UK warned to become less 'economically dependent' on China and to put long-term interests first

Wed 28 Jul 2021
Posted by: William Barns-Graham
Trade News

uk china

UK businesses have been told to stop “selling their soul” and instead swap short-term profit for national interest by reducing their reliance on Chinese investment and trade.

The strong comments were made yesterday (27 July) at a speech given to the Policy Exchange think tank by Tony Abbott, the former Australian prime minister who is now a member of the Department for International Trade’s Board of Trade.

Greed

“There has been a degree of naivety in our businesses, in our other institutions, and frankly there has been a degree of greed,” Abbot said.

“We need people with the character to say no, to put the long-term interests of the country ahead of what might be their short-term economic self-interest”.

Dependency

In his talk, Abbott added Britain needs to stop being so “economically dependent” on Beijing and called on the government to specifically block the sale of technology companies to China, the Telegraph reports.

He also argued supply chains needed reorienting away from the Asian superpower.

According to Politico he said, “the Beijing government sees trade as a strategic weapon to be turned on and off, like a tap."

He added that China was now “asserting itself, aggressively in what is, at best, a cold peace, and more likely a new Cold War.”

Abbott called for both the UK and Australia to conduct national supply chain audits and use government procurement to “keep a sufficiently sophisticated manufacturing base to produce the essential goods”.

Careful

Although he stopped short of suggesting UK companies should refuse to trade with China completely, he said firms needed to be “much more careful" about becoming economically dependent on China and assess where projects have "far more long-term value for them than us".

He added: “I'm not advocating a retreat from freer trade, just the importance of distinguishing between countries that really are open for business and those where business is more politics by other means."

Newport Wafer Fab

Prime Minister Boris Johnson recently asked national security adviser Sir Stephen Lovegrove to examine the purchase of Welsh microchip manufacturer Newport Wafer Fab by Chinese-owned Nexperia for a reported £63 million, with some MPs calling on ministers to urgently intervene.

When asked to comment on Abbott’s remarks, International Trade Secretary Liz Truss said: “I believe that there are currently practices going on, particularly in global trade, that need to be challenged."

Last July, China’s ambassador in London warned it would not be in the “UK’s economic interests to alienate China”, even though tensions between the two countries had escalated.