China’s economic growth has made it a destination for many British businesses. What advice would you give to businesses looking to enter the Chinese market?
China is a genuinely open market and one of huge potential for anyone who is prepared to be commercial and a bit adventurous. In economic terms they are reliable. The rule of law of course is less effective than you’d find in a western country but it is still there.
But it is genuinely competitive market and if that’s what you are, there are great gains to be made but, as in any state-run economy, you should remember you are always dealing not just with the businessman, but the state institution that lies behind it. And that means if you get yourself into difficulties that are believed to be counter to the interest of the state, it’s politics that will dominate, not economics.
My own view is that whereas Russia is a kleptocratic state that doesn’t enormously rely on the rule of law (and the rule of law can always be bent, in relation to the political governors or a nation, above all Putin and the KGB) China genuinely tries to be a law-abiding citizen in the world and will always want to be seen to be acting in a law-abiding manner. But behind that lies a number of things. First of all, it is a state-run organisation, it is a mono-political structure, it is not run on Western democratic lines and if the interest of the state conflicts with whatever you happen to be doing – whether legal or not – it is the interest of the state that will dominate.
Be enthusiastic, be adventurous, take chances but always be aware that behind it, whatever you do, you are not going to enjoy the same objective operation of the rule of law (although better than in other countries), as elsewhere.
Are businesses taking cyber security as seriously as they should?
Cyber security is the new front line in terms of operational advantage, economic advantage and state advantage. Taking the case of the issue of security and conflict I have often argued that the first four or five thousand years of warfare, say from Alexander the Great through to the battle of Blenheim, he who won on the land won; after the next hundred years from the battle of Trafalgar, he who won on the sea won; since the early days of the 1930s and the Spanish Civil War, he who won in the air wins. I think what is next and what people fail to understand and what is the strategic difference of the new operation of conflict and inter-relations of nations, it is now cyberspace – and he who wins in cyberspace, wins.
So you can be sure that all of those advanced countries (and technologically and you have to count China as one of those, and perhaps one of those at the forefront) they will be using this as a theatre of relations with other nations, they will be using this as a theatre of economic advantage, and they will be using it as a theatre of war, just as everybody else is.
I think in many ways none of us has come to grips with what I would call the synoptic change that is taking place.
He who wins in cyberspace, wins
In the 18th century you would have had couriers on horseback dashing around carrying pieces of information that everybody is trying to get at both commercial and economic and inter-state. Later on it would be tapping the airwaves, and now this is the new theatre where these things happen. China is particularly good at it, and particularly more able to reach into corners (which may be less advanced nations wouldn’t be able to reach, though I suspect they are not particularly better than we are).
Whereas we would extend that power, we in the West do extend that [power] to relations with other states, being able to intervene and intercept the communications of other states. To be able to dominate the battlefield we probably would not extend much into the commercial theme because we have laws of privacy but China I expect would not be bound by such niceties. And by the way, as a superpower, we behave not too differently when we were the superpower in the world, and the state advantage and economic advantage are quite closely tied together and we want to be able to make sure that one reinforces the strength of the other.
We are [one of the five cyber-superpowers] and we are necessarily restrained in our activity by the rule of law. Other nations, and China would be one, would not be so scrupulous about this. But I don’t think they are exceptional in this matter.
Should small businesses be worried?
If you are in or anywhere near to the defence area you are going to find yourself a subject of that as you would anywhere else.
I work with and advise a small business that makes power tools. Are they going to be the result of state sponsored intervention? One would have thought not, they would be too far below the radar for that. But on the other hand, it is relatively cheap to have private means to do that at a relatively cheap level so you shouldn’t assume anything you do is going to be beyond the reach of the state or private investigators. So ensure you have the best cyber protection you possibly can. It makes common sense.
Will the recent polarisation of UK politics see a new central-left party emerge and how can the Liberal Democrats benefit from the leadership challenges of the Labour Party?
If you remember history, and far too few of us read history and far too politicians do (which means you’ve got no mechanism for accurately judging what you are doing at the moment), but if you look at history, you’ll see that in the early decades of the 20th century there was a fundamental shift of the politics of Britain and the politics of the Western world.
