UK economy can’t afford rejection of Chinese firms over HK

By Cui Hongjian Source: Global Times Published: 2020/7/8 21:39:52

Illustration: Tang Tengfei/GT



Having originally said it would give Huawei a "limited role" in the construction of its 5G network, the UK is now looking to phase the Chinese telecoms giant out of its plans entirely, giving rise to concerns that will it choose to turn against more Chinese companies for unknown political reasons.

In the UK government's internal discussions on China-related topics, Hong Kong is almost definitely a key issue. Considering the timing of the UK's attitude reversal on Huawei, its negative view of China's national security legislation for the Hong Kong Special Administrative Region (HKSAR) was likely an important deciding factor.

However, the UK couldn't cite Hong Kong as a reason to ban the Chinese tech giant from its 5G network, so the Johnson government had to instead reference the US' groundless security accusation. 

If the UK had cited the Hong Kong issue as an excuse to ban Huawei, it would have put the UK in an awkward position and given the international community the impression that it wantonly uses market tools to pursue political aims. It would have been extremely harmful for the UK's business environment.

Regarding Huawei, the UK has been trying to hold off pressure from the US through technical means, but the Hong Kong issue has caused the country's position on China - and Huawei - to fundamentally change.

The UK is not expected to expand its Huawei shift to a wider range of Chinese companies and investments as it will be unable to find more excuses to restrict Chinese players, regardless of its complex sentiment due to the Hong Kong issue.

Such a move is particularly unlikely as the UK is currently facing the dual threat of significant Brexit uncertainty and the COVID-19 pandemic. Its economy has suffered its worst quarterly recession since 1979 due to shocks from the pandemic, with its GDP dropping 2.2 percent in the first three months of the year. The country has less than six months left before its transitional UK-EU trade agreement expires, and a new trade deal with the EU remains in the making. 

Against this backdrop, the UK's top priorities are maintaining an appealing investment environment and continuing to attract foreign investment. The UK economy can ill afford British indulgence in a colonial-era fantasy, yet it has arrogantly rejected Chinese investments that are badly needed.

If Chinese companies continue to be optimistic about the prospects of the UK market, they will continue their investment plans. Although China-UK relations are now experiencing setbacks, the UK will not become a chasm to avoid.

But Chinese companies should be wary that the UK will continue strengthening its scrutiny of Chinese investments and may even set implicit barriers. Under this trend, the UK may introduce more rules. The duration of investment reviews may be extended, and some industries in strategic areas may set investment ceilings.


The author is director of the Department of European Studies, China Institute of International Studies. [email protected]

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