enhance the value of the UK to its core allies and partners in the region, both bilaterally and multilaterally. In particular, UK defence engagement should focus on developing greater integration (the ability to operationally work with) and interchangeability (the ability to tactically be integrated in) with key partners with advanced militaries like Japan and Australia, in addition to the United States, to partly offset the lack of forward-deployed high-end combat capabilities. This in turn would ensure the necessary doctrinal know-how to pursue such an option if/when such resources are deployed and reinforce the UK overall convening power and its shaping capacity of regional stability. Future opportunities of this kind should also be explored with France and India. Similarly, the UK should prioritise the pursuit of stronger logistical support arrangements with Japan and Australia to ensure the long-term sustainability of its presence and engagement.
Prioritising CPTPP as a way to enhance trade with China within an Indo-Pacific framework. In January 2021, the UK government highlighted its ambition to prioritise access to fast-growing markets and major economies in its submission of an application to join the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) agreement. This, in turn, elevated the importance of ties with the Indo-Pacific region against and already expanding trade relationship, since in 2019 Asia already accounted for approximately 20% of both exports and imports. By way of comparison, the Americas accounted for 25% of UK exports and 16% of imports. Access to CPTPP should be regarded as an opportunity to guide the development trade ties with China. In particular, CPTPP has a potentially significant influence role to play in regards to the Regional Comprehensive Economic Partnership (RCEP) agreement signed in November 2020, the world’s largest trade bloc once it enters into force. China is a member of RCEP, and so are key actors in CPTPP, notably Japan and Australia. Japan certainly considers CPTPP an important forum to develop informal coalitions to influence trade processes in RCEP. Membership to CPTPP would enable the UK to develop economic policies, working with other key members, to enhance trade opportunities with China.
CPTPP membership as an enabler for a more systematic Indo-Pacific Engagement. One key implication for the UK relationship with China unfolding from a CPTPP membership pertains to the widening scope of systematic UK economic engagement with the Indo-Pacific. In 2019, seven of the UK’s top 25 export markets are in Asia. The top three in Asia – China, Japan and Hong Kong – together account for some £60 billion of exports in goods and services, a value higher than that of Germany (the UK’s third-largest export market). However, it is equally important to stress that UK exports to ASEAN (US$24.1bn) meant that it represented the third largest non-EU export market, whilst wider UK trade across the region is worth some £113.2 billion, excluding China. By 2019, the foreign secretary was reporting that the UK was the largest European investor in Southeast Asia, with ASEAN trade standing at nearly US$52.2bn and over 4,000 British companies employing more than 50,000 people in Singapore alone. This means that widening opportunities across the region should be supported by greater systematic efforts to enhance trade opportunities, especially in services, in crucial areas such as Southeast Asia, in addition to China. In turn, a stronger and more systematic engagement in the Indo-Pacific should be regarded as an opportunity to gain better understanding of Chinese trade practices in its neighbourhood and local responses to them.
CPTPP membership as an opportunity to develop UK-Japan economic resilience. Membership to CPTPP will enable the UK to build upon the FTA agreement signed with Japan in 2020 to work together with Tokyo, and other CPTPP members, on how best pursue a positive trade relationship with China. Working with Japan can be very relevant to the UK in that Tokyo has long been debating how to maintain robust trade with Beijing whilst increasing economic resilience and diversification. In 2010, Japan imported 82% of its rare earth materials from China. Following a period of strained bilateral ties with restrictions imposed on rare earth exports to Japan, Tokyo took action and by 2019 dependency was reduced to 58%, with a target of less than 50% by 2025. The Covid-19 crisis highlighted the importance to further reduce dependency. Japanese action was set to financially support the relocation of productions in Japan, or to third countries. Whilst the majority of Japanese business remained untouched by this policy, 73% of the manufacturing output of China-based Japanese companies was sold to the Chinese market, Tokyo remains committed to continue to enhance resilience in key sectors, from PPE to critical infrastructures. Indeed, Japan’s pledge to work with the United States in telecommunications ‘beyond 5G’ provides a strong sign of an approach that focuses on national resilience, and not necessarily outright decoupling, from China. The Japanese approach can be of great value to the UK in that it aims to keep China firmly within wider regional integration processes whilst preventing Beijing from imposing a leadership role that would undermine the principles of open societies and economies.
