China will not thank perfidious Albion for joining its new bank - Financial Times

March 18, 2015 at 2:59pm

PublicFriendsOnly MeCustomClose FriendsFamilyGo Back

http://www.ft.com/intl/cms/s/0/870e470a-cbc1-11e4-aeb5-00144feab7de.html#axzz3UhmLHn6Y

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights.  http://www.ft.com/cms/s/0/870e470a-cbc1-11e4-aeb5-00144feab7de.html#ixzz3Uhquq4KK

Jamil Anderlini in Beijing

All of Beijing’s diplomatic dealings with Britain start from a position of injured pride

The UK’s decision to join China’s new alternative to the World Bank has disrupted London’s “special relationship” with the US and left seasoned Sinologists and diplomats scratching their heads.

What does Britain possibly hope to gain by signing up to an institution so clearly aimed at challenging the US-led postwar global order?

The most convincing answer seems to be UK chancellor George Osborne’s desire to place the City of London at the front of the queue of European cities hoping to become offshore financial centres for China and the renminbi.

In private conversations last week, Treasury officials gloated about how the move gave London an advantage over Frankfurt in the race to attract Chinese business.

But following the decisions this week by Germany, France and Italy to join the bank, it is unclear how much of a first-mover advantage Britain has got.

Mr Osborne’s explanation that the UK wants to join China’s Asian Infrastructure Investment Bank to ensure it is ethical, transparent and efficient is unpersuasive.

For one thing, it is doubtful that China would change the way it operates the AIIB just to please the UK.

In acknowledging Britain’s “application to join” the bank last week, Beijing said it would consult more than 20 other countries that have already signed up and get back by the end of March with a decision on whether the UK is allowed into the club.

It is inconceivable the UK would have risked public rebuke from Washington only to be turned down in its attempt to join the new bank. But the lukewarm Chinese response does suggest a misjudgment of what might be gained from this move.

In the case of New Zealand, until this week the only other “western” country to join China’s AIIB, the motivation is clear and rational.

Wellington is pursuing a traditional “vassal state” policy vis-à-vis Beijing in order to secure its supply of dairy products to the growing Chinese middle class, by far its biggest single market.

The Kiwi kowtow appears to have worked quite well but British attempts to curry favour are met with a very different response. One prominent Chinese commentator who works at a top government think-tank in Beijing said in international organisations Britain acted as “America’s thug for hire”.

Europeans defy US to join China-led development bank

France, Germany and Italy have all agreed to follow Britain’s lead and join a China-led international development bank, according to European officials, delivering a blow to US efforts to keep leading western countries out of the new institution.
Continue reading

To understand the sentiment behind such remarks, British policy makers need a clear understanding of history and the way it is taught and viewed in China.

Very few British adults have a working knowledge of the opium wars, the history of gunboat diplomacy or the legacy of Britain’s “unequal treaties” and colonial subjugation in China.

In stark contrast, every single Chinese primary school student can rattle off a long list of national humiliations suffered at the hands of barbarian invaders, led by the UK and later Japan.

Several weeks ago in a village in rural China, a seven-year-old boy accosted a Financial Times reporter and demanded to know why he had burnt down the Summer Palace in Beijing.

All of China’s diplomatic dealings with Britain start from this position of injured pride, so acts of apparent British goodwill are often greeted as a cunning ploy or with a special contempt reserved for a weak, failed empire.

The UK’s historical handicap when it comes to China appears poorly understood by modern British politicians.

Perhaps this is partly because old-fashioned Foreign Office Sinologists are often sidelined in favour of salespeople who can rack up investment and trade deals.

But even if Britain’s actions are viewed from a purely commercial perspective, they still do not seem to make much sense.

London is one of the world’s top financial centres and Chinese financial flows will naturally gravitate there no matter what her majesty’s government does to “accommodate” Beijing.

Q&A: the Asian Infrastructure Investment BankThe Asian Infrastructure Investment Bank is one of four institutions created or proposed by Beijing in what some see as an attempt to create a Sino-centric financial system to rival western dominated institutions set up after the second world war.
Continue reading

The same goes for Chinese trade and investment, which soared spectacularly even in the 18-month period when Britain was in diplomatic deep-freeze following Prime Minister David Cameron’s public meeting with the Dalai Lama.

Both measures have carried on growing roughly as before, even after the series of conciliatory moves the US is so unhappy about.

Perhaps there is a more prosaic and petty explanation for this latest move.

Late last year, as China prepared to unveil the new AIIB, several European countries including Luxembourg and Germany came quite close to signing up to the bank — a move they thought would help them to promote their own financial centres to the Chinese.

They decided against it then, in part because of perceived opposition from the US and UK.

Maybe by allowing them to believe there was a united front against joining the AIIB, perfidious Albion was able to get one over on its European rivals, if only for a few days and even if the prize was not really worth the effort.