WeeklyWorker

29.10.2015
George Osborne: main architect

Royal pomp and Hollandisation

President Xi’s visit highlights what seems to be a changing strategic orientation of British imperialism, says Eddie Ford

Naturally, the British establishment laid out the reddest of red carpets for Xi Jinping during his October 20-24 visit to the UK. Xi, of course, is president of China, general secretary of the Communist Party of China, chairman of the central military commission and “paramount leader” - quite a job description.

His was the first official state visit from China in a decade and follows on from George Osborne’s high-profile jaunt to Beijing last month. Xi attended lavish banquets at the Guildhall and Buckingham Palace (and was also taken by David Cameron for fish and chips and a pint at a pub near Chequers). Going slightly overboard, the media have talked incessantly about the new “golden era” of cooperation between China and the UK.

Prior to the visit, there was some alarm in official circles that Jeremy Corbyn might rather spoil the show by violating dress code and - perhaps worse - bringing up “contentious issues”: ie, ‘human rights’. Presumably this acts as yet more evidence for his extremist, far-left tendencies - leading to the mischievous headline in The Sunday Telegraph: “Jeremy Corbyn should ‘know how to behave’ when he meets China’s president” (October 18). The article quotes Liu Xiaoming, China’s ambassador to Britain, as saying that Xi was “not here for a debate” on human rights. After all, Liu added, we all know that China and the UK “differ very much” because they are at a “different stage of development” - in his country, “we care more about rights to better life, to better job, to better housing” than all that stuff about democracy. The foreign office had already made clear regarding the visit that ‘human rights’ were “not one of the top priorities” for the government: rather the Tory “prosperity agenda” was “further up the list” of areas on which it was concentrating.1

In the end though, both Xi and the British establishment breathed a collective sigh of relief when Corbyn conformed to sartorial protocol at the royal banquet2 and - just like David Cameron and George Osborne before him - raised the contentious issue in a “private” 30-minute meeting with Xi. Afterwards, a Labour Party spokesperson said the two had “cordial and constructive” discussions on the “history of links between the UK, the Labour Party and China” - particularly the “huge contribution and sacrifice of the Chinese people in the struggle against fascism” during World War II.

William Hague risibly declared in 2011, when he was still foreign secretary, that it was “not in the British character”, or national interest, to have a “foreign policy without a conscience”. What astounding hypocrisy. One easy example will suffice. Who is Britain’s closest Arab ally in the Middle East? No, it is not a trick question - Saudi Arabia, of course. A tyrannical theocracy that will not even allow women to drive and is about to behead and crucify (in that order) Ali Mohammed Baqir al-Nimr, arrested three years ago when he was 17, because - in the words of the court judgement - he “encouraged pro-democracy protests [using] a BlackBerry”. So far we have had a near deafening silence from the British government about this case and many others.

Silk Road

So forget all the guff about human rights. The Xi visit is about one thing only - business. China now represents the UK’s sixth-biggest export market, taking 3.6% of its goods and services. In a joint statement, Cameron and Xi said they were committed to creating a “global, comprehensive strategic partnership for the 21st century” and exploiting to the full China’s ‘one belt, one road’ policy that aims to turn the old Silk Road into a modern trade route across Asia to the Middle East and Europe. Cameron also hailed the “up to £40 billion”-worth of trade and investment deals.

Many such deals are in the pipeline - too many to be listed here. More controversially, we have Hinkley Point C nuclear power station. Left in the lurch two years ago when Centrica pulled out, the £24.5 billion project run by EDF will now be part-funded by the China National Nuclear Corporation and the China General Nuclear Power Group.

Then there is the “pitch book” handed out by Osborne last month in China: a catalogue of £24 billion-worth of British projects desperately seeking foreign investors. Projects for sale include a £200 million orbital road in Leeds, a £325 million slice of the Alderley science park in Cheshire, and a £400 million gas storage site. High Speed 2 was also offered, even though it has not yet got the green light from parliament. The UK’s TV production industry have struck deals worth more than £225 million, including BBC Worldwide’s co-production deal with the Shanghai Media Group to make the sequel to the massive 2007 hit, Earth. Other deals include co-production agreements to make a Chinese version of the popular BBC series, Coast, and Chinese online video company LeTV has picked up the broadcast rights to Poldark - while this year’s Sherlock Christmas special will transfer to cinemas across China.

Beijing’s hopes of the renminbi becoming an international currency received a boost during the trip when China’s central bank made its first ever sale of debt - a yuan-denominated sovereign bond issue - on London’s markets last week, drawing orders of more than 30 billion yuan (£3 billion).3 The move is mutually beneficial, as it assists China in its ambitions for the yuan, whilst consolidating London’s position as a global financial centre. At the same time, the Chicago Mercantile Exchange announced that its London trading centre would offer offshore yuan futures, allowing financiers to trade and hedge on movements in China’s currency (a practice that was previously conducted through Hong Kong only). In the opinion of one senior analyst from Standard Chartered, we are now seeing the “internationalisation of Chinese renminbi growing at a pretty brisk pace” - he even speculated the “end of US dominance”.

Nor can we forget the nonsense about the ‘northern powerhouse’, Osborne’s pet project. Xi has announced the beginning of direct flights from Manchester to Beijing. The Beijing Construction Engineering Group is a 20% joint equity partner in Manchester’s ‘Airport City’, working with former Manchester United stars Gary Neville and Ryan Giggs to build a £200 million scheme including offices, bars, restaurants, apartments and a five-star hotel. Yet like almost everything to do with the amorphous ‘northern powerhouse’, there is a lot of talk but little in the way of action. According to the FT, just £4 million of new cash has actually being pledged as a result of the Xi visit.