If you go back to the days of the Changing of the Guard and Gilbert and Sullivan, they said you were even a little liberal or a little conservative. The Liberal Party then spanned what you might call intellectual metropolitan voter or person, and also was a representative of the working class of Britain.
In the second decade of the 20th century, Labour took that position and it was impossible for Liberals to straddle that gap. I think Labour now is in precisely the same situation. Mr [Jeremy] Corbyn has helped it get in to the same situation (but it was going to get there anyway and even if Mr Corbyn was changed it wouldn’t make much difference).
The bottom line is that Labour has lost all traction in Scotland without which they can never be the government of Britain again as the single majority party, and now they are losing their northern working class areas to UKIP and perhaps even the Tories a bit. We will wait and see. And meanwhile they are finding it impossible to straddle what you might call the London metropolitan natural voter and the working class areas of Britain. And the classic example of that is over Brexit.
What we are beginning to see now, the probability (unless Labour can find a way out of it and I don’t think they can, I think their problem is a lot more electoral than it is to do with Corbyn) then Labour looks to me, in long-term terminal decline.
You win battles now in the field of public opinion and if you can’t bring public opinion with you, you can’t win
You then have this curious phenomenon. Politics has spun now away to extremes. Mr Corbyn has taken the Labour Party into a position where it no longer makes any attempt to occupy the centre-left but is proudly a 1950s-style semi-state socialism and Mrs [Theresa] May has taken her party, in terms of position, which is indistinguishable from UKIP. I don’t mean they are the same as UKIP but the policy position they have adopted is now pretty much indistinguishable.
The vast centre ground where I think the vast majority of the British political centre of gravity lies now, is the new unrepresented and the new voiceless. Occupying that ground you have a collection of parties (it reminds me very much of the 1930s by the way) and so you have a collection of parties of which the most comfortable one (and that’s why the liberal democrats have seen such a huge surge in their membership) and also in their capacity to win votes. Particularly you see it in by-elections but you also saw it in Richmond.
But the problem with the Lib Dems is – and I adore them and I love them and they are my party and I will never vote for anything else and I advise people to join them – but the reality is that we have nine MPs. So I characterise the Liberal Democrats’ dilemma as: previously we needed a strategy to find a small space to stand on. Now we are too small to occupy the space that’s available.
And so my view is that there needs to be, to make sense of our politics, some realignment of those who are the voiceless, the moderate centre-left of Britain. Can the Lib Dems do it by themselves? If they can I would be delighted but my guess is in the time they are not going to be able to. So I think the point becomes how do they work with others to create some political voice for those voices that feel they are left out in the Brexit debate, for instance. And I don’t think that will happen organisationally. I don’t think that will happen by people saying you must leave your tribe to join mine. I don’t think it will happen by sitting in darkened rooms saying you have this seat; I will have that. I have tried that and it doesn’t work. It didn’t even work in the 1980s when the SDP [Social Democratic Party] was caused, let alone what will happen now when people aren’t much prepared to do what the centre tells them.
My view is that it is more likely to happen organically rather than organisationally, that we create a space in which people can work together and in a sense, More United – the organisation that I am involved in – is part of that.
So what I think I’d say about the Lib Dems is it is necessary that they are strong. They need to be as strong as they can, they will grow fast, I will certainly be supporting them as they do, and I hope they grow faster than we can conceivably imagine. So a strong Lib Dems is essential. It’s necessary but not sufficient. We need to have a wider gathering of the moderate forces of the centre.
Now the UK has voted to leave the EU, what is the best Brexit scenario?
The best scenario is we find our way back into the European Union. Without a shadow of doubt. We are beginning to understand the cost of the decision we took. I don’t think rushing around saying, “give us another referendum” is the way to do that. And I think there is a moment where you may well find – some time towards the middle of the year or in the third quarter – where the public mood changes, where the worm turns, where we understand the cost.
But I don’t think on this occasion, politicians can do very much to lead. We have to wait for the moment and then take it when it comes. If we cannot find our way back into the European Union – and it is by far the option that I would prefer (although it is not easy to find a route that will take us there at the moment) – then we need to be as close to the European Union as we can be.
