May Appears to Abruptly Walk Away From Britain’s Embrace of China

May Appears to Abruptly Walk Away From Britain’s Embrace of China
British Prime Minister Theresa May leaving 10 Downing Street, London, July 20, 2016 (AP photo by Frank Augstein).

It may be the shortest “golden era” on record. Barely nine months after Chinese President Xi Jinping’s extended visit to the United Kingdom seemed to cement a “very special relationship” between London and Beijing, China’s ambassador to the U.K. is warning that relations are now at a “crucial historical juncture.” The issue nominally at hand is the British government’s decision over whether to proceed with the Hinkley Point nuclear power plant, in which China General Nuclear Power Company (CGN) has a stake. But the real question is whether the new British prime minister, Theresa May, intends to walk away from the fulsome embrace of China pursued by her predecessor, David Cameron, and his chancellor, George Osborne.

The timing could not be more delicate. Trade and investment deals in Asia have been trumpeted by the pro-Brexit camp as a principal reason why the U.K. has nothing to fear economically from life outside the European Union. Despite its slowdown, China still has the deepest pockets; is adding the equivalent of an economy the size of Turkey to its GDP every year; and holds out the promise of becoming an essential source of revenue for the City of London, which fears that its access to the EU single market will end up being circumscribed. In one of his first statements after the vote, Osborne indicated that “more effort” in trade relations with China would form a critical element of the British government’s post-Brexit economic strategy. His successor, Philip Hammond, pressed ahead with an “open for business” trip to Beijing a couple of weeks later.

In this context, the decision, announced at the end of July, to hold a review of the Hinkley Point nuclear plant might be seen as inopportune. There were a number of grounds on which the new British government could have chosen to revisit the controversial project, but it signaled that the pre-eminent concern was neither cost nor viability but China’s role in sensitive energy infrastructure. Taken in isolation, a recalibration of the scope of access for Chinese state-owned enterprises might not be expected to have a major impact on Sino-British relations. Few other countries would be comfortable about such an arrangement either.

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