Written evidence from Professor Patrick Porter and Dr David Blagden, Strategy and Security Institute, University of Exeter (CHI0007)

A Time to Choose:

Britain’s Options for Relations with China

Summary

Britain’s relationship with China will be conditioned by two recent shocks, the vote to leave the European Union, and the election of Donald Trump as President of the United States. Both developments are likely to expose more sharply the contradictions of Britain’s current posture towards the People’s Republic. Both may force painful choices that the UK has thus far tried to avoid making.

Britain currently takes a contradictory stance towards China. It mixes a Treasury-driven commercial embrace of Beijing, with an eastward military-strategic shift to uphold an American-led liberal order of democracy promotion, freedom of navigation, the peaceful resolution of disputes, and integrated markets. This kind of incoherence could once have been rationalised as ‘strategic ambiguity’ in times of greater international tranquillity, where there was greater tolerance for middle powers hedging their bets. Starker conditions now are likely to be less forgiving.

The brute reality of Asia is that the United States and China are on collision course. Their interests as they define them are directly opposed, making serious confrontation likely. Rivalry between Washington, Beijing and Asian third parties has been long in the making. Trump’s incoming administration now threatens to turn the slow-burning ‘Asia Pivot’ into a more hard-line and aggressive competition, against an increasingly assertive China. In this context of escalating rivalry, Britain’s greatest traditional ally (Washington) and its new ‘best partner’ in Asia (Beijing) may both demand that Britain align itself on their side in the confrontations, disputes and even conflicts to come. Both are likely to exact a cost if Britain fails to.  

Britain faces this environment with reduced leverage. Its European commercial and institutional links and its armed forces are depleted. By failing to make hard strategic choices now that rank the UK’s interests and priorities in Asia, and by raising false expectations, Britain runs the risk of alienating both major powers and finding itself isolated internationally. The current posture is less a product of coherent means-ends calculation than of a clash between the Treasury’s vision of the Anglo-Chinese relationship and other departments.

Britain has three choices that probably cannot be deferred much longer. They need not be absolute choices, but they will entail hard trade-offs. Britain can choose to bandwagon for profit with a revisionist China, prioritising commercial engagement at the expense of traditional alliances and domestic liberal values. Alternatively, it can choose to balance and resist China’s challenge by aligning itself with the American-led liberal order, viewing the relationship across multiple issue-areas, at the expense of Asian economic opportunities and at the risk of major war. Or it can attempt to be a critical friend, sticking with but attempting to change the behaviour of its major ally, tilting the United States towards a mutual accommodation with a rising China, sharing power and creating a new order in Asia, a choice that requires high levels of cooperation and mutual restraint. All three choices have strengths and weaknesses. All pose dilemmas that can no longer be ducked.     

The Context: Collision Course

The main context for the Anglo-China relationship is that the United States and the PRC are on collision course. That is, Britain’s strongest traditional ally and its new commercial partner are engaged in a dangerous rivalry for primacy in Asia. Both recent and long-term developments suggest that this rivalry is likely to escalate further. Put simply, Trump’s confrontational promotion of the United States’ Asian interests -and China’s likely counter-reaction- is exacerbating and bringing forward the problem. Any realistic assessment of British choices and interests should take this reality into account.

The United States has long been an Asian power. It held primacy in Asia since World War Two, turning the Pacific and Indian oceans into American lakes. After the Nixon-Mao settlement of 1972, America faced no rival for domination of the region. China contented itself with other more local conflicts, internal reform and, under the leadership of Deng Xiaoping, chose to ‘hide and bide’ as it developed its model of authoritarian capitalism. In this period,  countries of the Pacific Rim prospered under American hegemony. Even once it was clear that China’s relative power was growing through its prodigious economic growth, Beijing professed only to be interested in a ‘peaceful rise.’ Other Asian states had a strong appetite for American patronage and investment. Their greatest fear was not American presence but American abandonment.

