Government must publish a clear and coherent strategy to address the UK’s trade and security relationship with China says Lords Committee

The report, entitled The UK and China's security and trade relationship: A strategic void, regrets the current ambiguity of the Government’s approach to China. It concludes that a coherent strategy is essential to show how the Government intends to balance its ambition for increased economic engagement with China with the need to protect the UK’s wider interests and values, including security issues, human rights, and labour protection.

Lack of UK strategy on China
The Committee concludes that there is no clear sense of what the current Government’s strategy towards China is, or what values and interests it is trying to uphold in the UK-China relationship. It finds that attempts by the three most recent governments to address security, sovereignty, human rights issues and economic aspects of the UK-China relationship has resulted in an inconsistent approach littered with ambiguities and no definitive strategy. The Committee finds that the Government’s recently published Integrated Review defines China as both an important partner and a systemic competitor, but gives no indication of any robust strategy to reconcile these conflicting roles. The Committee calls on the Government to produce a single, coherent China strategy, as recommended by the Foreign Affairs Committee in April 2019, and a plan for how it will execute that strategy. The strategy should seek to resolve the ambiguities in the current Government's China policy.

Tensions over Taiwan
The Committee welcomes the attention to the Indo-Pacific region highlighted in the Integrated Review, but was startled to discover Taiwan was not mentioned in the Integrated Review. It finds that tensions over the status and future of Taiwan could have severe consequences for the US-China relationship that could reverberate here in the UK and concludes that the Government must reflect the importance of Taiwan in any China strategy and rectify its omission from the Integrated Review. The Government must make maximum use of its diplomatic and soft power in the region to minimise the risk of conflict.

Security challenges
Crucial to the success of any relationship with China will be defining exactly what role the country plays in its relationship with the UK. The Integrated Review is currently ambiguous on this, especially with the use of the phrase “systemic competitor”. The Committee concludes that this ambiguity creates uncertainty as to the extent to which China can be considered a security threat in some areas. It calls on the Government to provide more clarity on these points.

Balancing human rights and economic engagement
The Committee acknowledges the National Security and Investment Act 2021 as an important first step in ensuring the security of investments in the UK and calls on the Government to publish a detailed plan for its implementation to provide added confidence to overseas investors. The Committee observes that a pragmatic approach must be adopted when tackling some of the more challenging aspects of the economic and trade relationship with China. It concludes that the desire for increased economic co-operation cannot lead to any compromise of the UK’s values, including human rights and labour protection. It is imperative that any strategy includes details on how decisions will be made when economic considerations clash with values. The Government cannot afford to sit on the fence over these issues and must commit fully to this.

The Committee highlights other areas in its report including:

• The need for UK cooperation with other nations to form a group with the necessary economic, political and scientific power to counter China’s global reach and ability to shape the future international order to suit its own interests above all others. The Committee feels that the Government should support initial steps the US has taken in this area.
• It will be vital to co-operate with China on global challenges, including climate change and global public health. The UK is a world leader in climate change and decarbonisation, and also has a leadership role at COP26 and must use this position to encourage China to engage with the global community on these issues. The Committee concludes that any China strategy must explain how the Government will cooperate with China to tackle climate change.
• A successful economic relationship with China will remain important, and the UK should avoid adopting a “trade war” approach in its dealings with China. However, there may be periods of stress if there are clashes over upholding the UK’s values, and the Committee concludes that Government must ensure the UK has sufficient resilience in its infrastructure and economy to weather these periods, including reducing the UK’s dependency on China in critical supply chains.
• Official Development Assistance (ODA) is a vital component of the UK’s soft power and any cuts may create a void in the Indo-Pacific region which will be exploited by China and other competitors. This is of particular concern in light of the crisis in Afghanistan, which is highly dependent on international aid. The Committee reiterates its call on the Government to restore the ODA to 0.7% GNI (gross national income) before significant damage is done to the UK's capabilities in this region and more widely.

Commenting on the report, Baroness Anelay of St Johns, Chair of the International Relations and Defence Committee said:

“In an atmosphere of growing tensions between the UK and China, the distinct lack of any clear position from the Government on China has become increasingly concerning. Throughout this inquiry we heard evidence of a “have its cake and eat it” approach in the Government’s relationship with China and the evidence we heard from Ministers did nothing to convince us this was not the case.

“Previous Parliamentary calls for the Government to produce a China strategy have so far been ignored. Although the Government maintains that it has made its approach to China clear in public statements and in the Integrated Review, we do not consider these vague statements, and those made to us during this inquiry, as constituting a strategy.

“We therefore repeat the call and urge the Government to produce a single, coherent China strategy and a plan for how it will execute that strategy. The strategy should seek to resolve the ambiguities in the current Government's China policy and balance economic relations and trade concerns with upholding values including human rights and labour protection, both of which must take centre stage in formulating the strategy. The Government must heed our call and follow the recommendations made in this report to formulate the priorities and focus for a definitive China strategy, and rectify the current void created by its absence.”