Commentary on Political Economy

Tuesday, 7 July 2020

Ditch Huawei and trade will suffer, warns China

Ambassador says Britain will bear consequences if it makes an enemy of Beijing

American sanctions on Huawei might make it impossible for the company to play a role in Britain’s 5G network
American sanctions on Huawei might make it impossible for the company to play a role in Britain’s 5G network
Britain will “have to bear the consequences” of making an enemy of China, the country’s ambassador has said, warning that trade would suffer if the government removed Huawei from the 5G network.
Liu Xiaoming ramped up the pressure on Boris Johnson yesterday as the prime minister prepared to announce that new equipment supplied by the Chinese telecoms company would be barred from next year as a result of US sanctions. Mr Liu said that Chinese companies, which invested $8.3 billion in Britain last year, were “all watching”.
The ambassador added: “There’s also an element of trust — how could people trust you? I do hope the British government will make the decision in the best interests, not only in China’s interests, not only in the interests of UK-China co-operation, but also in the interests of the UK itself.”
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Mr Liu was speaking shortly after Oliver Dowden, the culture secretary, warned that American sanctions on Huawei might make it impossible for the company to play a role in Britain’s 5G network. Senior government sources said it was likely to be confirmed next week that telecoms companies would be barred from installing new Huawei equipment next year.
In other developments:
• Christopher Steele, the former spy behind the dossier alleging links between President Trump and Russia, contributed to a new report that claimed China had sought to “capture” members of Britain’s elite, enlisting them to further its aims. It also alleged that fake radio programmes had been set up to boost positive opinions of Huawei.
• Rebel Tories, most prominently Sir Iain Duncan Smith, voiced concerns over Britain’s exposure to China in the nuclear power industry.
• Dominic Raab, the foreign secretary, was urged to use new powers to sanction Hong Kong’s chief executive, Carrie Lam, whose family have British National (Overseas) passports, over human rights abuses.
The ambassador hit out yesterday at the suggestion that British infrastructure needed protection from “hostile state actors”. He said: “We want to be your friend, we want to be your partner, but if you want to make China a hostile country you have to bear the consequences.” It was Britain that had sought a “golden era” for relations with China, the ambassador said, in a reference to David Cameron’s charm offensive, but “you cannot have a golden era if you treat China as an enemy”.
Mr Liu also accused Britain of “gross interference in China’s internal affairs” by offering five-year visas and a route to citizenship for British National Overseas passport holders in Hong Kong after Beijing imposed a draconian new security law on the territory. He refused to spell out how Beijing would retaliate after the foreign ministry said that it reserved “the right to take corresponding measures” against Britain.
Events in Hong Kong and Xijiang, where the Uighur minority has been targeted for detention and forced sterilisation, have placed the government under pressure from MPs to take a harder line with Beijing.
Attention was moving last night from telecoms to nuclear power after MPs warned that the sector was the “new Huawei”. China General Nuclear Power Group, a state-owned Chinese energy company, has invested more than £3.8 billion in Britain, primarily in the Hinkley Point C plant being built in Somerset. The company is also seeking approval to construct its own design of nuclear reactor at Bradwell in Essex.
Other Chinese groups have interests elsewhere in Britain’s energy system, including a battery storage scheme.
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Tory MPs also demanded to know whether ministers planned to sanction Chinese officials for human rights abuses after the foreign secretary announced a post-Brexit sanctions regime imposing travel bans and asset freezes on Saudi, Russian and Burmese individuals. Sir Iain called for the inclusion of Ms Lam, whose family have British National Overseas passports.
Downing Street suggested that Britain could follow Canada in suspending its extradition treaty with Hong Kong because of the national security law.

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