That traditional strategic order is coming to an end. China’s prodigious growth, large population and the sheer scale of its industrial revolution has transformed it into a major power with an economy that is set to be the largest on earth. It has increased its ambitions. It is translating its wealth into increasingly potent military power, in particular ‘area and access denial’ (A2/AD) capabilities. It is now challenging American dominance in Asia, making a bid for regional primacy as the leading power in its neighbourhood. The major fear of Asian states is no longer just American abandonment. It is the fear of conflict between America and China, of being caught in the middle and being forced to choose. Recently, there have been some high-profile dalliances, or even defections, from the Philippines and Malaysia towards China. The exact future configuration of the region is unclear. What is clear is a new state of turbulence and the raised possibility of conflict, a pattern in keeping with most historical power transitions as leading states pass one another on the ‘graph.’

Even though the economies of the US and the PRC are interlocked, the visible pattern is one of increasing geopolitical competition. Both states have ramped up and expanded their military presence throughout the region. China has made territorial claims in the East and South China Seas, unilaterally seizing and militarising reefs, rocks and islands. It claims waters internationally regarded as the High Seas, and thus part of the ‘global commons’, as part of its Exclusive Economic Zone. It has set up ‘air defence’ no-fly zones. Its news agencies broadcast an increasingly strident nationalism to its population. It wields its sense of historical victimhood strategically to create legitimacy and stoke consent for its great power ambitions, invoking its ‘century of humiliation’ and its determination never again to be dominated. It has repudiated the unanimous verdict of the Permanent Court of Arbitration in the Hague against its territorial claims in the South China Sea, defying hopes that it would gradually conform with the rules and norms of the North Atlantic liberal order.

America for its part has tightened and enlarged its alliances, conducted freedom of navigation patrols through Chinese-claimed waters and airspaces, and at least according to the National Institute for South China Sea Studies, over 2014 conducted 1200 close reconnaissance and surveillance missions against Chinese forces.[1] The nominee for Secretary of State has recently confirmed in his senate hearings that the US regards China’s encroachments on territory as a threat to its core interests. He warned explicitly that Chinese island-building and access is ‘not going to be allowed.’[2] China’s state-run media warned of a ‘large scale war’ if the US tried to deny it access to its artificial islands.[3] It has threatened to ‘take off the gloves’ if Trump abandons the ‘One China Policy’ and continues provocations over Taiwan.[4] Until recently, Washington presented its bid to sustain primacy in euphemistic language. The process has been continuously in search of a satisfactory label: American diplomats have termed the effort to strengthen America’s pre-eminence in the region as the ‘Asia pivot’ or ‘rebalance.’ It claims to be providing general security for an ‘operating system’ and countering piracy, terrorism and drug smuggling. Yet it is unlikely that these are enough to explain its shift of over half its naval assets to the region, away from their immediate post-Cold War concentrations in the North Atlantic and Middle East. Washington has invited China to engage as a responsible stakeholder. Both America’s actions and rhetoric, however, have made it clear that the US is inviting the PRC to submit itself on Washington’s unequal terms to an American-led order. America in the Bush and Obama eras may not yet have been containing a rising China, exactly. It was certainly preparing for that eventuality, building ‘containment capacity’, and the difference was neither meaningful nor reassuring to Beijing. Any ambiguity in the language of competition has now gone, as the US and China explicitly threaten one another in terms that are difficult to climb down from.

What will the collision look like? This is unclear. Unfortunately, both powers seem likely to run the experiment. Neither may want an all-out war or intend to launch a premeditated attack. Conflict can have other roots, though. The situation is ripe for either actor to miscalculate. One side may seek to exercise intimidation below the threshold of intervention yet misjudge where the threshold is. One side may push the other side in the mistaken belief that it will be back down. Low-level coercive activity, such as cyberattack and military reconnaissance, can escalate to higher-level conflict through a reactive spiral of move and countermove. Localised crises and confrontations can rapidly expand into general warfare, if one or both sides perceive marked advantages in moving first – or grave dangers in waiting to move second – as is likely in a US-China strategic balance characterised by scarce numbers of high-capability but potentially vulnerable military assets. Given there is disagreement over the fundamental issue of whether nautical zones are international waters or national property, and given the possibility that China erects an Air Defence Identification Zone over the South China Sea, there is every prospect for collision. Once all-out conflict seems imminently possible, this too creates pressures for escalation, especially as the speed and range of modern weapons systems offer incentives to attack before being attacked, both seeking the upper hand in a sharp exchange of strikes. The restraining forces of nuclear deterrence and economic interdependence may still be strong enough to prevent this escalating rivalry from spilling out into open warfare. They are demonstrably not strong enough to prevent a drawn-out security competition between them, climaxing at least in periodic crises and confrontations, and standoffs. In turn, this process will pose questions to the UK about its commitments.

