CRG Weekly: Foreign ministers' call and deepening UK-China trade
News from the China Research Group
In the press: Tom Tugendhat wrote to Secretary of State for BEIS Kwasi Kwarteng about a Chinese-backed takeover of Britain’s biggest semiconductor factory, Newport Wafer Fab.
The week in review
This week, the Official for National Statistics published a new analysis showing that China has overtaken Germany to become the UK’s single biggest import market for the first time since records began in 1997. Goods imported from China rose 66% from the Q1 2018 to Q1 2021, fuelled by rising demand for PPE and consumer electronics, as well as the limited impact of the pandemic on Chinese export capacity.
Foreign Secretary Dominic Raab held a phone call with Chinese counterpart Wang Yi on Thursday; the first time that the pair had spoken directly since sanctions were traded in March. Raab emphasised that the UK will look to work with China on issues such as climate change, whilst restating Britain’s concerns with the crackdowns in Xinjiang and Hong Kong. Chinese state broadcaster CGTN suggested that China was willing to be a partner of Global Britain, as long as the country’s “microphone diplomacy” was brought to a halt.
But Trade Secretary Liz Truss also warned this week that the UK should not become dependent on China for trade. In an interview with Politico, Truss conceded that West had “turned a blind eye” to Beijing’s unfair trade practices in the past and that pressure should be put on the WTO to make its rules tougher and restore faith in free trade. However, she also stressed that trade could continue to be a “force for good”.
The Home Office released its latest data on British National Overseas (BNO) visa applications in the first two months of the launch of the programme. 34,300 visa applications were received in February and March, with 7,200 granted - broadly in line with government’s mid-range estimates.
This came during the same week that Hong Kong passed a new electoral reform law that will allow a pro-Beijing panel to vet and elect all Legislative Council candidates, and Apple Daily founder Jimmy Lai was sentenced to another 14 months behind bars for participating in an unauthorised assembly on China’s National Day in 2019.
And finally - one of Australia’s largest winemakers, Limestone Coast Winery, has said that a free trade agreement with the UK would help offset the losses suffered from Chinese tariffs (FT). Beijing has imposed tariffs of up to 218 per cent on Australian wine during a period of fierce diplomatic tensions between the two Indo-Pacific nations.
In brief
The Mail on Sunday reported that arrests of Chinese ‘spies’ at UK universities could be made within weeks. Specialists at the Foreign Office, Special Branch and HMRC have drawn up a list of academics suspected of passing sensitive information to Beijing.
US President Joe Biden called for a further investigation into the origins of Covid in Wuhan, while Beijing accused the US of instigating a ‘smear campaign’. US Trade Representative Katherine Tai announced the US still faces ‘very large challenges’ on China after a virtual call with her Chinese counterpart Liu He this week (Reuters). Biden’s ‘Asia Tsar’ Kurt Campbell said that the era of US engagement with China was over.
The BBC reported that a camera system that uses AI and facial recognition intended to reveal states of emotion was tested on Uyghurs at police stations in Xinjiang.
Beijing hit back at an EU-Japan joint statement following a virtual leaders’ summit this week. Brussels and Tokyo voiced concerns around territorial and maritime disputes in the South China Sea and Chinese human rights abuses.
Yang Jiechi headed to Slovenia and Croatia to promote Chinese investment, trade, and tourism. Xi reportedly expressed willingness to extend the grace period for Montenegro’s repayment of an €809 million Chinese bank loan after the EU rebuffed a plea for support.
Taiwan accused China of interfering in Covid vaccine deals, with supplier BioNTech forced to remove a reference where Taiwan called itself a country.
The People’s Bank of China warned that the exchange rate of the Chinese currency shouldn’t be used as a tool to spur exports or to offset the impact of commodity price surges (Bloomberg).
Propaganda efforts have stepped up to promote ‘Party history learning’ in the lead up to the Chinese Communist Party’s 100th anniversary celebrations in July (Xinhua).
Families of the 21 runners who died during an ultramarathon in Gansu province are seeking answers and accountability (The Guardian).
Weekend reads
A moving long read by The Guardian’s Dan Hancox on the quest of families to find answers about the government’s deportation of hundreds of Chinese seamen, who were pivotal to Britain’s war efforts.
A detailed look at China’s information operations, particularly with regards to Taiwan’s 2020 election. The report by DoublethinkLab shows how China launched state-driven online and offline attacks.
Bloomberg wrote about a looming Chinese bond market disaster as ‘bad bank’ Huarong Asset Management is faced with having to repay $6.2billion in notes this year, and what all this might portend for the CCP’s efforts to rein in years of risky borrowing.
The British Chamber of Commerce in China released its ‘British Business in China’ 2021 position paper this week. The paper expressed concern about the effect of data security laws and stressed the need to improve market access for foreign firms.