Received 5 May 2021
 Dr Patalano is Reader in East Asian Warfare & Security at the Department of War Studies, King’s College London (KCL), and Senior Fellow, Britain in the World Programme, Policy Exchange. At KCL, he is the Director of the King’s Japan Programme at the Centre for Grand Strategy, specialising in Japanese military history and strategy, defence issues in East Asia, and maritime security issues in the East and South China Seas.
 This submission engages with the notion of ‘Indo-Pacific Tilt’ as defined in HM Government, Global Britain in a Competitive Age (CP 403, London, March 2021), 66-68.
 For example, Peter Walker, ‘MPs Call for Overhaul of China Policy after UK Suspends Hong Kong Extraditions’, The Guardian, 20 July 2020, https://www.theguardian.com/world/2020/jul/20/uk-risks-chinas-wrath-by-suspending-hong-kong-extradition-treaty; Sebastian Payne, Helen Warrell, and Laura Hughes, ‘Senior Tories Call for Reset of China Relations’, Financial Times, 22 April 2020, https://www.ft.com/content/b1dfb7b5-5140-4408-abc0-7d0b7f783a58.
 Jonathan Ford and Laura Hughes, ‘UK-China Relations: From “Golden Era” to the Deep Freeze’, Financial Times, 14 July 2020, https://www.ft.com/content/804175d0-8b47-4427-9853-2aded76f48e4.
 ‘George Osborne on UK’s “Golden Era” as China’s “Best Partner in the West”’, BBC News, 23 October 2015, https://www.bbc.co.uk/news/av/uk-34621254.
 Raab, MP, ‘Oral Evidence’, Foreign Affairs Committee, op. cit., Q154; RT Hon Dominic Raab, MP, ‘Oral Statement to Parliament on Hong Kong and China’, London: 20 July 2020, https://www.gov.uk/government/speeches/hong-kong-and-china-foreign-secretarys-statement-in-parliament.
 HM Government, Global Britain in a Competitive Age, op. cit., 11, 12, 13-14.
 Ford and Hughes, ‘UK-China relations: From “golden era” to the deep freeze’, op. cit..
Sophia Gaston and Evie Aspinall, ‘UK Public Opinion on Foreign Policy and Global Affairs: Annual Survey – 2021’, British Foreign Policy Group, 16 February 2021, pp. 52−53, https://bfpg.co.uk/wp-content/uploads/2021/02/BFPG-Annual-Survey-2021.pdf.
 Policy Exchange’s Indo-Pacific Commission, A Very British Tilt: Towards a New UL Strategy in the Indo-Pacific Region (London: Policy Exchange, 2020), 15-19; Alessio Patalano, UK Defence from the “Far East” to the “Indo-Pacific” (London: Policy Exchange, 2019).
 Policy Exchange’s Indo-Pacific Commission, A Very British Tilt, op. cit., 19. According to the UK government, the number of British citizen living in the Indo-Pacifc region is 1.7 million. HM Government, Global Britain in a Competitive Age, op. cit., 66.
 Louisa Brooke-Holland, ‘UK defence obligations to South Korea’, Briefing Paper, House of Commons Library, no. CBP08100, 5 October 2017, https://commonslibrary.parliament.uk/research-briefings/cbp-8100/.
 Tim Huxley, ‘Developing the Five Power Defence Arrangements’, IISS Analysis, 1 June 2017, https://www.iiss.org/blogs/analysis/2017/06/fpda; Government of the UK, ‘UK is Extensively Involved in Southeast Asia: Speech by Scott Wightman’.
 ’Government of the UK, ‘Chief of the Defence Staff, General Sir Nick Carter launches the Integrated Operating Concept’.
 Policy Exchange’s Indo-Pacific Commission, A Very British Tilt, op. cit., 20.
 HM Government, Global Britain in a Competitive Age, op. cit., 22, 62.