Fresh developments- namely the electoral victory of Trump- suggest that this collision is now coming sooner and more intensely than observers feared. Trump’s behaviour since his victory suggest that his robust campaign rhetoric against China is a signal of things to come, turning the gradually growing rivalry of the ‘pivot’ into an openly aggressive containment project. He has appointed Peter Navarro as head of his National Trade Council, a figure who openly identifies China as a totalitarian power and a strategic threat, who believes the US should curtail Chinese imports, and who shares Trump’s ‘zero-sum and belligerent view of the Sino-American relationship.’[5] The Commander of US Pacific Command has reaffirmed America’s commitment to primacy in the region, tellingly claiming that America’s first war was a freedom of navigation campaign. Trump has since flouted the spirit of America’s long-standing ‘One China’ policy, accepting a telephone call from the Taiwanese President Tsai Ing-wen, which Beijing has scolded as a de facto treatment of Taiwan as a legitimate sovereign state. China recently installed weapons in the Spratley archipelago. Trump has vowed to impose tariffs, attracting Beijing’s promise to retaliate, and to name China a currency manipulator on his first day in office. Such developments will make it hard for Britain to triangulate between the two major powers.

Britain’s Response

Both Britain and the PRC both want peaceful commercial growth and stability. Crucially, though, they want these things on different terms and have clashing ideas of the ‘pathway’ to achieving these interests. China’s preference, probably, is for Britain to bandwagon with it and distance itself from the United States, as it exerts its growing weight in sometimes brutal ways. We can infer that Britain’s current preference is a wishfully optimistic one, to have the best of both worlds, where it can economically bandwagon while retaining the benefits of the US-led liberal order.

This posture is an incoherent and potentially contradictory one. It mixes friendly mercantilism and potentially hostile counter-balancing. To some observers, this may superficially seem adroit, as a form of deliberate ambiguity. Indeed, there are circumstances where ‘triangulation’ can work. In today’s emerging security environment of Asia, however, it is not likely to work. Its costs may be unacceptable and both the PRC and the US are likely to be intolerant of such ambiguity. ‘Hedging’ in these circumstances runs the risk of damaging both of Britain’s relationships. The price for miscalculation in this regard is likely to be higher than before, now that Brexit does more to weaken than strengthen Britain’s bargaining hand.

The first part of Britain’s diplomacy towards China is one of bandwagoning and profit-driven diplomacy, with other aspects of the relationship muted. It became known as the so-called ‘Osborne Doctrine’, and was signalled in the state visit of Chinese President Xi Jinping in October 2015. This is primarily a Treasury-driven approach that embraces China and defines it as a primarily commercial actor and partner. The countries proclaimed a golden era in bilateral relations with obvious material dividends. Downing Street claimed it would unlock £40 billion worth of commercial deals across energy, finance, technology, education, and most notably allowed the state-owned China General Nuclear Power Company to invest in development of Hinkley Point C nuclear power station. Chinese investors are attracted to the UK’s financial expertise, its favourable tax environment, the City of London financial centre that is also a leading offshore hub for trading Chinese currency, the location of the headquarters of China’s biggest private bank, and the link between the London & Shanghai stock markets.

This approach was evident also in Britain’s formal strategic documents, the National Security Strategy and the Strategic Defence and Security Review, which use notably softer language about China than about Russia, playing down sources of disagreement between the countries, such as China’s practice of seizing and militarizing disputed territories. And it was signalled when the UK broke ranks with Washington and the rest of the G7 to join the Asian Infrastructure Investment Bank, without even consulting the US. The government did not go so far as to define China as exclusively a trading state. But it does place other strategic aspects of the relationship in the margins. ‘Brexit’ has given fresh impetus to the effort to attract Chinese trade investment.

