Anatole Pang: To succeed with China, we must learn to play the underdog once again
In my last piece on this site, I discussed some of the main themes in current Sino-British trade ,and began to look at some remedies needed. In particular, I tackled one great area of complacency: the idea that although Britain's services-focused economic structure was not as strong in the emerging markets as manufacturing powerhouses such as Germany, we would still benefit in the "next cycle", as those economies matured and required services. I pointed out that there are precious few examples of any emerging markets allowing as much foreign presence in services as they do in products - and that this hope was most likely a fallac.
Following on from this, and partly in relation to some of the responses I have had, both to the piece and more generally, I want to tackle the second great area of complacency which I detect in our British mentality: the idea that as long as we keep our own house in order, things will be fine. This school of thought argues in essence that we do not need such a thing as a "China policy", or an "India policy" or anything else. We should remain true to who we are (possibly in conjunction with an exit from Europe), and our patience will be rewarded.
For a start, this way of thinking demonstrates a dangerous parochialism which prevents Britain from taking on the challenges of globalisation head-on. It is instructive to note how far we are from our American cousins for whom "China is an overarching backdrop to almost everything" being discussed on Capitol Hill. Naturally. we do not have their geo-political priorities But, ideally, our own discourse should resemble more closely that description than the sad "black box" which currently exists. We need to talk more at Westminster about China.
Moreover, this attitude does not recognise the realities of our current relative position, or future trajectory. At some point, Britain will have to embrace its position as an underdog rather than a major player, and we have to understand that how we implement and conduct government-to-government trade policy is totally different in each circumstance. The days of corporate imperialism - when Britain could aim to dictate trade with the emerging markets on its own or even equal terms - are long gone. Instead, we must be flexible, and aim to shape ourselves to provide what others need on their terms.
I make no apologies for the unashamendly self-flagellatory tone of all this. However, to me it also offers the best hope for Britain's future. When this mindset is changed, Britain will be well-placed, with its natural creativity and enterprise, to benefit - indeed, it will be better placed than apparently stronger performers of the moment such as Germany who, cocooned in the comfort of their current advantages of quality, will not adapt as quickly.
The mentality of the underdog is key. As a student of history, it has always struck me that our "Imperial Hangover" is not just unhelpful, but also completely misplaced. Britain reached its decadent heights in the late 19th century, to be sure; but its peak of achievement as a nation came well before that - before 1830. Britain at its very best was not the land of mature industrial revolution, but a country of pirates, privateers, entrepreneurs and hooligans who travelled the world - stole, invented, sold and traded.
To return to the subject at hand, what could such individually-tailored policies include? Taking but one example, visas are just such an area. There is simply no reason for applicants from China to be caught up in the general rhetoric of "reducing immigration". Whether you are against immigration or not, it is patently obvious to those who are familiar with the situation that very few Chinese people younger than 35 have any intention of staying in Britain after they finish being a student or their business. Why would they? There is far more opportunity for them in China. The very ignorance of such a dynamic is indicative of the parochial attitude which can infect policy-making even when it does not intend do. But what is policy for China does not have to be policy for India, Bangladesh, Indonesia or Mexico.
Therefore I come back to two principle guidelines in response to these two great complacencies: first, engagement; next, humility.
- Engagement, insofar as the British political establishment must learn to treat China and other emerging markets as distinctive and proactive policy areas, and try to understand them individually. There can be no lazy, catch-all "Emerging Markets policy"; nor a continued Anglocentric mindset which does not allow us the knowledge or flexibility needed for the future.
- Humility, in the sense that we need to relinquish the idea that we are dealing with such economies on "equal terms". Yes, we have great things to sell; but they will decide what they need, and we need to be humble about how to sell ourselves. This is particularly true since foreign governments form such a large component of their consumption compared to the West.
If these two ideas can be digested and internalised, there is still a great future for Britain as an entrepreneurial middle-ranking country which can punch above its weight in influence. Again, it would put us in an advantageous position compared to our peers in Europe. If we do not adjust, however, Britain will continue to slide down the path of irrelevance for the likes of China.This is the best moment for pre-emptive action - and changing things whilst we can still catch up.