L@B Brief - August 2023
31 August 2023
Hello again,
What do you think about how the UK should deal with China?
Everyone is aware of the increasing difficulty in obtaining export licenses for China but worsening relations are affecting business and academia in a variety of ways. Recently, a China scholar in the US resigned, in the face of increasing difficulties caused by his university’s fears of being seen as “too chummy” with China. In the UK, universities have been under political pressure to diversify their recruitment and reduce their reliance on Chinese students, despite their importance as a source of income. There has been a fall in Chinese student numbers in the UK for the first time since records began in 2014 with the number down from 13,180 in 2022 to 11,630 this year; Chinese students now make up 22.7 per cent having fallen by 2.4% in a year.
Economic commentators point to increasing weaknesses in China’s economy which, post ‘zero COVID’, grew at just 3.2% compared with America’s near 6%. China seems to be suffering from the opposite problem to our current inflation: consumer prices fell in the year to July with some suggesting that China may enter a deflationary trap like Japan’s in the 1990s. Joe Biden has called China’s economy a ‘ticking time-bomb’ because of its ageing workers and unemployed young and in August the Chinese government announced that it would no longer publish the unemployment rate for young people - the July figure had hit a record high of 20.5%.
Financial instability at the world’s second largest economy is likely to have global implications, according to Dr Jan Knoerich an expert in the Chinese economy based at King’s College London. “It’s never good when China’s economy doesn’t do well because it’s going to spill into the rest of the world.” Another China commentator, George Magnus, sees more far-reaching effects: “We probably have to come to terms with the idea that China in the 2020s and the 2030s will not be the China that we have become accustomed to in the past 30 or 40 years, and that its economic trajectory is much more damaged than the one that we have come to know.” Dependence on China as a manufacturing centre may be likely to diminish as other areas – such as India, Malaysia, Korea and Mexico – grow.
So if China is no longer in the ascendent – does that make it more or less of a threat? Should we export as much as we possibly can now or should we capitalise on China’s apparent weakness to spread our future risk and strengthen our calls for improved human rights?
It sounds as if we need a strategy.
Toodle pip!
Jacqueline
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