Under a new Prime Minister and in the wake of ‘Brexit’, Britain has stepped up the second part of its dual strategy. The government articulates a ‘Global Britain’ shift, to follow the movement of wealth and power eastwards with a strategic presence. As well as economic bandwagoning, in other ways Britain is joining a counterbalancing coalition and a return ‘east of Suez.’ It strengthens military-strategic ties with Asian states who are countering China’s rise, through a new defence staff centre in Singapore, through RAF Typhoon jets training with Japanese military aircraft, and through assurances about future defence engagements, as when a British senior diplomat recently claimed that two new aircraft carriers will be seen in the Pacific to secure the sea lanes. This stance may not be overtly directed against China, but it is not hard to imagine how it appears to Beijing.

The major flaw of Britain’s current ambiguous stance is its apparent (and unexamined) conceit that we can separate economic order from strategic order, that the two things will not collide, and that the US will uphold the strategic order that the flow of trade relies on, without punishing Britain’s overtures to Beijing. China, however, is as much a geopolitical actor as a commercial one. It is bidding for regional recognition and dominance, engaged in an escalating rivalry with the United States and its Asian neighbours. This could directly affect Britain’s trade routes and the maritime ‘commons,’ where Britain’s commercial and strategic interests are tied together physically.

There are also other problems with bandwagoning. Other government departments and particularly the Foreign and Commonwealth Office (FCO) are less enthused about the commercial embrace of China and the effort to simplify what was once a more evenly multi-dimensional relationship. Developments even during the official event in 2015 suggested that ‘bandwagoning’ would run into difficulties. The Chinese premier’s visit to a liberal democracy was accompanied by the heavy-handed arrest of peaceful protesters in London. And just as the economic partnership was announced, Chinese dumping of state-subsidised surplus steel on global markets contributed to the near-collapse of Britain’s steel industry.

The government’s wager may be ‘worth it.’ It might be possible to maintain a close security relationship with Washington, a predominantly commercial one with China, and that the two will not collide. But it is not clear that the UK is prepared for the event that the status quo fails, if the US perceives the UK as ‘bandwagoning for profit’, or if China perceives Britain lining up behind a hostile US-led coalition. More intensive scrutiny is needed about the costs and risks of the choices involved. Britain’s position thus far has flowed from an inadequate decision-making process within government. As noted by the former Chairman of the Security and Intelligence committee, the Hinkley project ‘went from consideration to contract, without ministers even hearing about it. There must be some sort of accountability with deals of this nature.’  There is a need for a more critical exercise in evaluation, rather than allowing one part of government to craft strategy without coordination with other departments and ‘on the fly.’

In such a fundamental area as UK-China relations, countering unexamined assumptions and ‘groupthink’ tendencies more effectively would require mechanisms such as ‘red teaming’, ‘a structured process that seeks to better understand the interests, intentions and capabilities of an institution – or a potential competitor – through simulations, vulnerability probes, and alternative analyses.’[6] To ensure greater self-scrutiny, future reviews should institutionalise ‘friendly dissent’, using empowered ‘red teams’, and an equivalent of the Office of Net Assessment with an expanded brief, explicitly formulating a ‘shadow’ national security strategy, played out through scenarios built around tests of current policy, against which to evaluate existing assumptions. As John Hemmings argues, the UK should also introduce a formal vetting process into foreign investment in critical national infrastructure that is linked to national security, such as data centres, telecommunications companies or nuclear facilities. We can’t be certain of China’s intentions behind its capital-intensive large scale investments, but NATO has identified it as the source of many cyber-hacks in the West. China’s ‘investment offensive’ may well be driven by forces apart from bidding for global power, such as the regime’s continuous pursuit of domestic legitimacy. Nevertheless, such investment does generate potentially dangerous levels of access and subversion. Where Britain’s commercial and strategic interests intersect, some more intensive deliberation is due.

Britain’s Choices

Thus far I have explained why the status quo is unlikely to continue. What choices does Britain face? There are three choices: bandwagoning, balancing or power-sharing.

