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What Does China Really Want?

With pro-democracy protests recommencing in Hong Kong, the Financial Times’ former Asia Editor explores what China’s motives are towards the former British colony and the West.

What Does China Really Want?

With pro-democracy protests recommencing in Hong Kong, the Financial Times’ former Asia Editor explores what China’s motives are towards the former British colony and the West.

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The brain-power being thrown at the question ‘what does China want?’ could fill an encyclopaedia. It’s a good question. But it throws up as many questions as answers. 

The latest brain-twister is Beijing’s threat to impose its own security legislation on a fragile and rebellious Hong Kong. The move is a clear violation of the principle of “one country, two systems” which is the foundation of China’s accommodation with Britain and – by implication the West – negotiated in the run-up to the British handover in 1997. 

Is this mere sabre-rattling to ward off a second round of paralysing demonstrations by pro-democracy protestors or does it represent a real threat to the people of Hong Kong and to its future as a vibrant, financial super-hub? 

The UK has responded by offering a ‘pathway to citizenship’ to 300,000 Hong Kong residents. President Donald Trump has warned that the city could lose its special trade privileges. Constitutional lawyers insist that Beijing cannot impose such a law without renegotiating the Basic Law which governs the limits of China’s powers in the city until 2047. It would, they say, be challenged in the Hong Kong courts before the eyes of the world. This would cause China to lose face when it is preoccupied with the aftermath of the COVID-19 pandemic and threatened by a serious economic downturn. (China’s economy has shrunk this year for the first time in 40 years). 

I’m not so sure. It depends on China’s priorities.

In October 1982, Prime Minister Margaret Thatcher went to China to establish a basis for a negotiated settlement on Hong Kong’s future well before Britain’s 99-year lease ran out in 1997. 

Predictably, Thatcher – fresh from her triumph over the Falklands War – went in swinging. She politely locked horns with the Chinese leadership over the future of Hong Kong. Deng Xiaoping told the Iron Lady, who was angling for a Chinese takeover in name only: “I could walk in tomorrow and take over”. To which Thatcher replied: “Yes but the world will be watching”.

At the time, Hong Kong and its Tai-pans still clung to the hope that, at worst, the Chinese would run up the five-star flag over Government House – the elegant colonial mansion in mid-levels where the governor resided – and leave them and a well-honed largely British civil service to run the city. After all, a knight of the realm argued over dim sum at the China Club, why kill the goose that laid the golden egg? It was either delusion or hubris. Or both. 

About six weeks after Thatcher’s visit – by which time the markets were distinctly twitchy – I was in Beijing for the Financial Times. Colina MacDougall, its China specialist, and I went to see Vice-Premier Gu Mu, a veteran Chinese Communist Party figure and one of the key officials charged by Deng Xiaoping to drive through his ‘open door’ policy heralding a hybrid capitalism in a one-party state. 

At the end of the interview, we asked Gu Mu if he could answer a couple of questions about the future of Hong Kong. “Sure,” he said. He was ready for this.

Would China take over not just Hong Kong’s sovereignty in 1997 but also its administration? “Of course,” he replied. This was incendiary. We filed the story to a sceptical newsdesk. The following day the Hang Seng took a steep nosedive. The scales had finally fallen. 

The question ‘what does China want?” suddenly became painfully relevant.

The talks over Hong Kong’s future were led by Percy Cradock, the quintessential Foreign Office mandarin who was the British Ambassador to Beijing. Cradock was pilloried by the Hong Kong and British press for ‘compromising’ with the Chinese. 

I remember walking with him in the walled gardens of the British Embassy just after Thatcher’s visit. “I’m not sure she understands how these people think,” he said. A fluent Mandarin speaker, Cradock’s postings in Beijing dated back to the 1966 Cultural Revolution when he and others were roughed up by Red Guards who stormed the building. Cradock lived China. He knew his stuff. 

Predictably, the run-up to the handover in 1997 saw a long period of vicious infighting between Sinologists like Cradock – who emphasised the limits of China’s willingness to compromise – and those such as Thatcher and Chris Patten, the last Governor of Hong Kong, who believed it was possible to entrench democracy under Chinese rule in Hong Kong by tough talking.

Cradock accused Patten of fostering “unreal expectations” among the people of Hong Kong and this dichotomy is still being played out on the island’s streets and in the lives of its citizens. 

The desire to ‘read’ China preoccupies us all, understandably so. It is the most populous country on earth; its economy is creeping up on the United States; it is projecting its military power ever more widely. President Xi Jinping’s ‘Belt and Road’ initiative is creating a vast network of client states often forced into a debt trap. 

Countries that can’t service their financial obligations to China for building a port, a dam or a railway are strong-armed into a debt for equity swap that leaves Beijing in control of strategic infrastructure such as the new Hambantota port in Sri Lanka where Chinese submarines dock. China took a 99-year lease on the port which the Sri Lankans are desperate to rescind. 

China’s military is closely interwoven with strategic companies such as Huawei that sell to the West. Cyber espionage and the theft of western technology are major industries. China is walking into our world unopposed and unafraid. And it has a plan.

Lord Palmerston said: “England has no eternal friends, England has no perpetual enemies, England has only eternal and perpetual interests”. For “England”, substitute “China”. 

Its eternal interests have hardly changed since the establishment of the People’s Republic in 1949. These are:

Everything else is small change and everything is subordinated to these four goals. The Hong Kong security issue will ultimately resolve itself – but not at the cost of China’s sovereignty. 

The idea that China will worry if 300,000 potential troublesome Hong Kong Chinese move to Britain is questionable. China is feigning indignation as it must, but a choice between a brain-drain from the city and a loss of international status on the one hand against a continued challenge to Beijing’s authority is a no-brainer for the leadership.  

What will rattle the Chinese is anything that threatens the imperative of sustaining economic growth because that is the linchpin that holds everything together. The bargain the Party has struck with the people is: we give you jobs, you give us your undivided loyalty. A slump after the COVID-19 pandemic with millions of unemployed in a country that is increasingly authoritarian and deeply corrupt could unsettle President Xi Jinping. 

The only practical avenue open to the West, if it wishes to continue dealing with an expansionist China without being dragged into an unwinnable conflict, is to wean itself off cheap Chinese goods that we don’t need by rethinking our economic priorities. 

Alain Catzeflis is the former Asia Editor and News Editor of the Financial Times

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