After a year in which there were precious few high level political visits, China is now getting two in the same week: the UK Chancellor George Osborne and the Mayor of London Boris Johnson. The irritation at David Cameron and Nick Clegg's very public meeting with the Dalai Lama last year has now been replaced by an era of warmth and mutual understanding. That, at least, is what the press releases for these visits will have us believe. 

In fact, while the ministerial freeze has been on, the UK has been doing fine – having more than double the Chinese investment of any other EU member, and increasing its exports to China. Chinese visitors to the UK brought in £300 million last year – a formidable achievement in view of the highly unwelcoming visa regime the UK currently has towards people from China (something George Osborne has promised to reform while in Beijing). 

The UK and China are always keen to assert differences, but at heart they are pragmatic nations. They are both utterly at one in seeking growth, and they see in each other compatibilities that can be benignly exploited. For the Chinese, there are decent assets in the UK in the energy and manufacturing sector that are very reasonably priced, and which exist in one of the most liberal investment regimes in the world. For the UK, China is a vast market that its companies, small and large, need to conquer. Any tactical advantage in this battle for access is good in view of the competition that is going to come from other international companies, but also players inside China that want to find their way to the hearts of Chinese consumers. The next decades look set to belong to these consumers. The long term theme of Johnson and Osborne's separate visits is getting as close as possible to these new actors in global growth. 

Overcoming hurdles

Boris Johnson and George Osborne are unlikely to be publicly explicit about the challenges that British trade interests face in China, but in private meetings they have to be raised. The first is that China is becoming a master of indirect protectionism, and the treatment being given to companies ranging from GlaxoSmithKline down to small consultancies is getting harsh. The UK has a strong interest in the success of the EU in negotiating better trade access, from the right for companies to bid for government procurement in China to the perennial problems of state subsidies for Chinese companies and intellectual property rights protection. It is important to find smart ways to leverage the newfound interest China has in deploying its capital abroad, to give UK companies better deals in China. This has to be subtle work, but the primary interests in the UK are the same as our EU partners – having a liberal, rule-based, global order where China is far more integrated. 

There are also some domestic issues. Large trade missions to China have been happening since the reign of George the Third. Lord Heseltine led a vast army of companies in the early 1990s to Beijing. Trade missions have become an unquestionable part of the whole performance of UK politicians going to China. But just how much these achieve is debatable. A decade ago, in The China Dream, Joe Studwell poured cold water on some of the noisier delegations and what real business they did. Perhaps it is time for the UK government to give more support for small and medium businesses. Many of them will have to think about a China strategy if they are not already there, and will face a tough and time consuming task in making inroads in China. Some solidarity amongst them and with the government would be a big advantage. 

This impacts on the delicate business of how the UK undertakes its business and political relations with China in the first place. China is now the world's second largest economy on some measures, and George Osborne said his visit was to change UK perceptions of the country so that British people can see it as more than just an enormous factory producing cheap goods. For that to happen there needs to be a more dynamic, inclusive operation in the UK which cultivates links with Chinese business, rather than the ancient groupings of associations and dining clubs that prevail at the moment. These are good for the egos of those already doing well in China, but are not reaching out enough to the many in the UK who might find they can work in or with China. 

Academic understanding

There is a deeper values debate that China and the UK might have. Our history means that we have shared a lot of good and bad things. The UK needs to support as many young people in learning Chinese, visiting China, and knowing about China as possible. And the good news is that relations will be helped by the quarter of a million Chinese students who have studied in the UK and had experience of life here in the last 15 years. As much outreach to this group, many of whom are back in China and developing exciting careers, is important: each one is an invaluable ambassador for life here. Decades after the visit of Osborne and Johnson has faded from memory, it will be these people that truly shape the future. 

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China’s leaders set out their intention to push forward with policy reform following the Third Plenum. The full decision released on 15 November makes clear the aim to loosen constraints on the market, and suggests a dilution of state-owned enterprise influence. A new national security committee could also lead to greater policy integration between domestic security and international affairs.

The Third Plenum of the Chinese Communist Party’s 18th Central Committee took place in Beijing from 9−12 November. Initial reactions based on the communiqué released on the last day of the meeting were mixed. However, on 15 November the authorities published the detailed decision approved by the plenum, and an explanation given to the plenum by Party General Secretary Xi Jinping – in which he acknowledged major problems facing China.

These documents make the implications of the plenum much clearer. In sum, it offers a clear political signal that as China’s fifth-generation Party leadership enters its second year, it is intent on taking forward a ‘comprehensive deepening of reform’ across a wide range of issues. As an indication of the importance of this, a new high-level ‘leading small group’ will be established to coordinate and oversee this process. The decision spells out various new measures, and reiterates many which are already part of the government’s agenda.

