Theresa May has mildly offended China, which is healthy
New administrations are allowed their glitches as they settle in. When Theresa May decided to press the “pause” button on the Hinkley nuclear deal (surprising the French and to a lesser extent the Chinese, who always seem better informed…) it seems that not everyone in the cabinet and Whitehall that should have been in the loop was. It all happened rather quickly and with Whitehall and Adviserland in transition it is rather difficult to find out exactly who knew what and when about the decision to review the proposed construction of a new nuclear plant with French and Chinese expensive assistance. But it seems fair to say that it could have been handled more efficiently and cleanly, especially when the new Prime Minister needs to counter the fears of her colleagues that she is secretive and does not communicate properly with them.
What happened is understandable though. In any business, when a good new CEO or leader comes in it is customary for them introduce a touch of unpredictability at key moments in the working week. It is a way of reminding the machine or bureaucracy that there is a new boss in town and that not everything that applied under the old regime continues to apply. Theresa May is showing that she will not be panicked into signing something without satisfying herself it is the best of the options available.
The rushed nature of the decision to pause aside, I, for one, rather like this new approach to these matters. She did not throw her toys out of the pram in a tantrum, or spin some great tale of security woe about the Chinese learned from her time at the Home Office, or present her calling a halt as a post-Brexit moment of glory. She indicated simply that she wanted an opportunity to review the decision in light of changing circumstances in the energy market and ongoing security concerns. That was a perfectly sensible and reasonable decision. It is what the Prime Minister should do before signing away tens of billions of pounds of taxpayers money.
The government will now take a little time to work out what direction energy and security policy will take. We need to trade with China, of course we do. But whether or not the British should be quite as desperate to please them as the last government was is another question.
May’s rebalancing has implications for the City in particular, where the Bank of England has along with the Treasury been emphasising the importance of Chinese investment, welcoming Chinese involvement at the urging of the former Chancellor George Osborne, an early advocate of a post-financial crisis alliance with China.
The City is a potential venue because the Chinese do not trust Wall Street one bit, obviously, and of the alternative venues for them to do global business outside Asia, London is the leading choice, although they are also playing footsie with the German financial establishment. The single best argument in favour of the welcome merger between the London Stock Exchange and Deutsche Börse is that it represents a chance to strengthen European, as distinct from EU, financial ties, and prevent us all being picked off one by one by the Chinese as they buy and bully their way to dominance. (Incidentally, post-Brexit we have to get out of the Remoaner mindset that says all cooperation will cease. We are not leaving Europe – Europe is not the EU – and we must work with our friends and neighbours. Indeed we should do enthusiastically.)
Should May have offended the Chinese government on Hinkley? The Chinese – who traditionally respect power and firm politeness over crawling – are more likely in the long run to take a leader seriously who is robust and in time clear. The last government took detente to ridiculous extremes, showing China’s leaders around our football clubs, posing for selfies and inviting them to buy everything British that is not nailed down. May is indicating the Cameron/Osborne era of wooing China obsessively is over, which is good.