Chinese Premier's London visit yields deals worth $30b

Britain and China have concluded a total of £14 billion (S$29.8 billion) worth of new trade deals at the end of Chinese Premier Li Keqiang's three-day visit to London.

"Ours is truly a partnership for growth, reform and innovation," a visibly satisfied British Prime Minister David Cameron said yesterday, at the end of talks which also included discussion on simplifying business visa procedures.

But although Mr Li was treated with great deference by his British hosts, the impression remains that China continues to treat Britain as a country on "probation", a nation which still has to prove its friendship to Beijing.

The visit by China's second most senior political figure followed a Beijing trip by Mr Cameron last December and marks the end to an 18-month diplomatic freeze imposed by China following a 2012 meeting between Mr Cameron and the Dalai Lama, the exiled Tibetan leader.

Tensions are not completely dispelled, however.

In March this year, China abruptly cancelled a scheduled meeting between the two nations after Britain's Foreign Office released a document criticising Beijing's alleged human rights record.

More significantly, Chinese diplomats imposed the precondition that Mr Li would undertake the trip only if he could be assured of an audience with Queen Elizabeth II, an honour which only visiting heads of state can expect.

Acceding to this demand was a logistical nightmare as it entailed Mr Li devoting the better part of half a day of his busy schedule to travel to Windsor Castle outside London where the monarch now lives for what was, effectively, just a handshake and a cup of tea.

However, this allowed the Chinese to make the subtle point that their country is now powerful enough to dictate the level of protocol accorded to its leaders.

Still, the British are ready to put up with such awkward protocol demands because they currently lead Europe in expanding business with China.

"As China reaches the stage of development," said Finance Minister George Osborne, "some of the things the UK is particularly strong at, like banking, like insurance, are going to be in greater Chinese demand."

Mr Osborne's gambit to attract Chinese business is paying off: Almost two-thirds of the world's offshore trading in the Chinese currency is now transacted through London.

And, overall, British exports to China have more than doubled since Mr Cameron's government came to power in 2010, standing at £13 billion annually.

The British are also a good destination for Chinese investment partly because they offer some of Europe's most business-friendly legislation, but also because, uniquely in Europe, all of Britain's infrastructure is in private hands, giving China's big construction companies unique opportunities.

As a result, most of China's investment into Europe passes through London; last year alone, £8 billion worth of Chinese money poured into Britain as inward investment, more than during the 30 previous years put together.

The deals which Mr Li signed this week consolidate this trend: They include a major liquefied gas deal with Britain's BP energy company and contracts with Lloyds Bank to provide financial services.

Even on the thorny issue of British visas where the Chinese regularly complain of obstacles, there has been some progress.

British Home Secretary Theresa May has announced the introduction of a new simplified visa application form for Chinese nationals and an accelerated visa approval scheme, although that is reserved for Chinese businessmen with deep pockets.

Still, while Mr Li expressed satisfaction with his trip, he left his hosts in no doubt of his belief that Britain needs China more than China needs Britain.

In an article penned for London's Times daily, Mr Li quoted a Chinese proverb that "one should always be aware of the strength of others and the shortcomings of oneself", a pointed reminder to the Brits that they should know their place in the international pecking order.

Mr Li left last night for Greece, a country desperate for Chinese investment and with no intention of preaching about anything to Beijing.

Sadly, however, the Greeks do not have a monarch to host Mr Li to tea.

Jonathan.eyal@gmail.com

This article was first published on June 19, 2014.
Get a copy of The Straits Times or go to straitstimes.com for more stories.