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The planned talks would have been the first since Beijing’s crackdown on pro-democracy protests in Hong Kong in 2019.
LONDON — Boris Johnson’s government paused two key sets of trade and economic talks with China amid a backlash from Tory MPs and hawkish statements from candidates vying to replace him as U.K. prime minister.
The outgoing British leader’s administration has put two sets of talks that businesses were expecting to take place later this month back on ice, according to three people familiar with the discussions.
The planned talks, one set of which was revealed by POLITICO earlier this year, would have been the first since Beijing’s crackdown on pro-democracy protests in Hong Kong in 2019.
The decision to keep them in limbo has some British businesses worried, while human rights campaigners are claiming victory and hoping Conservative leadership contenders will keep the talks paused.
At the start of the year, Johnson was ready to resume the U.K.-China Joint Economic and Trade Commission (JETCO) dialogues, which have not been running since 2018.
The move followed then-Chancellor Rishi Sunak’s announcement in late 2021 that the Treasury would resume the China-UK Economic and Financial Dialogue last held in 2019.
Plans “were underway” for both sets of discussions to go ahead around the end of July, a person familiar with the planning of the talks said.
That was “until the political events of the past two weeks,” they added, with the dramatic resignation of Johnson and the ongoing contest to replace him at the helm of the Tory Party dominating Westminster. There was, the person said, “a sense of a bit of normal business resuming until these latest events happened.”
Two other people familiar with the planning confirmed the stalling of the talks as Johnson’s grip on No. 10 weakened.
Johnson’s imminent departure has sparked a fevered leadership race that has pulled in candidates who are hawkish on China including Foreign Secretary Liz Truss and MP Tom Tugendhat, founder of the China Research Group, which keeps track of Beijing policy.
Truss has openly called for the West to “learn the lessons” of Russia’s invasion of Ukraine and “make sure that Taiwan has the ability to defend itself,” touching on a major pressure point. The Chinese Communist Party considers “reunification with Taiwan,” a self-governing island, a key policy aim.
She also called out Beijing for breaking “legally-binding commitments” over Hong Kong. The views of current second-place candidate, Trade Policy Minister Penny Mordaunt, and Minister of Levelling Up Kemi Badenoch on China are less well known.
They’re in the running alongside former top finance minister Sunak, who has urged continued business ties between the two countries.
There has been “heavy pressure” to call off the trade and economic dialogues within government, said a human rights campaigner focused on China, who said “hawkish statements for some party leader hopefuls helped” in getting them paused.
“We shouldn’t reward bad behavior,” they said of China, noting that the economic dialogue with Beijing was put on hold after it imposed the draconian National Security Law on Hong Kong.“Hong Kong‘s freedom is being throttled ever more tightly and Beijing is unrepentant,” they said.
Yet businesses are concerned about the impact on firms of shelving the dialogues as China races to become the world’s biggest economy in the next 10 years as well as the world’s biggest importer.
The country is already Britain’s third largest trade partner after the EU and U.S., with £93 billion in total trade in goods and services between the two last year.
“It is regrettable that the dialogues are not taking place: given the importance of exports in rebuilding U.K. economic growth, it is more important than ever that U.K. businesses can take full advantage of the opportunities in what is set to become the world’s biggest economy,” said a spokesperson for the China-Britain Business Council.
“China is already a key market for the U.K., with our exports there supporting well over 100,000 jobs right across the country,” they added.
“Consistent annual meetings provide a public display of the two countries’ willingness to engage in and promote trade between each other,” said a spokesperson for the British Chamber of Commerce in China, noting the economic discussions help “mutual understanding.”
They’re calling for “increased bilateral ministerial engagement between the U.K. and China,” not less.
Just this week, British Trade Secretary Anne-Marie Trevelyan stressed the benefits of trade dialogue with China in a meeting with lawmakers. “If we can make progress on some basic market access barriers, in a regular conversation, that will be a great start,” she said.
“The problem we’ve got in the Conservative Party is that being hawkish on China is seen as a bit of a test of ideological purity,” said the first person familiar with the talks. They pointed out that, despite high-level diplomatic spats, U.S. Treasury Secretary Janet Yellen and China’s Vice Premier Liu He held their own economic dialogue at the start of July.
The same person pointed to a speech Sunak gave in the City of London last year, which they said showed his belief in “a mature and balanced, sensible relationship with China today in terms of business.”
But Sunak’s stance, the human rights campaigner said, “poses serious questions” about what his leadership “might mean for the U.K.’s China policy, and for our multilateral relationships with like-minded democracies.”
This article is part of POLITICO Pro
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