British finance minister Philip Hammond's canceled trip to Beijing this week highlights the difficult trade-offs the U.K. faces in its relationship with China.
For the Chinese government, Hammond's efforts to boost economic ties cannot happily coexist with Defence Secretary Gavin Williamson's remarks about sending an aircraft carrier to the Pacific and "oppos[ing] those who flout international law."
On top of the pressure the UK is under from other Five Eyes intelligence-sharing partners to take a tough line with Huawei's participation in critical infrastructure, such a controversy could further damage a relationship that was already turbulent.
Seen from Beijing, China has been very clear about what it wants from a relationship with Britain, but Britain appears unable to decide what it wants from China. The defining emotion is confusion, the direction nebulous.
After hailing a so-called "golden era" of bilateral ties during a state visit by President Xi Jinping in 2015, Chinese leaders now see the shock of the Brexit vote steering the relationship in a totally new direction without, apparently, a clear agenda.
All of the suspicions that the Communist Party's leaders had about the dangers of Western democracy have been confirmed in spades. They may have also learned a more pointed lesson from the Conservative party about the dangers of externalizing internal party conflicts.
In contrast, China has a very clear set of priorities for the relationship.
Firstly, Chinese companies continue to look to the U.K. to provide a secure home for investment, providing opportunities to enhance their global brand value or to make new acquisitions without the fierce resistance encountered in continental Europe and the U.S.
Secondly, as China faces choppy economic waters and a trade war with the U.S., it is looking to build alliances with Western powers committed to the principles of free trade and globalization, like the U.K., though not at the expense of relations with the EU.
Thirdly, Beijing is eager to be recognized by established economies, and has high hopes of the U.K. acting as a cheerleader for China's global ambitions as George Osborne did with the U.K.'s membership of Asia Infrastructure Investment Bank. All three could theoretically be one of China's prized "win-win" outcomes, and perhaps also benefit the British economy.
It is also important to remember why China has prioritized the relationship with the U.K. over other major European economies. While British media often focus on China's interest in education and tourism connections, Beijing has long admired British expertise in financial and corporate governance. As far back as the 1950s, Mao Zedong was championing the desire to become more like Britain's developed economy.
Today, while France and Germany have been important for providing manufacturing technologies, the U.K. is a more useful partner for the next stage of Chinese development: a shift to a service-based economy; the move to currency convertibility via Chinese yuan trading in the City of London; and a welcoming and absorbing of Chinese investment abroad.
From Beijing's perspective, the U.K. Defence Secretary Williamson's intervention jeopardizes these economic possibilities by challenging a key element of the Chinese Communist Party's legitimacy: a resurgent Chinese nationalism. The party has strongly promoted the idea that its leadership has ended over 150 years of foreign bullying of China and helped the country regain its rightful place at the center of world affairs.
Some parts of the world do not understand the sense of humiliation today's Chinese feel when they look back on the past, at least in the version that is popularly presented domestically. So it is no wonder that Williamson's comments have sparked rage in Beijing. The U.K. is traditionally viewed by the Chinese as a former colonial power which inflicted humiliation on China in the Opium Wars. Seen in this light, the government must show its people that it can stand up to strong words from Britain.
To build a better relationship with China, the British government must better understand how these strands of the relationship are connected and become more skillful at interacting along both lines.
China is an indispensable partner if a post-Brexit "Global Britain" is to succeed. To nurture that partnership, London will have to balance mitigating its security concerns with realism about how much it can change the Chinese government's outlook and political choices. And it will have to accept that it cannot divorce its security stance from its hopes for a profitable economic relationship.
Yu Jie is China Research Fellow in the Asia-Pacific Program at Chatham House in London