Mrs May claims that she has a mandate for Brexit. We have to agree with her that she does but she has no mandate whatsoever to take us out of the single market, not least because the Conservatives promised in their manifesto that we’d stay in it and the vast majority of people judging by opinion polls want us to stay in it. And so Brexit is taking us into a position, which is inherently not helpful, but in taking the most brutal and extreme form it is doing something which I think is very damaging indeed.
So I think the best we can do at the moment is prepare for the moment when the worm turns, when the public opinion shifts, if it does, and use every force we have to make sure that in leaving the European Union we remain as close to it as we can possibly get.
Will Brexit have an effect on trade with partners outside the EU?
I have no doubt about it whatsoever. It will have a huge effect on us. But not just that, but on our standing. I am particularly conscious of the fact that Britain used to be a medium-sized world power that was listened to and had influence. And that influence has been catastrophically cut because of the decision we took – I had someone say to me the other day: “We looked on you as a global power who had influence and who we listened to but I’m not sure you are going to be very much [more influential than a country like] Denmark in the future.” I don’t agree with that but I know where he is coming from.
Building relationships based on common interest, commercial interest and political interest is the way forward
If you are measuring the effect of this on other nations, you don’t just measure it in terms of economics, but you also measure it in terms of political influence in the world, which has been catastrophically diminished. And furthermore we’re only left with two options. If we don’t get close to Europe, then we have to get close to Trump, and that’s not a very appetising prospect.
You know the line in “The Lobster Quadrille” – the further we are from England the closer we are to France. Well the further we are from Europe the closer we are to Washington, and I’m not sure if I particularly want that at the moment and I am not sure too many others do either.
With America being increasingly inward looking and Europe possibly collapsing, is China starting to look like the good guy in all this?
It’s looking like a leader. Not just looking like a good guy but it’s certainly looking like a leader.
There is every sign that certainly European leaders and a significant number of their population are now saying “hang on – we will reject Anglo Saxaon exceptionalism and isolationism and take refuge in European solidarity” and that’s the right way to go. I guess if we can get past the French and German elections that is what will happen.
But underlying this is something much more fundamental. We are moving away from a mono-polar world, which is a rather rare circumstance, there has probably only ever been three in the world: the Roman Empire, the British Empire and the last 70 years of the American century – to a multi-polar world. America maybe the strongest in a multi-polar world but they do not dominate it like they did in the past.
If you want a picture of what I think politics looks like and statesmanship looks like – it doesn’t look like what it’s looked like in the last 50 or 60 years. It looks much more like Europe in the 19th century when there was a five-sided balance of power and there was a period of shifting relationships. It looks much more like that.
Whether America understands that (and particularly America under Trump) I really get worried that Trump completely fails to realise the geopolitical position of the United States and uses military and other means to thrash about trying to preserve the un-preservable.
And so the second point that I think is really important is that we are probably ending a 400-year hegemony of Western power, Western values and Western institutions. Up until now, when the West got its act together, it could do anything it wanted. We are now moving into a world in which the centres of power are no longer based around the Atlantic and the Mediterranean but are probably much more widespread and we are going to have to deal with that.
So you don’t think that China will be stepping up into this role as global leader?
Of course. I mean China will do everything they can to occupy the role – why would they not? It sees itself as a superpower and it’s very difficult to disagree with it and it will behave like a superpower.
My general view is that China wants to be viewed as a good world citizen. If you see the way that it behaves in the World Trading Organization, it is a good member of the WTO. Russia manifestly isn’t. I think multilateral organisations are now playing a major part in international peacekeeping, though no one notices it. They have 5,000 troops now in Africa under the UN. They want to be acting in multilateral structures and they are obviously taking as much raw material out of Africa as they can, but then so did we, so I’m not sure we’re in a position to argue there.
They will nevertheless behave like a superpower. You see them doing that in the South China Sea, they will try and be muscular and make space for themselves and they might not be too careful about the needs of others when they do so. But generally speaking the strategic opportunity at the moment – and this is where Trump worries me so much – is to test China’s interest in sustaining a rule-based order and trying to do things in a multilateral basis rather than driving them into a corner like we did with Russia after the end of the cold war.