More market in the economy

The most important material is on the economy, where the decision makes clear that the leadership envisages a ‘decisive’ role for market forces, and the establishment of ‘fair and equal’ competition in the economy. This will provide a guiding principle for policy-making over the coming years.

One of the ways of achieving this is to reorganize the functions of government. Here the decision reiterates the themes which the government has been working on since Premier Li Keqiang took over in March this year, namely reducing or removing the need for government approvals to businesses, freeing up the investment environment, and allowing businesses and the market to take the lead unless there is a strong reason for government intervention. Better governance is a wider theme of the decision, covering the judicial system and reforms to the party’s disciplinary organs which would clarify leadership and accountability in anti-corruption investigations.

SOE reform

A possible impediment to market reforms is the power of China’s state-owned enterprises (SOEs), and the original communiqué gave the impression that nothing much would be done about SOEs. However, the ability of these so-called ‘vested interests’ to stymie market reforms has been weakened by the targeting of a number of senior SOE-related cadres in the party’s latest anti-corruption campaign, which began at the end of 2012.

Further, the detailed decision suggests further reforms are in the offing. Although the relevant section of the document begins by restating the leading role for state ownership, a series of subsequent policy aims could serve to dilute it, such as ensuring equality in property rights protection and competition; developing mixed (state and non-state) ownership through cross-shareholding and bringing private capital into state-led projects; shifting from managing SOEs to managing state investments in enterprises; better supervision of SOEs which operate in natural monopolies; and removing administrative monopolies.

International affairs

The decision talks about further opening of China’s economy, but the vast majority of the issues covered in the decision are domestic in nature, and announcements such as a further relaxation of birth control policies have attracted most attention. Even the points on military and defense issues relate more to internal management than external capacity.

There was, however, one announcement which could have important implications for China’s foreign policy, which will be watched carefully outside China, the establishment of a ‘national security committee’. Xi said that this was being set up in response to external pressures to protect national sovereignty, security and development. He also cited internal pressures to maintain political security and social stability. It is too early to judge what the exact remit of this body will be, but it could lead to greater policy coordination and integration between domestic security issues and international affairs, at a time when China is playing a more important role across the international spectrum.

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Rapid economic growth and more widespread political stability have catalyzed increased international engagement with Africa in the past decade, as African states develop more significant roles in the global economy and political cooperation in geopolitics. Accompanying this is a shift in British engagement with African states from one with a development aid emphasis to one focused on trade and political cooperation.

HE Professor Kwaku Danso-Boafo will reflect on his time in London, developments in UK-Africa relations, the role of diplomatic engagements in informing and strengthening bilateral relations and the prospects for intergovernmental cooperation on African and global issues.

Attendance at this event is by invitation only.

In light of China’s economic reforms and a high-profile anti-corruption campaign, the speaker will argue that fundamental political, economic and social shifts have changed the nature of opportunities and risks for foreign businesses in China.

Registration for this event is now closed.

The umbrella revolution in Hong Kong, precipitated by the announcement of the decision on how to hold the 2017 elections for chief executive in September, has now sprung several leaks. The passion of the initial protests which convulsed the centre of the city, and which even heavy downpours of rain could not dampen, has evaporated. Street protests only get you so far. The activists have to engage now in the delicate art of politics and compromise. This is where either the real achievements are gained or everything is lost. Street protests belong to the world of theatre. They only make a difference if they give impetus and energy to what happens afterwards, in the establishment of long term arrangements and real outcomes.

The political vision of the leadership in Beijing about the Hong Kong issue is pretty clear. The idea that China talked about 'One country, two systems' on the basis of each part of this balanced clause having equal weight is now over. It was an illusion. In fact, for the Beijing leadership, there was only ever one important part of that four word phrase – the first two words. 'One country' trumps everything. And the preservation of their idea of that one country and its best future is key. A Hong Kong which would be able to march off with a political system increasingly at odds with that presiding just over the border was never on the cards.

Now both the Hong Kongese democrats, and the outside world, are relieved of their illusions, how best to deliver a future for Hong Kong in an age when the airy empty promises of its old colonial masters, the British, are no longer relevant. First of all, there has to be a shift in thinking. Like it or not, Hong Kong figures as a province in the thinking of Beijing leaders around Xi Jinping – a special province, one that has a unique status, and significant value for them, but a province all the same. In that context, it lines up with all the other issues and problems they have to deal with, from restive western provinces to fractious and demanding central ones, to placating the demands for more freedom and space of boom towns like Shanghai or Guangzhou. Hong Kongese have to think about how they relate to all these domestic issues, and pragmatically accept that they are irrevocably tied to a system that has to handle these – its success or failure in the management of this is also their success or failure. Hong Kongese have a vested interest in the Beijing government. They have to start thinking of far smarter ways of being allies in this, rather than camping outside of it and resting on loud declarations of their privileges. A sense of entitlement inherited from the British will get them no traction in China anymore, where there are far larger priorities and battles going on.

