United Kingdom - China Policy

An "interference alert" from MI5 counter-intelligence and counter-terrorism service was circulated to MPs on 13 January 2022, warning them that British-resident Chinese national Christine Ching Kui Lee was funnelling funds from mainland China and Hong Kong to British MPs and candidates. It claimed she was acting on behalf of the ruling Chinese Communist Party (CCP) and the United Front Work Department (UFWD). She has previously been named as a chief legal advisor to Beijing's embassy in London. Lee is "engaged in political interference activities on behalf of the Chinese Communist Party, engaging with Members here at Parliament and associated political entities," MI5 said.

House of Commons speaker Sir Lindsay Hoyle said the lawyer had acted as an intermediary for a bid to influence both serving members and Parliamentary candidates, assuring that such channels would be cut off. "I should highlight the fact that Lee has facilitated financial donations to serving and aspiring Parliamentarians on behalf of foreign nationals based in Hong Kong and China," he told MPs. "This facilitation was done covertly to mask the origins of the payments," Hoyle alleged. "This is clearly unacceptable behaviour and steps are being taken to ensure it ceases."

British Foreign Secretary Dominic Raab said the government plans to increase Britain's involvement in the Indo-Pacific region. As part of that plan, it will deploy aircraft carrier HMS Queen Elizabeth to the region. Raab spoke to NHK on 17 March 2021, saying the move "is sending a signal to all of our friends in particular our closest allies, including Japan, that we are there as a force for good, a force for stability and to uphold the international rules-based system." Regarding China, he said, "We need to be very clear and firm" over issues such as human rights in the Xinjiang Uygur Autonomous Region and Hong Kong. But Raab said Britain wants a "positive, constructive relationship" with China, not an "aggressive approach." He added that Japan, the UK and many other countries "need to work even harder" to defend the principles underpinning the international system.

Britain and China have a long and complex relationship beginning in the Qing Dynasty. Relations from the First Opium War in 1839 onwards are central to the narrative of national humiliation which remains a promiment theme of Chinese self-understanding, particularly in recent decades as China’s economic growth has seen the return of national self-confidence. The negotiations over the reversion of Hong Kong to Chinese sovereignty from 1980 to 1997 were often fractious and, in the final years, contentious. Relations since then have been volatile, with steep highs and lows. Although state visits have been steady, investment between the two rising incrementally, people-to-people contact sound and political links on the whole regular and expanding.

British economic interests in China were considerable and varied, and the potential market in China for foreign imports held a powerful attraction for Britain. Britain had made loans to China to support General Yuan Shih-k'ai against Sun Yat-sen's nationalists. A system of treaties enabled British officials to collect revenue for this purpose. The China Consortium, a banking alliance between Britain, USA, France and Japan, was formed in 1920 to oversee political loans to China.

British traders and financiers operated in enclaves around major ports - notably at Shanghai, Hong Kong, Canton and upstream on the Yangtze at Tientsin - which enabled the control of trade and access to potential markets in the interior. Extraterritoriality enabled the British to work outside the Chinese fiscal system. Some of these arrangements were formalised at the 1922 Washington Conference, which, conditional upon reform, provided for the return of sovereign rights to China.

After the death of General Yuan Shih-k'ai in 1916, China underwent a process of political disintegration as warlords took control of different regions. China began to default on various loans held under the treaty system and the tariff collection system collapsed. The British feared nationalists might seize foreign enclaves and prepared to defend them. By then, Chiang Kai-shek's Kuomintang Nationalist government was about to begin the reconstruction of China. Austen Chamberlain's memorandum in 1926 acknowledged China's grievances, and led to a more conciliatory period. Concessions followed (most importantly the return of tariff autonomy in 1930) but the British remained committed to maintaining extraterritoriality.

The UK was the first major Western country to recognise the PRC in 1950. In 1972, China and the UK agreed to establish full diplomatic ties with the exchange of Ambassadors, signalling their commitment to a strong and constructive bilateral relationship. Over the next 45 years, the UK-China relationship grew from strength to strength. The deep and broad links between the two countries range from trade and investment to education and the arts, science and innovation, sports and tourism.