Bandwagoning

Britain can choose to bandwagon for profit with a revisionist China. In this strategy, Britain would prioritise commercial engagement at the expense of traditional alliances and domestic liberal values. It would strive to be China’s European partner of choice. Chinese investment and trade would define a new mercantile relationship, fitting an historical pattern of Britain acting as an economic launch pad for new rising powers. Britain would desist its movements towards greater military-strategic engagement with China’s rivals in East and South Asia. It would probably not sever ties formally with Washington, but would distance itself from it. Britain would turn down the volume on human rights dialogue. It would mute its protests over Hong Kong and its opposition to China’s territorial grabs and expansion in the East and South China Seas. It would emulate China’s own self-declared stance of doing business without interference or commentary on internal affairs. London could even, once Brexit takes it out of the coverage of the post-Tiananmen EU arms embargo on China, contemplate the sale of advanced UK military technology to the PRC – Beijing having long craved accessed to the most developed Western weaponry – in exchange for dramatic commercial and trading concessions. This strategy would have the added benefit of enabling Britain to concentrate its military-strategic efforts in the North Atlantic, NATO’s eastern flank and in the Gulf. Indeed, given the incoming US Administration’s seeming willingness to jeopardise NATO credibility – a critical UK security interest – through admiration for Putin’s Russia, hugging China close might even generate alignment between Beijing and London on the desirability of balancing any future Russian aggression, China having long confronted Russia on the two countries’ border.  

Optimists who favour this strategy would wager either that America would tolerate this shift, that tilting towards Beijing lies in the Anglo-American ‘trade space.’ Or they would wager that the costs of American intolerance would be acceptable. Optimists would argue that the UK has flouted American preferences before, and emerged unharmed, over the Vietnam war, say, or Northern Ireland. Now that Britain is leaving the European Union and faces potential exclusion from the single market, there are stronger reasons to rank commercial engagement with Beijing above other things. Britain is a major power that will soon be unfettered by EU constraints, optimists reason, and therefore can bargain effectively with a rising China.

The optimistic case, however, underestimates the likely difficulties and price of bandwagoning. Firstly, Britain’s bargaining position has been weakened by Brexit. It would be negotiating with China as a single state rather than as part of a twenty-seven member union. At the same time, Britain may become less attractive for China. London’s primacy as a place of investment and as gateway to wider European market is jeopardised without freedom of movement across that market. China has a well-earned reputation for driving a hard bargain over trade deals, as the experience of Switzerland, New Zealand and Australia demonstrates. A bandwagoning strategy would entail relegating human rights issues to a problematic degree, in ways that would attract opposition at home on all sides of British politics.

As for the expectation of American tolerance, this is wishful thinking. Washington has already indicated its displeasure at unilateral British moves towards commercial partnership with China. America regards its primacy in Asia is a major, grand strategic concern. The incoming president shows every sign of being transactional in his world-view, and therefore sensitive to the logic of quid pro quo. Failure to ‘give’ by supporting America’s containment of China will likely result in some meaningful retribution. Sales of militarily useful UK technology to Beijing would be met by a particularly ferocious US response, and the likely severance of all elements of the Anglo-American alliance. Britain’s dissent on major questions in the past has resulted in retaliation, for instance during the Heath-Nixon era, and could (as then) lead to the suspension of intelligence cooperation or foot-dragging on negotiating a new bilateral, Anglo-American trading agreement. This does not necessarily mean that the price would be too high. It does mean that a strategy of bandwagoning should only be entertained once policymakers consider what they would be willing to give up. 

Balancing

Britain can also choose to ‘balance.’ In other words, it can choose to align itself less ambiguously with the US-led liberal order in Asia, placing a premium on upholding American primacy and placing the trading relationship with China second. This would not preclude seeking to strengthen economic ties with China. Britain’s stance could range from diplomatic support to indicative and symbolic steps, all the way to material and military backing to the American strategic order, building on the multiple moves underway to strengthen Britain’s strategic presence in Asia.

It would involve a wide range of stances, such as strengthening the existing Five Powers Defence Arrangements in the region, Britain’s cooperation agreement with Australia, New Zealand, Malaysia, and Singapore. It would involve supporting or even contributing to freedom of navigation and surveillance operations; more forcefully protesting against China’s transgressions, such as its authoritarian tightening in Hong Kong; its dumping of surplus steel on international markets and insisting on China’s compliance with international law and the ruling of the Permanent Court of Arbitration. It would involve some degree of diplomatic or material support for Taiwanese independence in the event of a standoff or open warfare across the Strait. 

