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UK-China trade negotiations stalled as hawks vie to succeed Boris Johnson

Boris Johnson's administration halted two important sets of trade and economic discussions with China in response to a reaction from Tory MPs and aggressive rhetoric from those aspiring to succeed him as U.K. prime minister.

According to three individuals with knowledge of the conversations, the administration of the departing British leader has froze two sessions of meetings that were scheduled to take place later this month.

The planned discussions, of which one set was disclosed earlier this year, would have been the first since Beijing's crackdown on Hong Kong's pro-democracy demonstrations in 2019.

Some British firms are concerned by the decision to put them in limbo, while human rights activists hail success and hope Conservative leadership candidates will keep the discussions on hold.

Johnson was prepared to restart the U.K.-China Joint Economic and Trade Commission (JETCO) discussions, which have been suspended since 2018.

The action followed the late 2021 declaration by then-Chancellor Rishi Sunak that the Treasury will revive the China-UK Economic and Financial Dialogue, which was last conducted in 2019.

Plans "were ongoing" for both rounds of negotiations to take place by the end of July, according to a person familiar with the sessions' preparation.

The stunning departure of Johnson and the ongoing race to succeed him as the leadership of the Conservative party have dominated Westminster over the past two weeks, they noted. The individual stated that there was a sense of normalcy returning till the recent occurrences occurred.

Two further individuals familiar with the preparations acknowledged that the negotiations had stalled as Johnson's hold on the No. 10 position weakened.

Johnson's impending resignation has generated a heated leadership contest that has attracted China-hawkish contenders like as Foreign Secretary Liz Truss and MP Tom Tugendhat, creator of the China Research Group, which monitors Beijing's policy.

Truss has publicly urged the West to "learn the lessons" of Russia's invasion of Ukraine and "ensure Taiwan has the means to defend itself," hitting on a significant pressure point. The Chinese Communist Party views "reunification with Taiwan," an autonomous island, as a primary policy objective.

She also criticised Beijing for violating "binding legal commitments" towards Hong Kong. Less well-known are the perspectives of current second-place contender Trade Policy Minister Penny Mordaunt and Minister of Levelling Up Keemi Badenoch on China.

Former senior finance minister Sunak, who has advocated for sustained commercial links between the two nations, is also in the race.

There has been "strong pressure" inside the administration to halt trade and economic discussions, according to a China-focused human rights activist, who added that "hawkish remarks from some party leader contenders contributed" to their suspension.

"We should not reward bad behaviour," they said of China, stressing that the economic talks with Beijing had been suspended after Beijing enforced the harsh National Security Law on Hong Kong.

“Hong Kong‘s freedom is being throttled ever more tightly and Beijing is unrepentant," they said.

As China aspires to become the world's largest economy and largest importer within the next ten years, businesses are concerned about the impact of abandoning the talks on their operations.

The country is already Britain's third largest trading partner behind the EU and the U.S., with £93 billion worth of products and services exchanged between the two countries in 2014.

“It is regrettable that the dialogues are not taking place: given the importance of exports in rebuilding U.K. economic growth, it is more important than ever that U.K. businesses can take full advantage of the opportunities in what is set to become the world’s biggest economy,” said a spokesperson for the China-Britain Business Council.

“China is already a key market for the U.K., with our exports there supporting well over 100,000 jobs right across the country,” they added.

“Consistent annual meetings provide a public display of the two countries' willingness to engage in and promote trade between each other,” said a spokesperson for the British Chamber of Commerce in China, noting the economic discussions help “mutual understanding."

They're calling for "increased bilateral ministerial engagement between the U.K. and China," not less.

Just this week, British Trade Secretary Anne-Marie Trevelyan stressed the benefits of trade dialogue with China in a meeting with lawmakers. “If we can make progress on some basic market access barriers, in a regular conversation, that will be a great start," she said.

"The challenge we have in the Conservative Party is that being hawkish on China is viewed as something of an ideological litmus test," said the first source with knowledge of the discussions. They noted that despite diplomatic tensions at the highest level, U.S. Treasury Secretary Janet Yellen and China's Vice Premier Liu He had their own economic conversation at the beginning of July.

The same individual cited a speech Sunak delivered in the City of London last year as evidence of his belief in "a mature and balanced, rational economic relationship with China today."

But Sunak’s stance, the human rights campaigner said, “poses serious questions” about what his leadership “might mean for the U.K.'s China policy, and for our multilateral relationships with like-minded democracies.”



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