Current Chief Executive C Y Leung has been a failure in almost every respect. He has proven poor at promoting Hong Kong’s interests in Beijing, the one place where he needs to deliver – and even poorer at delivering palatable messages back in Hong Kong. That Hong Kongese at least have some form of representation in 2017 is not much, but at least it is something. A good politician could have made something of this, messaged it differently, and used it as a basis on which to build. But Leung simply wasn’t up to this. It is hard to see him having a political life after 2017.  In many ways, he is already finished.

For the protestors, they now need to think deeply about their future strategy. They have made their point, and at least proved that the myth of Hong Kong’s apolitical population can be safely consigned to a trash can. Having politicized the city, they now need to argue, mobilize and build constituencies to support developments beyond 2017. Business is important here – the one constituency the Beijing leadership probably listen to and take seriously – so having an engagement strategy with them is crucial. Framing a demand for better quality leadership in the future is all-important here, because business, political and social constituencies all want to see this. If the Xi leadership in Beijing insists on a system where only two or three people can go through and then be voted on by the electorate, then the protesters at least have the negotiation space to demand far better quality candidates than the ones that have led the city since 1997 and its reversion to Chinese sovereignty. All three of the chief executives so far have been disappointments. Hong Kong now has the right to ask for a better deal, and insist that the people put forward are at least up to the job asked of them – something that the current incumbent evidently is not.

Does all this prove that Xi Jinping is a strong, forceful leader? Perhaps. Perhaps not. One could argue that a really strong leader would have had the courage and vision to let Hong Kong adopt a more open system in elections after 2017, and the confidence not to fear kickback from this into the mainland. What it does show is that, underneath all the heat and noise, Xi is as risk averse as his predecessor Hu Jintao, and has taken, at least domestically, a very safe option. If he had gone to Hong Kong and dared to explain directly to the people there what the Beijing government’s thinking was on this issue, that would have been even more impressive. At most, we can conclude that the Xi leadership is not radically different from their predecessors, but just aware of a vast menu of challenges they need to face domestically, of which Hong Kong is one of the least important. Beyond that, recent events over Hong Kong have shed little light into the real soul of the current Chinese leaders. At most it has proved what has long been known: that if you really want to see what they believe and what they want, then you cannot do that from Hong Kong but have to look at what they do over the border. In that sense, and only that sense, Hong Kong continues to occupy a unique position as the last place in China where its leaders can truly be themselves.

This article was originally published by IB Tauris.

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Long predicted, many observers now think that China has or is about to become more powerful than the United States on the global stage. Joseph Nye will explore the facts behind these beliefs and question if the century of American centrality in the global balance of power is at an end.

LIVE STREAM: This event will be live streamed. The live stream will be made available at 18:00 BST on Tuesday 9 June.

ASK A QUESTION: We will endeavour to ensure that questions are put to the speaker from our online audience as well as from the audience in the auditorium. Questions can be sent in advance via email to questions@chathamhouse.org and during the event on Twitter using #CHEvents.

On the surface, the Indian economy is performing well, and the popularity of Narendra Modi, the prime minister elected on the promise of liberalizing reform two years ago, is holding up. Christine Lagarde, the managing director of the International Monetary Fund (IMF), has referred to India as a ‘bright spot’ in the slowing global economy. According to them, growth equalled China’s last year at 7.3% and has now taken the lead as the world’s fastest growing economy. Yet some joke that India’s prospects look brighter the farther away you are.

The panel will reflect on Modi’s two years in power and discuss what they think the government got wrong and what they got right. They will question whether India’s resurgence can be sustained into the future, and discuss what this actually means for the prospects of India’s 1.3 billion people, as well as the balance of power in Asia and beyond.

This event is organized in association with the Lee Kuan Yew School of Public Policy at the National University of Singapore.

President Recep Tayyip Erdogan has responded with an iron fist to last Friday’s failed military coup attempt in Turkey by detaining, dismissing or suspending, so far, 60,000 military officers, police and intelligence officials, judges, teachers, academics and civil servants, and imposing a widespread travel ban and a three-month state of emergency. He is vowing to reintroduce the death penalty, abolished in 2004 as part of reforms required for opening EU accession negotiations.

This uncompromising approach in the post-coup period will have profound negative implications on Turkey’s domestic politics, security and foreign policy in the foreseeable future to the detriment of its stability and prosperity.

