Koo: The UK and China both claim that their relationship has entered a golden era. Why do they say this? What does it mean?Jacques: Hitherto the relationship between the UK and China has not been particularly positive. Until very recently, the UK has consistently emphasized the negative aspects of China, such as human rights and lack of democracy, as much as the positive. The new relationship between the two countries represents a big shift. The UK now views China as overwhelmingly positive. It sees China’s rise as crucial to its own future. It is seeking a comprehensive engagement with China and it perceives this as central to the UK’s economic future.
The Chinese welcome the UK shift; they are pragmatic and don’t allow the past to stand in the way. The fact that Britain has been America’s closest ally for over 60 years makes the new relationship with Britain an even bigger prize.
Koo: You have indicated that the UK approach to China was a recent decision made by the Cameron government. Can you tell us how this came about?
Jacques: In 2012, Cameron had a public meeting with the Dalai Lama. In response, Beijing put the relationship with Britain into the deep freeze. It would appear to have been a salutary experience. When normal relations were resumed, the British moved quickly and boldly to reassure China of their good intent and their desire to develop a different kind of relationship. The British had used their period in the deep freeze wisely: they no longer saw the world in such an overwhelmingly western-centric way, but came to the view that China was crucial to both the UK’s future and that of the world.
Koo: Recently, you gave a talk to the British government about the UK’s pivot to China and what it means for the future. Are there a lot of people in the UK that do not understand the nature and reason for the new relationship with China?
Jacques: It’s no exaggeration to suggest that the UK’s new attitude towards China represents a sea change. It goes against the grain of the bulk of previous conventional wisdom. Many in political circles and in the media are still singing from the old hymn sheet, emphasizing the negative over the positive.
Koo: The UK joined the AIIB against the wishes of the United States. Why? What does this tell us about the UK’s relationship with China and its relationship with the US?
Jacques: The US opposed the formation of the AIIB essentially because it saw the bank as a threat to the existing US global economic order and its institutions like the IMF and the World Bank. The UK has a different view. It saw the AIIB as an institution that could help meet the vast infrastructural needs in Asia. In addition, the UK government saw joining AIIB as a way of demonstrating to China, and the rest of the world, its new embrace of China. I don’t think we should anticipate any fundamental change in Britain’s relationship with the United States except that Britain has now shown a willingness to act independently of the US and even go against its wishes. That is new.
Koo: Did the US make a serious error in not joining the AIIB? Why didn’t it? Should it have done so?
Jacques: Without doubt the US made a serious error. The British decision to join demonstrated this mistake very clearly. After the British made the announcement, 24 other countries, including important European countries like Germany and France, applied to join the AIIB making a total of 57 rather than the previous 22 members. Presently, 30 other nations have applied and are on the wait list to join. That would make almost 90. The US succeeded in isolating itself with only Japan as its friend.
Koo: How do you explain the two different points of view?
Jacques: The US is the global hegemon. The present global order was designed by America and is essentially run by America. It is extremely anxious to preserve its global dominance. It regards China to be a threat to this. The UK is in a very different position; it long ago ceased to be a global hegemon. It therefore has no interest of this kind to defend. Its preoccupation is how to enhance and promote the economic fortunes of the UK. And it sees China as crucial to this.
Koo: According to the US, China has stolen hundreds of billions of dollars of intellectual property, costing the US millions of jobs. To what extent is Britain concerned about the theft of IP by China?
Jacques: Personally, I think these claims are greatly exaggerated. They belong more to the sphere of propaganda than reality. In comparison, the UK has so far been relatively unconcerned about this issue. Certainly it has made nothing like the same kind of fuss.
In this context it should be noted that while the US has been hostile to Huawei, the British attitude has been to encourage Huawei to invest on a large scale in UK, which is exactly what Huawei is doing.
Koo: The Cameron government faces the conundrum of whether or not to remain in the EU, promising to hold a national referendum on June 23. To what extent is this knotty issue influencing the UK’s policy towards China?
Jacques: The present British government believes the UK should remain in the EU. Bear in mind that two key players in the EU, Germany and France, share Britain’s new attitude towards China. China, like the US, strongly supports the UK remaining a member of the EU.
Koo: The US has always believed that other countries should adopt its democratic principles and values. But China comes from a profoundly different history and culture. Will it always be very different? Can the US accept that China will always be different?
Jacques: It will be very difficult for the US to accept that China is, and always will be, profoundly different from the US. The US believes that every country in the world should be like the US. This kind of missionary mentality is part of America’s DNA. But China isn’t and never will. It is impossible. If the US fails to accept this reality, then the future of China-US relations and world peace will be very bleak. But the US can come to a new attitude. Henry Kissinger, for example, has long accepted and argued that, for historical and cultural reasons, China will always be very different.
Koo: Is it inevitable, with the rise of China, that US-China relations will progressively deteriorate and acquire ‘cold war’ characteristics? What does history tell us about rising and declining powers?
Jacques: In my view, the main reason for the recent deterioration in the bilateral relationship is that with China’s continuing rise, the US has come to regard China as a growing threat to its own global preeminence. This does not mean it is inevitable that this process of deterioration will continue, leading to a new cold war and even open conflict. But the US will increasingly need to accept that its relationship with China must be one of parity rather than primacy. It is historically not true that a rising and a declining power inevitably leads to war; a classic exception to Thucydides Trap was the relationship between a rising US and a declining UK after 1945. The UK came to accept that it could not compete with the US and instead chose what we have come to know as the “special relationship.”
Koo: How serious are the present difficulties afflicting the Chinese economy? What are the chances of them getting much worse? What are the prospects for the Chinese economy, short and long term?
Jacques: China is facing a great economic challenge. Since 1978, its economy has been based on the Deng model of rapid economic growth, exports, high levels of investment, and cheap labor. Now this model is no longer sustainable. China is trying to shift to a new kind of economic model based on domestic consumption, a much larger service sector, and much higher productivity of both capital and labor. There are no guarantees that this transition will succeed. There are likely to be many mistakes along the way. It will be bumpy ride. But I have confidence that in the long term China will succeed.
Koo: Does the pivot to China reflect a break in the alliance with the US?
Jacques: The UK’s pivot towards China shows that its attitude regarding China is different from that of the US. This is the most important public disagreement between the two countries since 1956 (the Suez crisis). This does not mean that the intimate relationship between the US and UK is coming to an end. This is extremely unlikely. But it does suggest that the UK is willing to consider its future in a rather more independent way with regard to the US than it has hitherto since 1945.