Not just government

While 200 million Chinese have been learning English at various levels, in the UK we are more elitist. Our universities turn out world-class experts on specific aspects of China. But beyond a few modules at Keystage 6, knowledge of China in the British educational system is optional. Because of the importance of government links, and the real benefits people find when they put some investment and effort into understanding and learning about China, the British Government needs to put its money where the Framework document's mouth is and actually support, promote and show that it values knowledge of China. It needs to say that, because of its size, the rapidity of its rise and the likely impact it is going to have on our future, there needs to be a core cadre of expertise, a distinct group of people recruited and deployed because they understand China, know how to speak to it and know how to speak about it in the UK.

At the same time, there needs to be greater centralization of China-related work within at least the central government. At the moment, it often seems that different Whitehall departments run their own separate China policies, which are only loosely related to some larger, overarching UK policy. Divided houses, as we all know, fall. And parties that come before the Chinese scrapping with each other are fair game—look at the way the EU has been picked apart for several years. Any coordinating body would need a major political figure with clout at the head of it. But with ministerial responsibility for relations with China split between ministries, is it any surprise there is a lack of clarity about who, in the end, is driving all this splendid work? A Chinese official in 2008 complained to me about the fact that early in the second Bush administration, the Chinese Government felt that they had no specific highly connected figure in the administration to deal with. Bush got two things right. From 2006 onwards, he set up a clear high-level mechanism for talking about at least one key area with the Chinese Government—the Strategic Economic Dialogue—and he gave Treasury Secretary Hank Paulson the responsibility to deal with this. This went down well in Beijing. Obama has added more icing to the cake, upgrading the dialogue to include security and letting Secretary of State Hillary Clinton run the show. Why can't the UK at least partially steal this idea? Of course, much of our agenda might be dealt with via the EU. But surely, appointing a specific, powerful figure to be a clear point of governmental contact between the UK and China would, in the parlance popular in bureaucratic circles, seem like an "easy win."

No more backslapping

Governments everywhere like the defensive rhetoric of congratulating themselves. But perhaps with UK-China relations we can be brutally self-critical, because, if we improve, we are really well placed to become one of the key relationships China has. One thing we have to be clear about, however, is priorities. We are fond of agonizing about what China wants. We like to try and read in its agents' multiple actions some clues as to how to interpret its desires and strategies. What we might like less is to appreciate how mixed up and complex and fragmented an actor China is—except, that is, when it comes to identifying foreign policy priorities. Under these circumstances, the most sensible thing for us to do is to back-engineer the question, and be clearer at least about what we want. We'd be in good company here. This is precisely what China has been doing for the last 30 years.

In the 1980s, during the first years of the opening-up and reform process, China did not allows its policymakers and leaders to sit around agonizing over what the West might want when the issue of foreign investment came up. Instead, in a series of government policies and laws, China set out a clear vision of the sectors and regions where it was seeking investment, and set up the infrastructure to do this, with special economic zones, preferential laws and tax breaks. A quarter of a century later, foreign investment in China stands at $700 billion, the second largest in the world. Foreign investment has brought in know-how and managerial techniques, and fundamentally altered the ways in which Chinese enterprises operate. In that sense, it has been a success. Now, as we face Chinese investment coming out of China, we need to modestly look at how China did things back then and copy some ideas. And the most important, in my view, is to set out clearly not what the Chinese might be interested in, or want to invest in, but what we need and want. Once we are clear on that, we can address the other issues with a lot more focus and strategic intent.

The 'China threat?'

Part of the challenge of stating how important China is, and how politically it is worth the risk and effort to make the case for a special effort and a special relationship with China, is that China still arouses complex, antithetical feelings in much of the public in the West. Getting the complexity of China across to the electorate is not easy.