The rationale would be that Britain’s national security interests rest on a sustained and close relationship with Washington, and that both powers share a common vision for world order, promoting the peaceful resolution of disputes, an opposition to unilateral territorial expansion, and freedom of the seas. It would also be based on a calculation that the best way to keep the peace in Asia is by deterring Chinese adventurism through a US-led counterbalancing coalition, while encouraging and rewarding its compliance. In turn, this would make it easier to obtain American support in other policy areas. For all of the Trump Administration’s eagerness for close ties with Moscow and the China-UK shared interest in checking possible Russian aggression, US power and commitment together makes for a much more convincing safeguard of British and European security than any alternative partnership.

This strategy would mean accepting potential costs to the Chinese commercial partnership for the sake of upholding what both the US and UK like to call a ‘rules based international order.’ Beijing almost certainly would interpret increased defence engagement with Japan, Singapore and the US as the sign of a hostile coalition forming. It would not necessarily require the UK to support American behaviour uncritically or automatically. Within the constraints of a balancing strategy, Britain could attempt in the medium term to  exert a restraining influence on Washington, urging it to revert to a more diplomatic ‘rebalance’ while attempting to persuade Beijing to enjoy a peaceful rise within a liberal international order. If push came to shove, however, Britain would tuck in behind the United States.

A balancing strategy may successfully deter and reverse China’s bid for hegemony. However, history suggests that attempts at counter-balancing rival major powers – while sometimes unavoidable and necessary – can also sustain and develop antagonism, particularly when they are experiencing relative rise and decline vis-à-vis one another. Hard-line and unyielding confrontation, without pathways for de-escalation and compromise, can polarise adversaries and lead to a spiral of mutual fear. These dangers rise in circumstances of a major power shift. As Graeme Allison and the Harvard Kennedy School’s ‘Thucydides Trap’ Study demonstrates, 12 of 16 cases of major international power shifts have resulted in war.[7] At the very least, we should expect a growing US-China antagonism to create an era of crisis management and even near-misses. To put it in simple terms, it may well drive the US and its allies to the brink with Britain implicated. This would not only bring the UK close to a catastrophic war. It would divert resources, time and attention from other pressing tasks at home and abroad.

Power Sharing

An alternative strategy is ‘power sharing’, or rather attempting to change American behaviour more fundamentally. Britain would advise the US to make a series of bargains with China to accommodate its rise peacefully, while still placing the alliance above commercial partnership with China. Its rationale would be that both great powers, the US and the PRC, are likely to remain in the region and seek both recognition and influence there. If neither side is willing to allow the other to achieve primacy, and if neither side is willing to withdraw, then a power-sharing arrangement whereby they both forego primacy, remain in the region and share leadership in Asia is more likely to avert catastrophe.

This strategy could be made up of a number of incremental bargains. It could take place at the level of international institutions, accommodating China into a leading position within multilateral financial institutions such as the IMF and World Bank. China could moderate its territorial demands in return for some concessions in the South China Sea. The US could urge China to negotiate bilateral compromise settlements and joint developments projects, turning the sea into a shared preserve, where the competing claimants all ‘meet halfway’, all receiving some territorial gains in return for self-restraint. Mutual demilitarisation could also create space for a constructive diplomatic process to be given a chance. The US could reduce its surveillance and navigation patrols and arms sales in exchange for reciprocal Chinese demilitarisation towards the Taiwan Strait, shifting the footing of the China-Taiwan dispute towards a peaceful, consensual and bilateral settlement. Greater restraint from China would reward it with greater security and breathing space along its maritime periphery.

None of this would necessarily work. Accommodation is always difficult, usually finite and fragile against both external and internal forces that drive states towards antagonism. Even if it did not work, it would at least reveal China’s preferences. A power-sharing strategy would be hard to execute. It would require significant self-restraint on all sides, a good deal of domestic fortitude in the face of protest from hardliners, and a willingness to forgo gains in exchange for longer term stability. To the extent that Britain retains grand strategic influence over Washington, it could fulfil a role it executed during the Korean War, acting as a critical friend offering good advice. This advice may be ignored. But given the stakes involved, it might be worth a try.