Fractured politics

Erdogan’s indifference to the unprecedented political unity against the coup is, regretfully, a missed opportunity to dilute the deepening polarization and divisiveness bedeviling Turkish politics. His determination to use the putsch to consolidate political power in the presidency and to erode or eliminate the secular character of the Turkish state by means of a new constitution will widen the ideological and ethnic divide between, respectively, secular and conservative Turks and Turks and Kurds. Just a few months ago, Ismail Kahramam, speaker of the Turkish parliament and Erdogan ally, exhorted that ‘secularism cannot feature in the new [religious] constitution’.

His policies and rhetoric, in other words, will undermine even more the almost imperceptible presence of ‘interpersonal trust’ in Turkish society - the willingness of one party to rely on the actions of another party – seen as incongruent with a robust polity and cohesive society. According to a 2010 OECD survey Turkey’s levels of interpersonal trust are considerably lower than OECD averages and it stands out among the 20 surveyed countries as the only one where higher educational attainment correlates with lower feelings of trust. That posture can only breed even more discord and mistrust between the different segments of the Turkish electorate and entrench personality-based and top-down politics, the root cause of political turmoil in Turkey.

Diminished state capacity

Turkey’s NATO partners fear that the purges of experienced military and security personnel have the potential to diminish its capability to thwart the threat posed by Islamic State of Iraq and Syria (ISIS) and other militant groups and to better manage its long and porous borders with Syria and Iraq. Thus far, Turkish authorities have incarcerated nearly one-third of Turkey’s senior military commanders and more than 7,000 police and intelligence officials. This constitutes a major loss of expertise and institutional memory at a time of heightening security challenges. After all, Turkey witnessed 14 bomb attacks over the last year, many of them carried out by ISIS or the separatist Kurdistan Workers’ Party (PKK).

Similarly, the removal of tens of thousands of school teachers, both in private and state schools, university academics and education ministry officials will severely disrupt the provision of adequate educational services to enable future generations to succeed in an increasingly complex global economic environment. This ‘cleansing’ operation did not spare even the elite and renowned state and private universities considered bastions of liberalism and cosmopolitan values in Turkey.

In all probability, the government’s replacements of key staff with less qualified loyalists will rupture the institutional integrity and professionalism of the military establishment and the state institutions. Such a hollowing out process was already underway prior to the coup but post-coup decision-making has greatly accelerated the speed. Sadly, under the best case scenario, it will take Turkey years, if not decades, to restore a modicum of rule of law and public services’ delivery at pre-coup standards to which the Turkish citizenry have been accustomed.

Foreign policy challenges

Erdogan’s endorsement of the death penalty might signal the end of Turkey’s (already nearly non-existent) EU accession prospects and a more troubled relationship with Europe and the US. He was, before the coup, a prickly and challenging partner for the US and NATO to handle, a recalcitrant member of the US-led anti-ISIS coalition and vociferously against the US cooperation with PKK-affiliated Syrian Kurdish fighters targeting ISIS in northern Syria. After the coup, he will probably become more disagreeable to US and European foreign policy and security objectives.

His disagreeability will probably extend to Turkey’s deal with the EU to stem the flow of Syrian migrants across the Aegean Sea and Greece into mainland Europe, which looks increasingly unsustainable. A pugnacious Erdogan may utilize the forthcoming EU refusal to abolish visas for Turkish travellers to the Schengen borderless zone by end-October to wring out more concessions from an Erdogan-sceptical Europe. Despite their exasperation, they should decipher from his rapprochement with Israel and Russia that he tends to compromise with muscular diplomacy as opposed to diplomatic niceties.    

Turkey will be so convulsed and self-absorbed by internal political machinations and its security and military capabilities so compromised that it cannot afford to deploy sizeable assets to promote regime change in Damascus. Syrian President Bashar al-Assad and his Russian and Iranian backers are, naturally, the prime beneficiaries while the armed largely Sunni opposition are the biggest losers. Arguably, Assad must now feel very secure in power and confident that he will enlarge his territorial acquisitions at the expense of the Sunni groups. Equally, the Syrian Kurds will seek to strengthen and, perhaps, extend the quasi-autonomous zone along the Turkey−Syria border commensurate with Turkey’s declining influence in the Syrian quagmire.

Europe’s lesson

Turkey is a bitter testimony to the ill-effects of sacrificing progressive values to political expediency, fear and interests. German Chancellor Angela Merkel and former French president Nicolas Sarkozy demonstrated a lack of strategic foresight by stymying Turkey’s desire to join the EU in 2005. Had the EU engaged Turkey in a credible accession process, however arduous it may have been, the coup would probably have never occurred. Turkish political leaders would have been forced to implement deeper and wider reforms to strengthen democracy, secularism, human rights and a functioning market economy. Instead, Europe is reaping what it sowed: a coup-rattled and more unstable Turkey on its doorstep.

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