On many issues, from political reform to its economic impact on the rest of the world, China stands at a crossroads. We can either leave it to its own devices, or we can take as full a part as we can in its development and evolution. Even trying to achieve the latter means that the very worst that could happen is that we are ignored. The evidence, however, is that in many ways the Chinese Government listens, and responds, to international opinion more than it might wish. One commentator called it a fragile superpower. The complexity of China of its provincial, economic, political, social and ethnic structure is striking. It really is more like a continent than a sovereign state. . Its potential instability, now that it is so profoundly part of the global trading system, will destabilize us. Its environmental challenges are now ours. It is, in many ways, a global power before it even gets out of bed. For those that talk of the "China threat," perhaps it is time to look at this a little more cooly. With all that we know of China's internal issues, which is more likely: that it would wish to become an aggressive international actor, projecting its force onto Africa, Latin America or even the EU, undermining our systems and trying to convert us to the "Chinese way," or that it suffers from massive internal disruptions that in turn bring the international system down, cause huge movements of displaced people and destabilize the region and the world? I for one fear the latter far more than the former. From everything they say, so do the Chinese leaders.

What do we want?

The UK works with the EU, the UN and a number of other parties when it comes to China. I would suggest, though, that there are two key areas where we can engage deeply, and specifically, country to country. In one area we can offer something, and in the other area we can request something. For climate change, the UK's expertise and technological and policymaking skills are widely admired and followed in China. The UK's role in the Kyoto, Bali and Copenhagen processes is well understood. China's leaders, and its people, know what a massive mountain they have to climb in cleaning up their environmental problems. They can see all too well the toll on their natural environment that the last three decades of intense industrialization has taken. They are in the market for ideas, assistance and policies that work. The idea of congestion-charging introduced in London was something the Ministry of Transport in Beijing looked at seriously. There are other areas where the UK is well placed to be a key interlocutor. Here our assistance could translate into real political rewards from the Chinese side, especially as this particular dialogue between China and the United States becomes politicized very quickly. The UK can easily avoid this. The second area is Chinese overseas direct investment (ODI). China is poised to become a major outward investor, with its stock of ODI increasing exponentially each year since 2003, so that it stood as the world's sixth largest outward investor in 2008. But its lack of experience in the international environment means that its state and non-state enterprises have made big mistakes. The UK, as a financial center, a major investor in China, a gateway to Europe, and a liberal, open economy, is perfectly placed to benefit from engaging with this outward flow of Chinese enterprises. At a time when manufacturing companies and other businesses in the UK need capital, we are faced by a partner with $2 trillion in foreign reserves it does not know what to do with. Here we can really work for the UK's national interest, but in an area where China has a very specific, very large and very obvious unmet need.

What needs to be done?

The UK can and should immediately do the following:

- Accept the distinctiveness of China's political system, and make a political decision in the UK that relations with China are of an order and nature which means that UK-China relations must be treated differently than relations with other countries.

- Appoint a cabinet-level minister with specific responsibility for the relationship with China, perhaps backed up by a special envoy who enjoys close contact with the highest levels of the Chinese Government and is seen as being the key go-between. These individuals would sit on a specific, politically empowered coordinating body for UK-China relations, which would have the authority to set policy.

- Set out two or three clear policy areas where we can realistically become the key partner for China in Europe and perhaps even globally. These could be working with China on its outward investment or on climate change. But we have to think through clearly what we want and articulate this in clear policy formulations that are then accepted and acted upon across Whitehall.

- Establish a government-linked/funded center for intense study and expertise on China, either in the Cabinet Office or within the FCO, but with a clear cross-Whitehall mandate.

None of these carries massive political risk. All would serve to make our machinery for dealing with China, at least at a government level, more fit for the purpose. We might not get the waves of Chinese investment, benefits and gains that the more optimistic expect. But at least we will know that we did our best. At the moment, we are passing up what looks like a great opportunity. If we take just a couple of the steps above, I am pretty sure that we will find not only that we are pushing at an open door, but that we will be opening it to a rich and rewarding set of future possibilities.

(The view in this article does not necessarily represent that of Beijing Review