UK’s balancing act between powerful friends

David Howell

HERE is a tricky international dilemma. What does a country do when it has two powerful friends with whom it wants — and needs — to have ever closer and better relations, but when unfortunately the two countries concerned dislike and even fear each other intensely? This is precisely the United Kingdom’s position in the case of China and Japan. As the UK looks outside Europe to expand new markets, and new sources of investment, following the Brexit decision to leave the European Union, it becomes increasingly important to be on excellent terms with both these key Asian and global powers with their colossal consumer markets.
But for the UK this means maintaining a delicate and skilled balance to avoid accusations of unduly favouring one source or the other, or letting down friends or similar complaints. In recent weeks Japan has clearly been the favoured one in British minds. This is because the Japanese giant Softbank has arrived with a substantial inward investment bid to purchase a leading British company, ARM Holdings, the world-beating chip manufacturer. This has come at just the right time psychologically when fears had been growing that Brexit would deter foreign inward investment, on which the British economy relies.
To the relief of the new British government, the billions from Japan seem to prove these fears unfounded and that the UK still exerts its powerful attractive charm to world investors. The deal is doubtless also a shrewd and timely one when the pound sterling has been dropping. This has also acted as a strong reminder of the central role Japan has long played over many years in British business, including of course in the revival of its highly successful motor industry, in the economy of South Wales, in electronics, in railway equipment and in many other areas.
But back last year it was a different picture. The UK, it seemed, was going all out to cultivate its Chinese connections, leading the support for a new Chinese development bank, the Asian Infrastructure Investment Bank, inviting Chinese involvement in British railway and infrastructure modernisation and welcoming the Chinese into its revived civil nuclear programme. At that time the British appeared almost to have forgotten that Japan, not China, had long been their best friend in Asia, and that the UK had long been regarded as Japan’s best friend in Europe.
Instead all the talk was of China as the UK’s new “best friend” and partner, with special privileges for Chinese banks and Chinese business visitors, placing them in a more favoured position not just than Japanese travellers to the UK, but also giving them a better deal than visitors even from other key countries such as India — supposedly a close Commonwealth ally. British eyes and hopes, it appeared, were firmly focused on China’s immense plans for covering Central Asia with a maze of new roads, railways and gas pipelines — vast projects in the construction and financing of which the UK was determined to be involved.
No wonder there were alarm signals in other capitals, including Tokyo that the UK might be, so to speak, spending too much time with China at the expense of ties with other old friends. But now the balance has been restored. Japan, or at least Japanese business, has shown that it remains a true ally and, as the saying goes, a friend in need is a friend indeed. Two other factors may have helped balance out a tricky situation. First the Chinese response to the Hague-based Permanent Arbitration Court’s ruling and second, the planned new French-designed nuclear power station in the UK at Hinkley Point C, for which Chinese financial support was so badly needed, looks less and less likely to be built, thanks to spiralling subsidy estimates, untried technology and construction costs.
All in all it could turn out that the dilemma is not so difficult. In these new circumstances no major trading nation, and especially not the UK, can afford for one moment to be anything but very closely linked to both China and to Japan at all levels, from small business and cultural ties up to the handling of major global issues, like climate change, security, anti-terrorism and world health. Best of all would be if one day Japan and China could sink their differences despite the horrific legacies of the 20th century and get on as neighbours. That may look unlikely now but it would be a clear win-win situation all round for global prosperity and peace — in fact for everyone. The writer is a British Conservative politician, journalist and economic consultant.
— Courtesy: The Japan Times

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