Cameron’s insults may come back to haunt him

By Sonny Leong – Chair, Chinese for Labour

Hidden in the news pages last week Cameron warned African states over China’s ‘authoritarian capitalism’, claiming that it is unsustainable in the long term.

The Daily Mail reported:

“In possibly the most critical comments made by a modern British Prime Minister about China’s growing global influence, Cameron admitted the West is increasingly alarmed by Beijing’s leading role in the new ‘scramble for Africa’. On the last day of his tour of Africa, he acknowledged at Nigeria’s Lagos Business School that he was keen to counter the ‘Chinese invasion’ of Africa. He said: ‘I believe the model of authoritarian capitalism [in China] we are seeing will fall short in the long term.”

Trade between Beijing and Africa was worth £70 billion by the turn of this decade. It was worth £4 billion ten years before. Trade deals with more than 40 countries have been signed, including Uganda, Kenya and Algeria. China also provides billions each year in loans to states on the continent, extending their political as well as economic influence.

Foreign aid to Africa has been part of China’s strategy since the end of World War II. Through joint efforts of both sides, cooperation has been developed in ever-expanding fields.

“This is a new strategic partnership. There is no colonial history between Africa and China, so they are well received here. There is no psychological bias against the Chinese.” Tsegab Kebebew, a senior official in Ethiopia’s foreign ministry, told the BBC in Beijing recently.

Africa needs China’s investment and appreciates China’s development of it’s infrastructure. For an outsider like Cameron to make such ill-conceived speeches shows a distinct lack of understanding of China-Africa relations and the changing political weather.

Mark Hendrick, All Party Parliamentary China Group Chairman stated in a recent parliamentary question:

“£1.4 billion-worth of trade deals were signed between China and the UK. After his visit to the UK, Premier Wen went to Germany and signed deals worth £9 billion, which is six and a half times the value of the deals signed with the UK. There were 13 Chinese Ministers in Berlin signing deals with 10 German Ministers. The Economist described the UK visit as a “sideshow” compared with the German visit. What is the Government doing to make sure that the UK does not play second fiddle to the Germans when it comes to economic partnership with China?”

Indeed, with Cameron hurling insults at the Chinese at every opportunity, it is little wonder our trade deals are nothing compared to Germany and France.

Chinese companies must be wondering why they should invest in the UK or buy UK goods and services when its Prime Minister offends them with contemptuous rudeness. Such short sightedness is dangerously harmful to the UK economy and potential growth.

During his visit to Europe, the Chinese premier, Wen Jiabao, repeated the position that China was a long-term investor in Europe. China has increased the purchase of government bonds of some European countries. In addition to acquiring European government debt, China is also using foreign exchange reserves to finance investments by Chinese companies. This helps to promote the country’s multinational corporations, which is the goal of the “going global” policy, the linchpin of China’s growth strategy.

According to consultants Dealogic, Chinese firms have acquired stakes in 33 UK companies since 2008 – acquisitions totalling almost £12bn. In the period 2010-2011, Chinese companies invested in 59 projects, creating 1,471 jobs according to UK Trade and Investment. China was the seventh-largest investor in the UK, one position lower than the previous year.

The Chinese Ambassador in the UK, Ambassador Liu Xiaoming in a statement earlier this year said that the negative media coverage of Chinese investment “serves no point and does not help expand cooperation between the two countries”. He also remarked:

“We do, from time to time, come across some difficulties and problems. I think a lot of things need to be done by the British side, in terms of further improving the investment environment for Chinese businesses.”

For the United Kingdom to benefit from China’s rise would require an in-depth understanding of China’s aims and political constraints. For starters, whoever is advising the Prime Minister on the relationship with China should be given the boot, otherwise Cameron’s desire to double bilateral trade to 100 billion US Dollars by 2015 will remain nothing but a dream.