Garvan Walshe is a former national and international security policy adviser to the Conservative Party.

There was a time, under David Cameron’s government, when China was thought to be an essential partner for the UK: so essential that the Chinese were even awarded a contract to build a nuclear power station at Hinkley Point, and Huawei was deemed fit to build the UK’s 5G telecommunications network. Rachel Reeves’s visit to Beijing last week was a faint echo of that policy.

How did a dictatorship, at least nominally Communist, manage to get itself into the position of supplying power and communications infrastructure in one of the world’s leading democracies, one of NATO’s three nuclear powers and a member of the Five Eyes intelligence sharing network?

The UK fell victim to a theory of modernisation that provided cover for greed on both sides (the British would get infrastructure on the cheap; the Chinese would win profits, and experience working in a major Western market). The idea was that as countries developed economically, the middle classes would press for political change and when they did a dictatorial system would open up, leading to opportunities for those that had positioned themselves before the full opening.

The theory drew on European history (in Germany for instance), and it was not wrong to suggest that the middle classes would push for change. What it overestimated was the desire of the authorities to crush them. Modernisation theory described less of a process, and more of a bet. And if the bet came off in South Korea and Chile, it has not in Russia, Turkey, and of course China.

Not for Xi Jinping, who came to power in 2012, the relative opening that China had been experiencing under his predecessor Hu Jintao. Xi swiftly eliminated rivals through corruption investigations, consolidated Party control over the economy, and even humiliated the retired Hu by having him escorted from the National People’s Congress in 2022. Xi snuffed out democracy in Hong Kong and turned Jimmy Lai into a political prisoner.

Alongside modernisation theory, the fiction grew up that Chinese companies were ordinary firms, interested in making money and independent of politics. This was, to put it bluntly, unforgivably naive. Energy and infrastructure companies in Western democracies have to keep an eye on the political winds. To expect Chinese companies, dependent on a dictatorship, to act independently of their political masters lacks credibility, as Jack Ma found out when the regime decided to crack down on his tech business.

Since then, China has pursued increasingly aggressive intimidation of Taiwan and the Philippines, established a network of secret police stations across Europe and ramped up military spending. It has supplied vital technology to Russia’s war effort against Ukraine and helped Moscow evade sanctions. Russia’s deployment of North Korean troops to fight Ukraine couldn’t have happened without Beijing’s blessing.  All this is to say nothing about its domestic human rights record, including the concentration camps used against the Uighurs and its wide network of detention and torture centres used to keep its own population in line.

Fortunately, the UK has extricated itself from dependency on this evil regime for its infrastructure and power needs. But China remains a huge part of the world economy, as well as being the world leader in solar panel and electric-car battery production.

Exactly how big is harder to say. It pays to be cautious about comparing the absolute size of economies with very different structures — market exchange rates make China’s production appear too small, because costs are lower — but inflating its economy by using purchasing power parity measures to account for these lower living costs adjusts too much. Many goods and services, including ones that are inputs for areas in which direct comparison is relevant, like military production, are traded at world prices, and thus expensive for the Chinese.

Equally, comparisons about the distance of railway lines China has laid down or power stations China has built compared to those in Western countries risk being fatuous if not used with care. China is still in the middle of industrial development, building railways and power station where none existed before. Advanced economies need only to upgrade them. China’s pharmaceutical industry was unable to produce a good Covid vaccine.

Nonetheless there are areas, particularly in electronics, where China has great industrial capability, and the country excels at producing slightly out of date technology at low prices because of the immense scale at which it can organise manufacturing.  This is the secret to its success in the solar panel and car-battery markets. Europe and the US invested in more advanced and cleaner battery technology, but China’s cells, and therefore the cars they are installed in, are considerably cheaper. (This is the same tradeoff as with Huawei 5G systems: cheaper but inferior to Nokia and Erikkson). This scale however is necessary if the world economy is to decarbonise at an acceptable cost.  This is an area in which UK and Chinese interests are aligned.

The policy challenge comes from the Trump Administration, which, correctly, appears to see China as a challenge to US dominance of the international system and wants its allies, including the UK to take its side in economic confrontation.  Such confrontation will come at a cost to the UK (as it will to the US: the Trump Administration’s plans for tariffs will mainly just increase prices for American consumers and industry), but if London has to choose between Washington and Beijing, the risible size of the benefit attributed to Reeves’s Beijing visit should be a useful guide. £600m comes out at less than a tenner a week per person.  

The UK will need to keep a number of concessions up its sleeve that it can throw Trump when the time comes. Some will involve moral anguish or strategic compromise.

This one doesn’t.

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