UK-China relationship is casualty of Truss-Sunak battle to succeed PM Johnson

LONDON (BLOOMBERG) – The rivals to replace Prime Minister Boris Johnson are locked in a battle to take the toughest line on China, firmly drawing a line under the vaunted golden era for Sino-British ties.

Ms Liz Truss, the front runner in the Conservative leadership race, has branded Chinese tech giants a security risk, called to arm Taiwan and, in private, labelled China’s crackdown in Xinjiang a genocide, according to reports. Mr Rishi Sunak has named China the “biggest long-term threat to Britain”.

“There’s a perception China’s actually more of a hostile-state relationship so you should re-consider all areas of engagement,” said Ms Julia Pamilih, head of research at the China Research Group, set up by Conservative MPs to scrutinise Sino-UK ties.

If Ms Truss or Mr Sunak follow through with a hardline approach when one of them becomes prime minister on Sept 5, they’ll be weakening ties with Britain’s third-biggest trade partner – a major source of cheap imports – just at a time when the cost-of-living crisis is biting the hardest, with inflation soaring into double digits.

They’ll be in line with the US, which is keen for allies to support it in more clearly taking on China over human rights issues.

But amid fears about the involvement of China-backed companies in critical British infrastructure, the new leader will also be closing the investment spigots that their fellow Tories David Cameron and George Osborne sought to open just seven years ago when they were prime minister and chancellor of the exchequer.

In 2015, the two men said Britain would be China’s “best partner in the West,” promising a “golden era” in relations. Now, both Ms Truss and Mr Sunak are apparently calculating that a degree of economic damage is an acceptable price to pay for defending western principles.

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“There will be a cost in terms of diplomatic relations and probably in the Chinese willingness to invest in capital projects here,” said Royal United Services Institute Chairman David Lidington, the de facto deputy to Ms Theresa May when she was prime minister.

Still, “the Chinese will look at actions rather than slogans.” A lot has changed since the David Cameron era amid alleged Chinese human rights abuses against the Uighur ethnic group, suppression of civil liberties in Hong Kong and President Xi Jinping’s failure to condemn Russia for the war in Ukraine. That’s prompted Britain, US and European Union to take a harder stance.

“For too long, politicians in Britain and across the West have rolled out the red carpet and turned a blind eye to China’s nefarious activity and ambitions,” Mr Sunak said last month. “They are stealing our technology and infiltrating our universities. And abroad, they are propping up Putin’s fascist invasion of Ukraine by buying his oil and attempting to bully their neighbours, including Taiwan.”

Hyping the threat

Earlier this year, when Mr Sunak was Chancellor of the Exchequer, Treasury officials drafted a deal to deepen trade links with China, but that initiative was called off and seems unlikely to be resurrected.

Chinese Foreign Ministry spokesman Zhao Lijian has accused Mr Sunak and Ms Truss of “hyping up the so-called China threat” for political one-oneupmanship.

The Chinese government is less concerned about Mr Sunak than Ms Truss – the clear front runner. It’s trying to discern the approach she’d take as prime minister, two people familiar with the matter said on condition of anonymity.

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Ms Truss used her opening pitch as foreign secretary in 2021 to characterise China as a strategic threat contrasting with the “network of liberty” she wanted with allies such as the US and Australia.

That alliance was strengthened with the creation of the Aukus partnership, designed to counter China’s growing clout in the Indo-Pacific.