 In July 2016, the Permanent Court of Arbitration in The Hague delivered an award in the case of the Philippines against China, which landed a decisive blow to China’s legal position in the South China Sea by finding that its claims to historic rights as defined by the ‘nine-dash line’ were illegal. For a brief summary of the award, see ‘South China Sea tribunal: Key points’, BBC News, 12 July 2016, https://www.bbc.co.uk/news/world-asia-36772813.
 Rockall is an inhabited islet in the North Atlantic Ocean that lies within the UK’s exclusive economic zone (EEZ) that the British government voluntarily recognised to be incapable of generating an EEZ of its own when the UK joined UNCLOS. See UK, Foreign, Commonwealth & Development Office, ‘UK Government’s Position on Legal Issues Arising in the South China Sea’, House of Commons, 3 September 2020, http://data.parliament.uk/DepositedPapers/Files/DEP2020-0516/UK_govt_analysis_of_legal_issues_in_the_South_China_Sea.pdf.
 Alessio Patalano, ‘Beyond the Gunboats: Rethinking Naval Diplomacy and Humanitarian Assistance Disaster Relief in East Asia’, RUSI Journal, vol. 160, no. 2 27 April 2015, p. 34.
 Well summarised here: Permanent Court of Arbitration, ‘The South China Sea Arbitration’, Press Release: 12 July 2016, https://docs.pca-cpa.org/2016/07/PH-CN-20160712-Press-Release-No-11-English.pdf.
 Government of the UK, ‘An Invisible Chain: speech by the Foreign Secretary’, 31 October 2018, https://www.gov.uk/government/speeches/an-invisible-chain-speech-by-the-foreign-secretary.
 UK, Ministry of Defence and Foreign and Commonwealth Office, ‘UK’s International Defence Engagement Strategy’, 17 February 2017, p. 8, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/596968/06032017_Def_Engag_Strat_2017DaSCREEN.pdf.
 Policy Exchange’s Indo-Pacific Commission, A Very British Tilt, op. cit., 26.
 Ministry of Defence, Defence in a Competitive Age (CP 411, London, March 2021), 48-49.
 Policy Exchange’s Indo-Pacific Commission, A Very British Tilt, op. cit., 47.
Liz Truss, ‘UK Applies to Join Huge Pacific Free Trade Area CPTPP’, 30 January 2021.
 Matthew Ward, ‘Geographical pattern of UK trade’, Briefing Paper (London: House of Commons Library, no. 7593, 25 November 2020), 6, https://commonslibrary.parliament.uk/researchbriefings/cbp-7593/.
 Christopher W. Hughes, Alessio Patalano, and Robert Ward, ‘Japan’s Grand Strategy: The Abe Era and its Aftermath’, Survival, Vol. 63, 2021:1, 143-44.
 Ibid., 7.
 The second and third being the United States and China. Government of the UK, ‘ASEAN Economic Reform Programme’, 19 December 2019, https://www.gov.uk/government/publications/prosperity-fund-fco-programme-summaries-countries. Also, Policy Exchange’s Indo-Pacific Commission, A Very British Tilt, op. cit., 31.
 Government of the UK, ‘Foreign Secretary Hunt: Britain’s role in a post-Brexit world’, IISS, Singapore: 02 January 2019, https://www.gov.uk/government/speeches/foreign-secretary-hunt-britains-role-in-a-post-brexit-world.
 Policy Exchange’s Indo-Pacific Commission, A Very British Tilt, op. cit., 32.
 Ryosuke Hanafusa, ‘Japan to Pour Investment Into Non-China Rare-earth Projects’, Nikkei Asia, 15 February 2020, https://asia.nikkei.com/Politics/International-relations/Japan-to-pour-investment-into-non-China-rare-earth-projects.
 A point very well explained in Mathieu Duchatel, ‘Resilience, Not Decoupling: Critical Supply Chains in China-Japan Relations’, Institut Montaigne Blog, 28August 2020, https://www.institutmontaigne.org/en/blog/resilience-not-decoupling-critical-supply-chains-china-japan-relations.
 ‘US and Japan to Invest $4.5bn in Next-Gen 6G Race with China’, Nikkei Asia, 18 April 2021, https://asia.nikkei.com/Business/Telecommunication/US-and-Japan-to-invest-4.5bn-in-next-gen-6G-race-with-China.