Is this therefore a threat for the whole idea of Western liberal democracy?
I don’t think it is. I really don’t think it is. I think it is a threat to those that believe that the West still has hegemonic power. That line was exposed brutally in Afghanistan and Iraq. In Libya and in Syria, of course. Unless we do deals with others we won’t get our way in the world. For those who believe that the year is 1945 [and that] you can have a Bretton Woods institution that can solve the problems of the world – they’d better wake up and smell the coffee.
By and large China’s interest it seems to me is in a more stable world rather than in a turbulent one
Take a simple fact. The G8 had to become the G20. We had to involve them when we set the rules for the world order.
Now the question is: what is China? Are they going to become like Russia, throw their weight about, become aggressive (I think that’s Russia’s weakness not its strength) or are they interested as a trading power in basically a rule-based order – even one necessarily shaped to include their views rather than Western liberal democracy? I think they are. Why would you not be if what you’re actually getting your power through is not military adventurism but trade.
But testing that proposition for China seems to me to be crucial. I think they will seek to be leaders where they can, perhaps in climate change. They will seek to exercise diplomatic power. They will seek to use commercial power. They will back that up as nations always do, by being able to extend and project that power when they need to do so including through military power. But by and large their interest it seems to me is in a more stable world rather than in a turbulent one.
So therefore that’s a positive thing for British business?
I think it is a positive opportunity for Britain. If you take a look at the 19th century and use that as your model, Britain’s key thing was that it was building relationships which didn’t last long and were all over the place. We were called “Perfidious Albion” as a result. I think British diplomacy and British businesses should be seeking out alliances with people with whom we don’t necessarily share values but we do share interests.
The classic diplomatic place for this is the attack on the Somali pirates. What’s the largest naval unit protecting us against the scourge of Somali pirates? Answer? The Chinese. Of course it is. They want to keep the sea lanes open, just as we did. And so building those relationships based on common interest, commercial interest and political interest, it seems to be is the way forward and there is huge opportunity for us there. If we stay stuck in the view that we are one of the world’s great powers and things are like they were in the past, where the West can get its way whenever it wants it, then we’re not going to be very successful.
If we begin to think about building relationships, which may not be so long lasting but can deliver advantages to us politically and commercially, then I think we can be clever enough to benefit from that.
As wars are fought increasingly for “hearts and minds” and the power of social media changes the landscape of the traditional battlefield, has the need for military hardware diminished?
It hasn’t diminished it has grown. If you read Rupert Smith’s remarkable book, he was saying that you win battles now in the field of public opinion and if you can’t bring public opinion with you, you can’t win. It’s called the “The Utility of Force”, and this has always been the case.
But now social media gives that a huge new impetus. You cannot be successful in politics, in statesmanship, probably in large chunks of business but certainly in democracy, and winning hearts unless you can make use of this new medium. Very much like printing when it was first invented. It produced a huge flood of idiotic false news, but at the same time it is the medium by which people changed the minds of others. I guess that means you have to be good at managing it.
There is an argument that says a Western liberal democracy creates soldiers that are problem solvers fighting for a cause, rather than blindly following autocratic leaders. Might this cause a problem for new newly nationalistic and increasingly autocratic Western countries?
If it happens, yes, but it won’t. What has changed our lives? It is the advent of new technology, this extraordinary boost in communication. A historical parallel is very clearly with printing. People tried to control it for a bit but it failed because you just can’t do that. And you see it most particularly in China. China now has understood very clearly. It has actually made the change from a communist, state-run economy to a liberalised economy, ok with some caveats, but basically a liberalised economy. And it realising this has produced a huge upsurge in people that want to have a liberalised society as well. And China is having to cope with that.
China’s biggest problem today is how do they liberalise? Can they liberalise at a pace which is acceptable to their people but doesn’t blow the whole system apart? Whatever you think, whatever attempts made to control it, they will be as fruitless and useless as the attempts to control printing.
Lord Ashdown is an advisor for cyber security firm G3. He spoke to Tom Pattinson
This interview has been edited for clarity and style.