Is Theresa May trying to replicate Merkel’s approach to China?

While British Prime Minister Theresa May probably may like to take a leaf out of German Chancellor Angela Merkel’s book, she is no stateswoman like her counterpart nor is Britain comparable to Germany in geopolitical terms. As Merkel effectively engages China and Sino-German trade turnover grows, Beijing sees Germany as the locomotive that pulls the EU economic and political trains. On the other hand, post-Brexit Britain, faced with a choice between America and China, may finally opt for the tested relationship with Washington.

Thanks to her blend of foreign policy realism and idealism, Germany’s Chancellor Angela Merkel is commonly credited with being the Western leader best equipped to deal with Chinese leaders.

British Prime Minister Teresa May (L) and German Chancellor Angela Merkel

British Prime Minister Theresa May (R) and German Chancellor Angela Merkel

Some in Europe think Britain’s new Prime Minister Theresa May is drawing inspiration from its German counterpart in revising her predecessor David Cameron’s “gung-ho” approach to China; and if this is not the new British Iron Lady’s true intention, a current spat between London and Beijing proves she should exactly rush across the Channel to learn from the Frau Kanzler how to effectively engage Beijing.

May’s recent decision to postpone the $23.5 billion Hinkley Point C nuclear power station project, in which the state-owned China General Nuclear Power Company (CGN) has one-third stake, apparently introduces a new paradigm, with Britain’s interest in attracting Chinese foreign investment that now must be compatible with national security.

In a similar case, Australia upheld on August 19 that it would block the $7.7 billion sale of Ausgrid energy grid to Beijing’s State Grid and Hong Kong’s Cheung Kong Infrastructure – Canberra explained quite differently its position, bluntly advancing national security motivations.

Many see behind London’s turnaround – which has triggered harsh criticism from Beijing – the United States’ hand. It is worth noting that the US government recently accused CGN of attempting to steal its nuclear technology and secrets.

Washington was disappointed with the British government in March 2015, when Britain was the first European Union country to join the new Asian Infrastructure Investment Bank, China’s alternative to the multilateral institutions that the US shaped in the wake of the Second World War.

The engine of Europe

The problem for May is that she is (still) not a stateswoman like Merkel and, above all, today’s Britain is not comparable to Germany in geopolitical terms.

Apart from the personal ability of Merkel, one of the most respected world leaders, in general Berlin has now a greater relevance than London, something that will matter in the future Sino-British dialogue, not least should Beijing decide to re-calibrate its diplomatic and economic strategy toward London in response to the latest events.

Germany is China’s largest trading partner in Europe, as Britain ranks third. In 2015, the Sino-German trade turnover totalled $78 billion, against $62.3 billion between London and Beijing.

Germany was the one country in the European Union (EU) to register a significant surplus ($3.3 billion) in the commercial exchange with China. That is due largely to the complementary nature of the two economies, with Germany exporting high-value-added industrial machinery in return of cheap manufactured goods – even though this trend is bound to change in the face of China’s growing technological improvements.

In the 2005-2015 time frame, China’s foreign direct investment (FDI) to Britain amounted to $34.3 billion, as Chinese FDI to Germany touched upon $8 billion, according to the China Global Investment Tracker. But the pace of Beijing’s investments in Germany is growing dramatically, accounting for $5.6 billion in the first eight months of 2016, against $3.8 billion in Britain in the same period.

More importantly, in the eyes of the Chinese leadership, Germany is the “geo-political pivot” of the EU, and this not only because it is the most important economic powerhouse in Europe.

Berlin is the crucial juncture of the political dynamics across the continent; the country that in essence defines the line of conduct within the EU during a crisis, be it sovereign debt, immigration, Ukraine and so forth.

It is also the diplomatic bridge between Europe and Russia, notably in this moment of high tensions along the Euro-Russian border, as well as the real reference – in place of just Britain – of Washington when it comes to the American interests in the Old Continent.

A choice between Washington, Beijing

By escaping the EU, London runs the risk of becoming a peripheral middle power, incapable of influencing Brussels’ policy-making, while the European bloc continues to be China’s best economic partner. Then, despite its extensive maritime dimension, continental Europe appears to have a larger share in China’s One Belt, One Road infrastructure initiative than the British islands.

The great challenge for Britain is to balance security concerns and openness to Chinese investments, as London needs to expand its extra-European network of economic ties to offset potential downsides of Brexit. Negotiations between London and Beijing on a free trade agreement and the final destiny of Hinkley Point will test the Sino-British ties down the line.

At the moment, however, the Sino-British “golden era” in relations, ushered in by Chinese President Xi Jinping and Cameron last fall, looks like in shambles. Faced with a choice between America and China, May could indeed think that the tested relationship with Washington remains “more special” than the blossoming one with Beijing.

Emanuele Scimia is a journalist and foreign policy analyst. He is a contributing writer to the South China Morning Post and the Jamestown Foundation’s Eurasia Daily Monitor. In the past, his articles have also appeared in The National Interest, Deutsche Welle, World Politics Review, The Jerusalem Post and the EUobserver, among others.

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