Intermediary?

Frankly, you cannot blame anyone for being extremely sceptical about the media hype concerning the new “golden era”.

Then again, having said that, there is something significant going on here - as highlighted by the nuclear deal and, perhaps even more importantly, the fact that the UK government recently broke ranks with its European and US allies and signed up to the Asian Infrastructure Investment Bank. This is a Chinese initiative launched last year and regarded by many as a potential rival to the International Monetary Fund and World Bank.4 That is certainly how the US views it. Hence its displeasure with the British government: it is loudly complaining that the decision - part of Britain’s “constant accommodation” of China - was taken after “no consultation” with the US.

There are various explanations for this shift. One is the fairly straightforward reason that Osborne is clearly looking forward to becoming prime minister and is meanwhile banking on China. This is quite a gamble, as the US is still the dominant world power, economically and - crucially - diplomatically and militarily, and all the signs are that it will remain so for very many years to come. China cannot replace it for the foreseeable future. From the Chinese point of view, its capitalist class and state capitalist bureaucracy is using London (or, rather, the City) as a financial base from which to invest around the world.

Noting this strategic reorientation, a recent article in the Financial Times (October 23) describes it as another example of the “Hollandisation” of Britain - meaning the gradual abandonment of the pursuit of power, as the UK spends less on defence and reduces its role on the international stage - something that increasingly worries the US. Remember, however, that Holland used to be the world hegemon in the 17th century, with its east Asian empire and control over the Cape sea route - it eclipsed Portuguese dominance over the spice trade with the East Indies, and as a result became super-rich. Holland itself underwent a process of rapid industrialisation. Luxury goods were exported to other European markets. But after 1730 it lost its position as world hegemon, with the rise of France and in particular Britain. Meanwhile, capitalists in Holland increasingly turned away from local manufacturing to speculation and overseas investments. Amsterdam became the banking capital of Europe. However, the 1780-84 Anglo-Dutch war saw the country defeated and to all intents and purposes reduced to a British dependency.

Britain has undergone the same sort of process since the late 19th century. From 1945 it was certainly reduced to a US dependency, albeit as a junior partner in the new post-World War II order. Banking long ago eclipsed industry and with the 1986 big bang the City of London became a key, if not the premier, financial centre of global capital - its only rival being New York. The retraction of the UK’s global position can be seen in the steady decline of its armed forces, now a pathetic rump compared with its former glory days. Attempts to meet Nato’s 2% spending target are just smoke-and-mirrors accounting.

Hence the possible change in strategic orientation. Britain seems to be seriously tempted by the prospect of swapping its position as loyal number two to the US for something more of an intermediary between a rising China and US imperialism - obviously existing within the entirely US-dominated world order, but playing the particular role of reaching out to China, the second largest economic power in the world, through the medium of the City.

eddie.ford@weeklyworker.co.uk

Notes

1. Financial Times October 23.

2. Even if his “suit was rather too large and his tie askew”, disapprovingly noted The Daily Telegraph (October 21).

3. The distinction between the terms ‘renminbi’ and ‘yuan’ is similar to that between ‘sterling’ and ‘pound’.

4. https://en.wikipedia.org/wiki/Asian_Infrastructure_Investment_Bank.

Star apologetics

On October 21 the ‘official communist’ Morning Star published an article by Jenny Clegg entitled ‘When Jeremy Corbyn meets Xi Jinping’. In it we are informed that “building a constructive relationship with China is vital for the future of our economy”, requiring “pragmatism as well as idealism”. After all, China is “near to overtaking” the US as the world’s largest economy and will grow at two to three times the US rate in “coming years”.

True, Xi’s crackdown on dissidents is “clearly unpalatable for Labour” - but judgements should be “balanced”. Providing us with a litany of wonders, the article recounts how China has “lifted over 728 million people out of poverty since 1981, contributing over 70% of the millennium development 2015 goal of halving world poverty”. What is more, China “does not drop bombs on other people”. Unlike other nuclear states, China is committed to “no first use” and supports a “nuclear weapons convention” - just like Jeremy. Think of the amazing things we could do together - “Why not open discussion on a Britain-China mutual nuclear weapons non-targeting agreement?”

The article also seeks to vindicate Corbynomics - and left Keynesianism in general - in the policies adopted by the CPC. You see, in 2009 China pumped £600 billion “directly into its economy” - producing “double-digit growth” for the following three years, and so “preventing the world financial crisis and recession from turning into a world depression”. All thanks to China - “If this isn’t an example of ‘people’s QE,’ what is?” As for Corbyn’s much touted plans for a national investment bank, he “might draw on the experience” of the Chinese government - which “controls all the country’s major banks” and has “invested heavily”, especially in “infrastructure to promote growth”.

In fact, why stop there? China’s “state-owned enterprises experimenting in employee share ownership” should provide “exciting opportunities” for Beijing to “exchange ideas” with John McDonnell and his call for “modern alternative public, cooperative, worker-controlled and genuinely mutual forms of ownership”.

A lot of hype, but, as per usual, no mention that China has embraced the market with a vengeance and is now an integral part of the world capitalist system - where state and private capital are inextricably interweaved.