Thread by @lukedepulford

As the Chancellor @RachelReevesMP touches down in Beijing, two lines are being used:

1️⃣ We need the money
2️⃣ We need China to defeat climate change

I can’t believe how little scrutiny these lines have received.

So, first: is China going to rescue the UK economy? 🧵

Let’s look at the evidence. The UK consistently runs a trade deficit with China (around 30-40 bn). We run a very slight (much smaller) surplus in services. @GovUK figures:


Whereas some other countries did derive major economic benefit from China’s rise, Britain didn’t, not even in the so-called “Golden Era” of 🇨🇳🇬🇧 relations. Despite all the concessions, the pot of gold never materialised. Old but good primer here: carnegieendowment.org/china-financia…

Key point here is that there are risks to accepting Chinese FDI. Eg CIVITAS estimated that between 2010-19 over 80% of Chinese FDI into the UK came from State Owned Enterprises, especially targeting areas of critical infrastructure. Do we think there might be a reason for that?

Even so, did Xi’s 2015 pint with David Cameron bring an attendant bounce in Chinese FDI? No. It’s been declining since 2016. This was due to Xi tightening restrictions on foreign investments, regardless of UK policy at the time.

This is a global trend. Chinese global investment is in decline, as the economy slows. The 🇨🇳 economy faces structural challenges, and is being buoyed up by foreign exports. Expecting this trend to be reversed and an exception made for Britain is negligently naive.

That’s without saying anything about the manifold risks of seeking deeper integration with an increasingly authoritarian country which (to take one example) takes a stance on Taiwan that risks wiping 10% of global GDP off the map.

In summary: the Golden Era economic strategy didn’t work. And now the sh*t is hitting the fan with authoritarian China’s economy, it would be good to know the basis on which the Treasury believes this time will be different + national security compromises are worth “balancing” 😱