Former diplomat Lord McDonald, who played a key role in the “Golden Age” of UK-China relations, talks to Andy Mok about the ways in which both British businesses and the UK government should be approaching China in 2023.
In the summer of 2022, Lord McDonald of Salford’s intervention in the Chris Pincher affair – accusing then Prime Minister Boris Johnson of being less than honest about his knowledge of Deputy Chief Whip’s sexual misconduct – sent shockwaves through the political establishment. But it also demonstrated his skill in delivering blunt yet necessary messages for maximum impact in the service of the public good.
So it should come as no surprise that McDonald’s first book, Leadership: Lessons from A Life in Diplomacy, should be described by English historian Peter Hennessy as “a book full of riches – a despatch from deep inside the British state about how it really operates and how it could be run better.
“In places”, he adds, “Simon McDonald wields his fluent pen like a blowtorch. His candour burns the page. Some of the most eminent in the land will rush to the index. Some will be right to tremble if they find their name.”
I recently sat down with Lord Simon McDonald in Cambridge, where he is currently Master of Christ’s College and working on a second book about foreign policy recommendations for the British government. During his stint as Permanent Undersecretary, McDonald played a key role in ushering in the “Golden Age” of relations with China in the Cameron era, only for Theresa May to hit the brakes. According to McDonald, this necessitated “a lot of explaining”, which, in diplomatic terms, was akin to smoothing out a crumpled map.
Drawing on experience ranging from serving under four permanent under-secretaries and a dozen senior ambassadors before becoming permanent under-secretary himself, McDonald believes the UK should pursue a more independent policy towards China, one that Brussels or Washington do not dictate. Such a policy would better serve the UK’s interests, allowing it to navigate its unique position within an increasingly complex web of international relations. The potential benefits of this approach include fostering stronger trade and investment ties, as well as deepening cooperation in areas such as science and technology. Historically, the UK’s China policy has been influenced by its alliances with the European Union and the United States, potentially constraining its ability to respond to China’s rise in a manner tailored to its own national priorities. If the UK does not pursue a more independent policy, he believes, it risks missing opportunities for growth and collaboration with the world’s second-largest economy, and could continue to be swayed by the interests of external powers in its relationship with China.
McDonald points to the Huawei 5G controversy as an example of the UK’s changeable policy towards China. Initially, the UK government granted Huawei a role in building its 5G network, a decision that prioritised economic considerations and technological advancements. However, due to mounting pressure from the United States, including a “policy disruption mission” by a White House delegation to London in 2019, which included a five-hour meeting with senior officials from GCHQ as revealed in Richard Kerbaj’s The Secret History of the Five Eyes, the UK reversed its decision and banned Huawei from participating in its 5G infrastructure. The flip-flop highlights the challenges the UK faces in developing an independent policy towards China, and precisely why this remains a fraught but important topic that requires candour and a commitment to the public good to address.
McDonald also notes that the China-UK relationship exhibits a degree of maturity in that political disputes do not impact trade, investment and business activity. This maturity presents a significant advantage for British businesses operating in China. Despite political disagreements, business activities remain largely unaffected, providing a sense of stability and reliability for British companies. This enables them to capitalise on economic opportunities, build long-term relationships and navigate the Chinese market with confidence. As a result, British businesses can focus on growth and expansion rather than being preoccupied with the uncertainties that may arise from shifting political landscapes, ultimately strengthening their presence in the world’s second-largest economy.
In terms of practical and on-the-ground advice, McDonald emphasises that personal knowledge of and contacts in China are indispensable and cannot simply be outsourced. He adds that liaising with the embassy and consulates in China can be invaluable, as they can provide a treasure trove of granular information and insights based on their deep experience and commitment to a positive relationship with China. And while they cannot make business decisions, they have played a key role in helping British businesses avoid costly mistakes.
Looking ahead, McDonald notes that British businesses have generally enjoyed a good run in China, particularly luxury automotive brands such as Rolls Royce, Bentley and Jaguar Range Rover. This trend will likely continue. In terms of new areas for growth, he sees collaboration in third countries, most notably in sub-Saharan Africa, and deeper cooperation in science and technology, especially in areas such as climate change, as especially promising.
McDonald has always been comfortable ruffling a few feathers by declaring uncomfortable truths at decisive moments, and in this instance, it’s the UK’s need to pursue a more independent China policy. Yet in doing so, he also offers actionable guidance for British businesses seeking to make their mark in the Chinese market. By understanding the importance of personal relationships, tapping into embassy and consulate resources, and embracing an independent policy, British businesses can navigate the peculiarities and opportunities that China presents.
Entering China is a key decision for businesses of all sizes. Call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out how CBBC can provide you with the platform to unlock your potential.