In that time the UK became one of the most open economies in the world and now receives more Chinese investment than any other major European country. UK exports to China grew 63% from 2010 to 2015 and London has become a leading hub of Chinese financial activity at the heart of RMB internationalisation. The UK also established the first Renminbi sovereign bond outside China and is home to the second largest RMB clearing centre after Hong Kong.

The UK and China work together on common development objectives such as helping poor countries address pandemics, recovery following natural disasters and building stronger economies in Africa. Chinese policies are enormously significant for our global agenda: addressing the need for economic, financial and institutional reform through mechanisms such as the G20, managing global pressure on resources, promoting lower carbon growth and sustainable development, achieving the Millennium Development Goals (MDGs), and reducing conflict and proliferation of Weapons of Mass Destruction.

Chinese markets and investments are increasingly important for UK business. UK exports to China have tripled since 2008, growing from £7.6 billion to £23.1 billion in 2018. In 2018, UK-China trade reached a record of £68.5 billion, making China the UK’s fifth-largest trading partner. More than 10,000 UK businesses now sell goods and services to China.

China was the UK's second largest trading partner and fourth largest investment destination outside the EU. The UK was China's third largest trading partner and second largest source of actual investment within the EU. Bilateral trade in goods continued to grow. Direct investment by Chinese companies in the UK grew rapidly.

Chinese visitors to the UK have doubled in ten years while UK visits to China are up by more than a third. About 250,000 Chinese tourists visit the UK each year, drawn by British cultural icons such as Shakespeare and Sherlock Holmes, while the 170,000 Chinese students studying in British world-leading universities constitute the largest group of international students in the UK.

Xi Jinping arrived in London on the evening of 19 October 2015, starting the first state visit to the UK paid by a Chinese President in 10 years. At noon of October 20, Queen Elizabethheld a grand welcoming ceremony for President Xi Jinping at Horse Guards Parade in London. In the afternoon, Xi Jinping delivered a speech at the UK Parliament, stressing that China and the UK should intensify exchanges and mutual learning, boost mutual understanding, support and friendship between the two peoples and thus promote bilateral cooperation to a new high. Xi Jinping held talks with Prime Minister David Cameron of the UK at the Prime Minister's Office in Downing Street of London.

The tenth Economic and Financial Dialogue (EFD) between the UK and China will be held on 17 June 2019 in London. Over the past ten years, EFDs secured billions of pounds worth of commercial deals for UK companies, boosting investment and jobs. They have also established the UK as the leading financial services partner for China with, for example, an agreement to pursue the London-Shanghai Stock Connect, expanding market access for UK financial services firms, and establishing London as a leading global centre for RMB trading. UK financial services exports to China were worth £332 million alone.

London handed the economically vibrant Hong Kong back to China in 1997 on condition that Beijing preserved its judicial and legislative autonomy for 50 years. But Britain and most other Western powers concluded the new 2020 security law seriously undercut that commitment. On June 8, 2020, State Councilor and Foreign Minister Wang Yi noted Hong Kong affairs are purely China's internal affairs and brook no outside interference. Maintaining national security in Hong Kong concerns China's core interests, thereby a major issue of principle that must be adhered to. Dominic Raab expressed, the UK side is committed to developing a strong bilateral relationship with China.

After China's imposition of a national security law on Hong Kong, the UK confirmed 01 July 2020 that new arrangements will be put in place for British Nationals (Overseas). The unprecedented extension of visa rights follows increasing restrictions on the rights and freedoms of the people of Hong Kong by the Chinese Government in breach of the Sino-British Joint Declaration. The new immigration rules will allow BN(O) citizens the right to live and work in the UK for longer and give a path to full British citizenship. This decision came on the 23rd anniversary of Hong Kong’s handover and fulfils PM’s promise to ‘uphold our profound ties of history and friendship with the people of Hong Kong’.

