British Prime Minister David Cameron and Chinese President Xi Jinping
Photograph by Getty Images
By Minxin Pei
October 21, 2015

If you ever bother to read Chinese history textbooks, you would find the United Kingdom, along with Japan, depicted as the most vile foreign devils that committed unspeakable crimes against China during its “century of humiliation” (roughly between the Opium War of 1839-42 and the Communist victory in 1949).

Today, the erstwhile foreign devil appears to be atoning for its sins. In welcoming Chinese President Xi Jinping to London with the most lavish display of pomp and pageantry in recent memory, the government of Prime Minister David Cameron is eager to show its honored guest that it will not let the past stand in the way of the future. A “golden era” in Anglo-Chinese relations, according to London and Beijing, has just begun.

While we do not yet know what this golden era may bring, it is now abundantly clear what it has already cost the U.K.

Cameron—and his Chancellor of the Exchequer George Osborne, who is now apparently in charge of the U.K.’s China policy—has already damaged the U.K.’s special relationship with the United States, China’s arch strategic rival. To be sure, the erosion of the historical bonds between Washington and London began earlier when the British government rushed to join the China-led Asian Infrastructure Investment Bank (AIIB) last spring, in spite of Washington’s opposition. Doubling down on the bet, George Osborne led a large trade mission to China in late September and even took time to tour Xinjiang, a northwestern province riven by ethnic conflict, all without saying a word about human rights conditions in China.

Now, with its over-the-top display of friendship, London may have crossed an invisible line with Washington and the rest of Europe. If Cameron and Osborne defy the skeptics and succeed in luring massive Chinese investments, it is reasonable to assume that London will be even more beholden to Chinese influence in the future, making itself a less reliable ally of the U.S. To the extent that China’s master strategy with Europe has always been, and will remain, one of divide and conquer, luring the U.K. into the Chinese commercial orbit can only mean a less unified Europe and greater distrust and rivalry between London and the rest of the continent.

Prime Minister Cameron and his colleagues will most probably be disappointed at the pay-offs from their efforts to court China. Even though the hype surrounding Xi’s visit asserts that China may bring tens of billions of pounds worth of contracts and investments, the economic reality of Anglo-Chinese ties is far less rosy. China is the sixth largest export market for the U.K. (which made £14 billion from goods and services sold to China in 2014), behind the U.S., Germany, the Netherlands, France, and Ireland. In the same year, Chinese exports to the U.K. exceeded £36 billion. Based on those figures, China appears to need the U.K. more than the other way around.

Aside from its desire to attract Chinese investments, Cameron’s government hopes to capitalize on London’s status as a premium global financial center in persuading Beijing to give it preferential treatment in offshore renminbi transactions. While this is likely to happen in the near future, for no other reason than China’s self-interest in making its currency a more popular form of payment and investment in international commerce, the long-term payoff from courting China’s renminbi business is doubtful at best.

Beijing has an ambitious goal of building its own center of global finance in Shanghai. Right now, China lacks the ability to do that, but as Beijing’s record in other industries demonstrates, the moment it is up to such a task, it will push aside its Western partners and not allow, to borrow a Chinese proverb, “fertilized water to flow into other people’s fields.” Cameron and Osborne perhaps should consult senior executives from Western multinationals who have helped China in the past but have recently been burned by Chinese protectionist policies.

In any case, London’s timing in trying to pry open Beijing’s wallet might be off. As the Chinese economy continues to struggle under heavy debt, anemic demand, and an oversupply of zombie firms, Beijing’s resources are already stretched thin. With capital fleeing China at a record pace ($500 billion this year alone, according to a recent estimate by the U.S. Treasury), the Chinese government might be hard-pressed to fulfill its pledges of funding big-ticket items overseas, including some of those announced during the Xi visit.

It would be interesting to speculate how future Chinese history textbooks will record Xi’s visit. One can easily imagine a triumphant passage portraying the one-time opium-peddlers as contrite yet cynical seekers of favors from a rejuvenated Middle Kingdom.

Minxin Pei is the Tom and Margot Pritzker ’72 Professor of Government at Claremont McKenna College and a nonresident senior fellow of the German Marshall Fund of the United States

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