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Letter from the UK



What has China ever done for us? Historically, paper, gunpowder, fireworks, the compass, printing….. and now, more pertinently, what will China do for us? By the time you read this, Papa Xi and consort Peng will have enjoyed their trip to the UK, following their USA visit earlier in the year. Cultural activities featured a pint in David Cameron’s local pub, a horse drawn carriage ride to a State Banquet hosted by the Queen, and a meeting at the Prince’s School of Traditional Arts with later announcements of new collaborations in film, TV and entertainment. A veritable heritage fest of Ye Olde England.

The main focus for the UK though, is the hoped for three “eyes”; investment, infrastructure and innovation, with the specific aim of making London the global centre for offshore Chinese finance. The UK’s shopping list includes investment in a modern rail network (High Speed 2, passing through the fields close to my own home) and the building of a new generation nuclear power plant at Bradwell on the Thames Estuary using Chinese expertise. Xi’s trip continued with a peek at the new Graphene manufacturing plant in Manchester, centrally located in the much touted Northern Powerhouse, an area in dire need of serious investment to balance runaway economic growth in the London corridor. The day was rounded off by another cultural highlight, a visit to Manchester City’s Football Ground. To prime the pump came the news, just prior to the visit, of China’s growth rate, down to 6.7 percent of GDP, still wayany other country in the West.

Judging by the tone of comment in the UK/USA media however, scepticism reigns. There are contradictory reports on the validity of the Chinese figures. Some argue Beijing is stuck in a rut, with industrial businesses less likely to soak up investment funds, and domestically, observers note a potential rebalancing away from smoke stack industries to the employment of millions more people in an expanded health service and transport systems. Independent analysts LSR (Lombard Street Research) support China’s move to a more balanced economy, but are strong critics of the accuracy of official data. Earlier this year, when the official Chinese growth rate was 7 percent (the government target) LSR was arguing it was in reality below 4 percent. Analysts at Fathom Consulting are even gloomier; they describe a long decline in the Chinese economy with little upturn in sight and suggest a growth rate closer to 3 percent per annum.

Then comes the nervous questioning of Chinese motivations. According to the Pew Centre report on global opinion, the Chinese economic rise is the stuff of nightmares and a looming threat. It will “eventually replace or already has replaced the US as the leading superpower”. The study does not give evidence, nor say whether this is good or bad, or when it may be expected to happen, but the doom mongering tone is unmistakeable. GDP is not the whole story by far. And will China eventually own all the UK financial and power infrastructure, including (gulp) its nuclear capabilities?

So where does the UK stand? Despite the many problems China does seem to be on the right track after decades of wars, revolutions and disasters, either inflicted from outside or from within, and there is something to be learned from this. China’s rise may be feared simply because the West does not understand the country. Foreign media paint a picture of a government crushing political dissidents, of a government being aggressive towards its neighbouring countries. These things are true to an extent, yet they are far from describing the whole picture. If only other countries would be so lucky as to be stuck in a rut like China. Growth rate down to 6.9%? Shocking. What’s the number for Britain again?

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