On 01 July 2020 Foreign Secretary Dominic Raab gave a statement to the House of Commons: " the enactment of this legislation, imposed by the authorities in Beijing on the people of Hong Kong, constitutes a clear and serious breach of the Joint Declaration.... the legislation violates the high degree of autonomy of executive and legislative powers and independent judicial authority, provided for in paragraph 3 of the Joint Declaration.... China has breached its international obligations to the United Kingdom under the Joint Declaration..." Britain’s offer extended to the 2.9 million of Hong Kong’s 7.5 million residents who either have British National Overseas (BNO) passports or are eligible for one. China could try to deny eligible Hong Kongers the right to leave or reassert its claim of legal jurisdiction over the migration process. Raab conceded “that there would be little that we could do to coercively force” China to allow Hong Kongers to leave.

The Chinese embassy in London issued a statement stressing that "all Chinese compatriots living in Hong Kong are Chinese nationals." The statement continued "If the British side makes unilateral changes to the relevant practice, it will breach its own position and pledges as well as international law and basic norms governing international relations. We firmly oppose this and reserve the right to take corresponding measures."

"We stand with the people of Hong Kong," junior minister Simon Clarke told broadcaster Sky News. "The flame of freedom is very precious and we made guarantees to those people when we left Hong Kong and so we will do whatever is required, that is within our power, to make sure that this is upheld."

China's Ministry of Foreign Affairs said 23 July 2020 that China is considering not recognizing British National (Overseas) passports as a viable travel document after the UK released more information on the new Hong Kong BNO visa that allows their holders to move to the country for residency. The spokesperson of the Chinese Embassy in the UK said "In an MOU exchanged between China and the UK, the UK has explicitly pledged that BNO passport holders who are Chinese citizens residing in Hong Kong shall not have the right of abode in the UK." The spokesperson noted that the Chinese side urges the UK side to recognize the fact that Hong Kong is part of China, have a right and objective understanding on the national security law for the Hong Kong Special Administrative Region, immediately correct its mistakes and stop interfering in Hong Kong affairs, which are China's internal affairs, in any form. Such interference will be self-defeating, said the embassy.

On 14 July 2020 Britain approved the costly phased removal of Chinese telecoms giant Huawei from its 5G network despite warnings of retaliation from Beijing. The decision gave British telecoms operators until 2027 to remove Huawei equipment already in Britain's 5G network. The operators must stop buying 5G equipment from Huawei by the end of the year, delaying the rollout of the network. Digital Minister Oliver Dowden's announcement on Tuesday followed a meeting chaired by Prime Minister Boris Johnson of his cabinet and National Security Council. The policy reversal handed a major victory to US President Donald Trump's administration in its geopolitical and trade battle with China. But it threatens to further damage Britain's relations with the Asian power and carry a big cost for UK mobile providers that had relied on Huawei equipment for nearly 20 years.

The UK is China's largest investment destination in Europe. If some Chinese companies, especially state-owned enterprises, start to pull back investments and sell assets in the UK, this could cause more Chinese companies and even other Asian countries' businesses to reconsider their plans to invest in the UK. China's economy has gained significant strength and the UK's available options are fewer than China's in a showdown over not just technology but also the Hong Kong issue.

Hu Zhirong, a director of the Chinese People’s Association for Friendship with Foreign Countries (CPAFFC), gained unprecedented access to the U.K. establishment via his friendship with Li Xuelin, also known as Xuelin Bates, a supporter of David Cameron and the wife of Lord Bates. The CPAFFC has been identified by Australian academic Clive Hamilton, an expert on Chinese influence operations, and co-author Mareike Ohlberg, as an organization set up to advance the agenda of the ruling party's United Front Work Department, which coordinates influence and outreach efforts both overseas and among non-party groups and communities. Hamilton and Ohlberg's new book, Hidden Hand, says China is recruiting "useful idiots" to push the country’s agenda overseas.