Comment: Should the UK's partnership with China be welcomed or feared?
The Chinese see something in us, and we could not dream for better luck than to make 1.4 billion new friends, says Professor Sir Keith Burnett, Vice-Chancellor of the University of Sheffield.
Should the UK's partnership with China be welcomed or feared?
By Sir Keith Burnett, 24 September 2015, posted on The Telegraph
George Osborne has been in China this week. Is he selling the family silver? No. But he is telling Chinese investors about the opportunities in Britain that will bring them long-term returns.
The challenge for the Chancellor is simple: Britain needs major infrastructure investments. We need new forms of energy and better transport links. We need regenerated cities and housing. The North of England feels this need acutely.
If the Government’s drive to establish a Northern Powerhouse is to be more than warm words, it needs infrastructure and investment, and these projects need serious injections of capital.
Sheffield, for example, is a city famous for manufacturing and selling cutlery and steel to the world. Yorkshire’s economy is not just about guarding the family silver, but it is about making products and seeking markets.
It is not enough to have a hallmark for quality. Any thriving economy also needs to sell what it makes beyond its own shores if it is to stand a hope of being a global manufacturing power.
So why China?
One could not dream for better luck than to make 1.4 billion new friends...
Professor Sir Keith Burnett
China is one quarter of the world’s population. One could not dream for better luck than to make 1.4 billion new friends, all of whom are playing a role in building a vibrant economy, displaying a determination and energy that has both startled and unsettled the world.
The Chinese see something in us too.
Chinese companies, encouraged by their government, believe that now is the time for them to internationalise and diversify their investments. A date, 2025, has been set for China’s transformation into a consumer-driven, skills-led economy. As in the UK, companies once used to a high rate of returns domestically are looking far and wide for new opportunities, including infrastructure projects.
China is committed to building roots in the UK, and not just investing in our power-generating capabilities. For example, one Chinese investor – China Investment Corporation – owns a 10 per cent stake in Heathrow airport and an 8.7 per cent stake in Thames Water.
Nor are either restricted to the UK. Highly successful companies such as the Metallurgical Corporation of China build property, bridges and roads from Africa to the Indian sub-continent and Europe.
The UK also has a remarkable advantage in the City of London. Rich in talent and ambition, the City has unparalleled strengths. Developers have been impressed by the ability to regenerate parts of the capital, working with the London mayor, the City’s architects and world-leading construction companies.
The UK devolution agenda opens the possibility that this kind of capital and development opportunity could help create the infrastructure needed to rebalance the economy and create equally high stock in the North.
But what are the Chinese motivations behind investing in UK capabilities, and should we welcome this or fear it?
We would be fools not to grasp the possibility of partnership. In Sheffield, we have very positive experiences of working with Chinese companies.
We work closely with the Chinese Nuclear Power Company at our Nuclear Advanced Manufacturing Centre to support British manufacturing and the jobs it provides by building an environment where UK nuclear development can flourish. This has to continue in the interest of keeping the lights on in the UK.
Where infrastructure is concerned, collaboration can enhance labour productivity in both nations, and open up the potential to export to the world. It carries great promise.
A combination of Chinese capital and dynamism and British regulatory strengths, safety and internationally-leading research could be a world-beater, providing the high-skilled employment that is needed in the UK and China, where both nations have neglected technical skills. The new approaches to advanced vocational training we are piloting are equally relevant in China, where value added to the worker is of just as much importance as the value added to the component.
This should address any concerns about China’s motivation behind placing bets on our success. Adam Smith, now more widely read by Chinese leaders than Marx, taught that we don’t need to worry about whether someone is acting in our interest; we need to be sure that they are acting in their own interests, and check that we are worthy of their interest.
If our infrastructure opportunities are good enough for China, we should seek ways to share both the risk and the success.
Professor Sir Keith Burnett
At the heart of our suspicion is that we are not making these investments – in infrastructure and in capabilities in the North of England – ourselves, because there is no appetite. If our infrastructure opportunities are good enough for China, we should seek ways to share both the risk and the success.
We have an opportunity not only to purchase from China – to play the role of customers or contract negotiators – but to become long-term partners with the power to build components that the world needs, for which our children will be grateful.