Britain has played host to two leaders of Asian powerhouses in recent weeks. David Watts considers the prospects for British co-operation with both an established and a less familiar economic partner.
Perhaps no two nations set more store by the way they conduct public business, especially when it comes to foreign diplomacy, than Britain and China.
The promise of a ‘golden age’ between London and Beijing must have been enticing for Chinese diplomats but what they really wanted was the very public—and rarely awarded—ride for President Xi down the Mall with the Queen in her red and gold state coach. There is no higher accolade that the British state can award, especially when it goes alongside an address to parliament. And its impact on the Chinese public watching on their televisions must have been huge, cementing the status of President Xi as the new, great leader of a China recovering its rightful place in the world.
For the Chinese, this signal of the massive increase in Chinese power and influence was without price for them in telling the world that Britain was seeking to redress the humiliations heaped on it by the then world’s hegemon through the sales of opium and the separation from the motherland of Hong Kong. Here we had the sidekick of the world’s most powerful nation stepping aside from American policy and refusing to maintain economic and political pressure on Beijing over its attempts to challenge the current world’s financial superstructure by establishing an Asian loan bank.
Having failed to make political headway with Washington on an array of geopolitical issues, Beijing can now approach through the side-door provided by its junior lieutenant in a way that it could not before.
But for all the economic clout that China’s subsequent deals will bring to Britain, the sinews of Indian life running through the nation will have a lasting effect that will long outlast trade deals, however spectacular.
Take the 40,000 Indian doctors and consultants working in the NHS who make up 20 per cent of the organisation’s total of 200,000. Or Tata Industries, the nation’s principal private manufacturer which employs more than 60,000 people and generates £3 billion of revenues per year.
Closer to the people’s hearts are the extraordinary talents of Indian singing, stage and sports figures such as Sir Ben Kingsley, Freddie Mercury, Dev Patel and Ravi Bopara.
Indian food, sold through 9,500 Indian-style restaurants, is a daily reminder of the sub-continent’s soft power, as well generating a large number of jobs and another £3 billion in business.
But for all the depth and strength of the Anglo-Indian relationship, the sheer necessity of finding fresh prospects for this British economy has meant that new, substantial sources of trade and investment have had to be found.
Yet many in Britain have been shocked at the way in which the government threw caution to the winds and spoke of the UK’s relationship with China as entering a new ‘golden era’, a phrase which would never appear in a diplomat’s draft. Indeed it appears to have emanated from the Treasury, desperate to engage Chinese capital and expertise in the construction of new atomic power stations and other infrastructure.
A ‘golden era’ it certainly is but for which power as yet remains unclear. At first glance the cost of the nuclear construction could have been cheaper and with fewer risks to security, and these are very real. What other nation would outsource its key source of energy to a foreign power at the other side of the world, no matter how golden the present era? Especially at a time when the Chinese are moving into telecommunications on such a big scale and are suspected of widespread hacking into foreign systems.
The other major concern is that, while India is a familiar and important investor into Britain—there would be no prestige manufacturing in the motoring sector without the Indians—China is very much a newcomer, with total Chinese investment at only 0.1 % of total inbound investment to Britain last year. Even a quadrupling of its investment with some £60 billion of projects—some of them over 20 years—will still leave it a relatively small player, albeit in crucial sectors.
Much has yet to be learned about the way that China will deal with moving into a large-scale developed economy with projects that involve the full range of abilities from hard-core construction to high-tech skills. Elsewhere Beijing’s instinct has been to take over all the work—even down to employing their own imported labour to do the heavy excavation. That will not go down well in Britain. London may be kow-towing but at least the nation can still do its own digging.
India is looking more for traffic going in the other direction, with its need for training and skills to bring on its workforce to enhance the ‘Make in India’ campaign, though Delhi will try and relieve the disappointment of the failure to sell the Typhoon fighter-bomber to the Indian Air Force by buying a fresh batch of Hawk jet trainers for the Indian Navy which would be assembled at home.
Just as President Xi’s visit to Britain was marked by the sale of a big batch of Chinese bonds, so the City will now help to sell offshore Indian bonds, which will in turn help with the construction of expanded rail infrastructure and housing.
Another area where the two nations share significant complementary strengths is technology, particularly in life sciences, software and increasingly hardware. India’s pharmaceutical sector is already lively and looking to move into more drug discovery and development. Here Britain’s own strong pharmaceutical sector, featuring such powerhouses as GlaxoSmithKline and AstraZeneca, has an interest in the Indian market for sales and as a location for clinical trials and data outsourcing.
Britain could learn a great deal from India’s frugal approach to innovation, particularly in health, an area where Britain is struggling with its National Health Service costs.
Training and skills are a huge area of scope for further co-operation and sales between the two nations, with Britain’s large-scale offerings in this area and India adding one million young people to its workforce every month for the next decade. If these young people can be trained and added to the workforce, they could be a strength to be reckoned with, powering their nation to the third most dominant economic power in the world by 2030. And that is something that both nations would value far beyond the immediate impact of trade balances following Narendra Modi’s historic visit.