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Author: Alan Shipman

Xi who must be obeyed

Updated Tuesday, 29th October 2013

The giant pandas are a plus – but China’s main appeal to western leaders is its ability to lead the giant projects their own companies won’t invest in, argues Alan Shipman.

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A cartoon shows China-as-a-Panda offering cheap labour - at a price China has always beguiled western visitors, but it was used to be those on the political left who were most susceptible to its revolutionary vision. French intellectuals from the film-maker Godard to the philosopher Sartre, seeking an alternative socialist icon to the disgraced Joseph Stalin, formed a rose-tinted view of Chairman Mao that often shielded them from the brutal reality.  

Similar misperceptions took root in Britain, where even the otherwise astute economist Joan Robinson returned from her 1960s trips with an embarrassingly sympathetic view of the already-disastrous Cultural Revolution. Fifty years on, her intellectual successors are up in arms about the treatment of one of Beijing's own top economists, whose sacking is a reminder that – even with Mao and his Red Guards long gone – the country has little respect for free speech or human rights.

But now an icon of the political right, George Osborne, has returned from China lauding its political and economic progress, and urging the UK to copy it . His motivation – matching the leftist visitors' of an earlier era – is that China had discovered an economic model that redeems even the sorest political repression. China has gulags, little social security, a lethal lack of environmental safeguards, no limit on wealth-accumulation by those with the right political connections – and has achieved double-figure national income growth for more than two decades.  There isn't much clear red water between the governments of David Cameron and Xi Jinping. That's why the prime minister could quickly jettison small irritations like the occupation of Tibet in pursuit of closer trade relations.

Nuclear option

The success of Cameron's mission means that few in the UK will any longer be worried about China's dictatorial politics or diminished human rights. Their much more immediate concern will be whether the newly-wooed Chinese enterprise can protect their jobs, or keep their lights on without  blowing up the south coast. 

State-owned Chinese corporations are now to be principal partners in Britain's new nuclear power plant programme, replacing German and Japanese firms which pulled out in the wake of the Fukushima disaster. China is already the main bringer of new energy and transport infrastructure to most of the emerging world, especially Africa. Now it will bring the next generation of nuclear power to the country that pioneered it. The deal confirms China's rapid rise as global civil engineer, as well as the UK's further retreat towards an economy built on financing and consulting to industry, while the industry disappears (see this article by the OU's Doreen Massey). 

It looks like a win-win deal. The UK's own energy regulator has warned that power cuts are on the horizon unless there's rapid progress towards replacing the present ageing nuclear plants and ‘greening' coal-fired stations (another Chinese speciality). China's engineering groups are uniquely placed to undertake large, long-term projects because of their supplies of cheap capital and freedom from yield-hungry shareholder pressure. The quality of Chinese infrastructure is sometimes called into question, but it can hardly be criticised by a UK nuclear industry which has suffered numerous radioactive blasts and spills in its 56 years of home-made fission.  The Chinese nuclear option enables UK energy giant like Centrica to abandon such investment and pay back money to investors, a move much more in tune with the country's financial engineering focus. 

Eastern compromise

China is still a low-income nation, its per-capita national output on a level with Botswana and Bulgaria. Its spectacular economic growth could be flattened in the next few years by problems ranging from poisoned atmosphere and lack of innovation to regional conflicts and political currents unleashed by past economic progress.  Typing “China ghost cities” into any respectable search engine quickly reveals why some economists feel the central planners have misdirected their investment, with credit-crunching consequences. But such problems at home would only strengthen Chinese firms' enthusiasm for expansion abroad, as was the case with Japanese multinationals when a bursting property bubble bombed their home base. 

It is unlikely that George Osborne will look back on his China conversion with the remorse that now surrounds those earlier left-wing infatuations with the dragon. Although safety inspection has been one victim of austerity, the UK is unlikely to have embarked on a reality-TV-remake of The China Syndrome, the 1979 film in which nuclear scientists cover-up a reactor meltdown which eerily anticipated that year's Three Mile Island accident. The new China syndrome consists in taking inspiration from a foreign country's dynamic recent past, just as its stored economic and political problems tilt it into a potentially stagnant and violent future. But while going to China's capital has its hazards, securing an inflow of China's capital – before it evaporates – may be an astute move for a country quickly losing the capacity for real investment of its own.


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