Sunanda K Datta-Ray: Westminster welcomes the dragon

Last Updated: Fri, Jan 27, 2012 19:11 hrs

Up and down Britain they are tossing and frying crisp vegetables and bits of meat in woks. If a Food Network UK survey is to be believed, one-fifth of the population guzzles Chinese stir-fry at least once a week. That mythical chicken tikka masala concoction never did exist much outside the imagination of politicians with subcontinental constituencies.

Food being inspired by finance, the preference for Chinese stir-fry has political and economic implications that highlight British pragmatism. The £500-million investment by the China Investment Corporation (CIC), a $410-billion sovereign wealth fund, in Thames Water that provides sewerage services to 14 million Londoners and water to 8.8 million is hailed as a diplomatic triumph. Many countries would not dream of allowing foreigners a role in such a vital sector, but George Osborne, Britain’s Chancellor of the Exchequer, sees it as a “vote of confidence in Britain as a place to do business”. He means China, not India, when he says Britain must be “the home of Asian investment into Europe.”

Tapping into the world’s second-largest and fastest-growing economy didn’t begin with David Cameron’s government. The first major Chinese investment was the 1997 acquisition of MG Rover by the state-owned Nanjing Automobiles. Twelve years later the CIC paid £880 million to become the largest shareholder in the Canary Wharf development in London’s East End. Last September’s Anglo-Chinese MoU on infrastructure was followed by the Thames Water deal that encourages hopes of Chinese participation in the £32.7 billion high-speed London-Birmingham railway.

Osborne, who wants the renminbi to be traded first in London, received a warm response from the CIC Chairman, Lou Jiwei, who speaks of a “win-win” situation with Chinese funds revitalising the West’s infrastructure. China’s foreign currency reserves for investment have more than quadrupled to $3,202 billion in six years, with the Chinese moving on from snapping up US Treasury bonds to acquiring iron ore, gold and platinum deposits. They are now eyeing European physical assets.

There’s a message in these transactions for the European Union that snubbed Britain over the euro. Osborne is reminding Europe that London has always been a global hub of foreign exchange trading, far outstripping the US and Switzerland, the nearest European rival. The currency trading forum that Britain and Hong Kong are launching is expected to benefit from the City of London’s financial expertise, time zone advantages and historic links with the former colony.

This is sheer chutzpah, purging history of all that is unfavourable to the present. In claiming Sinic links for two British banks, Standard Chartered and HSBC, British commentators overlook that these links were primarily in the hated opium trade that led to two disgraceful wars. In the course of the second, Lord Elgin burned down the Summer Palace in Beijing while allowing his troops to loot its priceless contents. Even otherwise, Britain’s disdain for Manchu protocol, insistence on extra-territorial rights in Shanghai and bullying over Tibet hardly left happy memories. Sikhs are still seen as reminders of the police force that executed the colonial will.

Prince Philip’s comment to British students about becoming “slitty-eyed” if they remained too long in China and Prince Charles’s reported remark about Chinese take-aways harked back to that psychology. But being themselves hard-headed and unsentimental, the Chinese won’t allow these memories to impinge on the profit motive. Conscious, for instance, that the Industrial and Commercial Bank of China is the world’s largest bank, they would like Standard Chartered and HSBC relocate their headquarters to Hong Kong.

They must have noted with amusement that the current upgrading process of Heathrow airport’s five terminals is being compared unfavourably with the 2 billion pound terminal – bigger than all the five combined – Beijing built for its own Olympics. British interest in China’s new malls (an 893 per cent increase in shopping centres being promised by 2015), foodies, taste in wine and obsession with the iPhone must be immensely satisfying. London yearns for more Chinese tourists and shoppers.

No foreign policy can afford to remain mired in pride and prejudice. But actually, and despite all those jokes about the Chinese, some not even printable, the British always played it safe. When an unknown Chinese in pigtail, pillbox hat and mandarin robe turned up at Westminster Abbey for Queen Victoria’s coronation, they seated him between an earl and an archbishop just in case the Son of Heaven had sent an envoy. The man was a curiosity-driven boatman from a junk moored in the Thames but his hosts couldn’t be accused of not investing in the future.  

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