Bill Emmott: Western nations need to unite on policies toward China

By Bill Emmott

Governments everywhere are struggling to define, build a consensus on, and then implement clear, coherent policies toward the world's two superpowers, the United States and China. For all of Europe, just as for countries like Japan, South Korea, Singapore and Australia, both these superpowers are, to adapt a phrase used in the 1990s by Secretary of State Madeleine Albright about her own country, "indispensable nations." But both are also highly troublesome and awkward nations. There is a key difference, however: in the U.S., the election in November may change things quite radically; in China, there is no prospect of change on the horizon. Therefore, any policy toward China has to be designed with a view to the very long term.

When thinking about U.S. policy toward China, my mind inevitably goes back to U.S. attitudes to Japan during the late 1980s and early 1990s. Much of the suspicion about Japan in those days in the U.S. media and political classes, which bordered at times on hysteria, was similar to today's thinking about China: a belief that Japan and the U.S. were competing for a technological leadership that would shape the long-term future; a belief that Japan's economic system was somehow competing unfairly; a belief that Japanese political and corporate influence in the U.S. was excessive, dangerous and even at times tantamount to espionage.

Of course, as is often pointed out, unlike with China, policy toward Japan was moderated by the fact that it was and is a security ally even while being a commercial competitor. But that also led to another striking difference. This is that virtually no other country demonised Japan during the 1980s in the same way as America did, and America put little pressure on other western governments to support its own policies of protectionism and industrial rivalry. With China, by contrast, other countries do share U.S. concerns and fears, and their governments are being pressured by the U.S. to follow its lead.

That is what my country, Britain, has just done over the issue of whether to allow equipment from the Chinese telecoms equipment maker Huawei to be used in the country's 5G mobile networks. Having previously decided, on advice from the British secret intelligence services, that Huawei equipment could safely be included as long as it was restricted just to some peripheral parts of the network, Boris Johnson's government last month reversed course and announced that Huawei would in future be excluded.

This reversal happened under pressure from the Trump administration but also thanks to lobbying from inside the ruling Conservative Party in Britain's Parliament. Only five years ago a previous Conservative-led government claimed that UK-China relations were then entering a "golden age," as Prime Minister David Cameron and his Chancellor of the Exchequer George Osborne tried to make Britain as attractive to Chinese foreign investment as Margaret Thatcher had done for Japanese investment in the 1980s.

There are other reasons behind the Johnson government's change of China policy, most notably China's imposition of a harsh and dictatorial security law on Hong Kong, in violation (in Britain's view) of the international treaty the two countries signed in 1984 under which Hong Kong was returned to Chinese sovereignty in 1997. Britain's reversal of attitude is a dramatic one. Yet it is far from alone in having to think hard about how to deal with today's China: similar debates and dilemmas can be seen in Germany, France, Italy and Australia. All of these countries, like Japan, know that China is a vital trading partner; many want Chinese foreign investment; but all also have serious security and geopolitical concerns that they have to balance against those economic interests, including pressure from a highly troublesome and awkward Trump administration.

That U.S. pressure will likely still continue even under a Biden administration, although a new administration might be less likely to use extreme measures such the financial sanctions the Trump administration has just imposed on Hong Kong or the bans imposed on U.S. firms doing business with Chinese services such as Tik-Tok and WeChat. The main change that would come if Donald Trump fails to be re-elected is that pressure to follow America's lead on China would no longer be combined with Trump's constant criticism and bullying of the country's own allies. A co-ordinated western policy would become easier.

However, countries like Britain, Germany, Australia and Japan will still find themselves in a difficult position. Unlike the United States, these medium-sized powers lack the economic weight to be able to confront China or to decouple from it. Many, especially Western European countries, Australia and countries in East and South-East Asia, are more dependent on trade for their economic growth than is the U.S. Weakened further by the economic consequences of the covid-19 pandemic, they also need foreign investment more than ever. Whatever China's own economic problems it is likely to remain one of the major sources of capital for foreign investment.

For Britain, this promises to produce a particularly ironical outcome. On Dec. 31 this year, the country will fully leave the European Union as the culmination of its Brexit referendum decision in 2016. But in forming its policy on China, Britain will nevertheless have no choice but to seek to collaborate closely with its European neighbours as well as with the European Union institutions. Britain is too small to be able to deal with China on its own. Central to any policy planning will be co-ordination both with the United States and with the EU.

Such co-ordination will be essential on issues such as trade rules, intellectual property protection, reform of multilateral institutions including the World Trade Organisation, and for developing industrial alternatives to Chinese suppliers in advanced technologies. It will be essential, also, in security and defence issues. Where co-ordination may prove most difficult, however, will be in dealing with Chinese foreign investment. The promise of Chinese capital gives China its easiest way to divide countries from one another.

It is precisely for that reason that regular co-ordination of policies at the highest political level is going to be necessary not just between smaller western countries and the U.S., under either Trump or Biden, but also between each other. No policy toward China, in Britain, Germany, Australia or Japan, will likely work or be sustainable if it is not regularly discussed and agreed between political leaders in all these countries.

Western countries need common positions, in support of one another. Talking in bland generalities at G7 summits is not enough. Prime Ministers like Boris Johnson, Shinzo Abe and Scott Morrison, and Germany's Chancellor Angela Merkel, need to be talking constantly to each other about their policies toward China. Otherwise, we will all be trampled by one, or even both, of the world's two giant powers.

(Bill Emmott is an independent writer, lecturer and consultant on international affairs)