Explaining the Golden Era

  • Themes: China

David Cameron's return to government as foreign secretary should prompt a reckoning with the assumptions and effects of the 'Golden Era' of UK-China relations from 2010 to 2020.

David Cameron and Xi Jinping.
David Cameron and Xi Jinping. Credit: Associated Press / Alamy Stock Photo

In 2015, The Plough, a pub in Cadsden, Buckinghamshire, hosted Prime Minister David Cameron and Chinese President Xi Jinping for pints and fish and chips in a moment that epitomised the so-called ‘Golden Era’ of UK-China relations from 2010 to 2020. In the ensuing years, with the Covid pandemic and the decision to remove Huawei from UK 5G networks by 2027, relations between Britain and China became antagonised. In a surprise move in November 2023, however, Cameron rejoined the government as foreign secretary. The former prime minister’s return should prompt a reckoning with the assumptions that drove the Golden Era and the lasting institutional effects.

Cameron’s engagement with China was a response to the crisis of the global economy in 2008 and the divergence of the economies of China and the West. In 2008, as the UK attempted to prevent the systemic collapse of the British banking sector, China undertook a wider and more globally far-reaching response. China attempted to make up the shortfall from the loss of export orders with a gigantic $586 billion spending programme, which accounted for 12.5 per cent of the country’s GDP at that time. An equivalent spend in the US would have been a two trillion dollar programme, but at the time of the Chinese announcement, Democrats were pressing George Bush for a stimulus package of just $100 billion (with a further package in January 2009). China’s efforts were hailed by economists as setting the standard for other countries to follow.

Cameron admired China’s response to the crisis. In a meeting with Chinese Premier Wen Jiabao in February 2009, Cameron praised China’s stabilisation efforts and the effect it had on the global economy. For Cameron, China’s actions during the crisis were not an abstract boon to the British economy; they marked its arrival as a key player in the maintenance of international order.

Cameron’s election to Prime Minister in May 2010 brought into office a set of individuals with a strong interest in developing close relations with China, particularly his Chancellor of the Exchequer and close friend, George Osborne. The new government envisaged a unique place for Britain in the constellation of China’s global relations. As many European countries, including Britain, turned towards austerity measures, a demand for cheaper Chinese goods rose. Chinese competition, furthermore, served a useful creative purpose in encouraging leaner and more aggressive domestic businesses. Six months into office, Cameron travelled to Beijing with British business leaders, hoping that companies might seize the opportunities presented by China. He vowed to double UK trade with China to $100 billion and praised the country for lifting billions out of poverty.

Though Cameron set the tone for the Anglo-Chinese economic relationship, the sheer depth of the exchanges was not due to government direction alone. Desperate to find new sources of money after the Financial Crisis, the City of London Corporation started a campaign to deepen its ties with Beijing. In the same year, HSBC, one of the great symbols of Anglo-Chinese finance, issued the first Renminbi-denominated bond in a major effort to internationalise the currency. By 2014, 62 per cent of Renminbi payments made outside of China took place in London. To manage the risks associated with this huge influx of foreign money the Bank of England and the People’s Bank of China agreed to a swap agreement. At the end of the year, the Treasury followed suit and issued the largest-ever Renminbi sovereign bond by a non-Chinese issuer.

From 2015, Cameron was increasingly willing to match his understanding of China’s economic importance with action. Of greatest consequence, Britain became one of the founding members of the Asian Infrastructure and Investment Bank (AIIB). As he argued in his memoirs, ‘by joining the institution at the start, we believed that we could help ensure that it would have proper rules and governance’. It was not only about having an institution that would work within the parameters of the liberal international order, Cameron also hoped that Britain would exert some influence within an institution that could shape the next hundred years of global economic growth.

In September 2015, George Osborne visited China on a trip that became emblematic of the economic partnership between Britain and China. Facing the crowded auditorium of the Shanghai Stock Exchange, he declared that the ‘world still needs China’s help’, before saying, ‘Let’s stick together and create a golden decade for both our countries.’ The five-day trip featured journeys to Beijing, Chengdu and Urumqi – the capital of Xinjiang – where Osborne notably avoided any public mention of human rights abuses in the province. One month later, Xi Jinping made a five-day visit to the UK, which included a state banquet with Queen Elizabeth. Xi and Cameron signed a string of now controversial business deals worth £40 billion, including the planned Hinkley Point C nuclear plant.

Choosing China was a challenge for the United States. The Americans had been concerned about China’s activity in the South China Seas since the early 2010s. The Obama administration’s ‘pivot to Asia’ was in no small part conceived as a means of shoring up international order in the region in the face of increasing Chinese assertiveness. This geostrategic competition, however, was bleeding into the economic realm. Beijing’s Made in China 2025 policy committed the country to reducing its dependence on foreign suppliers, which was taken as evidence by US policymakers of China’s attempts to destabilise the global trade order. The government’s decision to join the bank rested on a fundamental divergence between them and the US on whether the UK could modify Beijing’s behaviour. As one American official reacted, ‘we are wary about a trend to constant accommodation of China, which is not the best way to engage a rising power’.

The decision went beyond a belief that Britain could exert some influence in this nascent institution. The AIIB was conceived as an engine for China’s Belt and Road Initiative and a direct alternative to the string of so-called Bretton Woods economic institutions of the IMF and World Bank, set up by the Allies after the Second World War. For Cameron, ‘[w]e believed that it was unrealistic to argue that China should take full part in the global rules-based order – joining and paying into institutions we had set up after the war…’ Cameron felt a fundamental reworking of that order was overdue. He was willing to stand by this view even if that undermined the central position of Britain’s closest ally within that order.

The intrinsic difficulty of Cameron’s worldview was squaring the abstract principle of engaging one of the great powers with the material reality of an increasingly assertive China. Concerns about Chinese claims in the South China Sea could be broached behind closed doors; human rights could be parked; Britain would wait-and-see on Taiwan. Eventually, though, tough decisions were required. With a legal commitment to Hong Kong under the 1984 Sino-British Joint Declaration, in June 2020 the British government had to choose to stand with Hong Kong or ignore this commitment for the sake of good relations with China. The government chose the former. By pushing on with its actions in Hong Kong – despite British protestations – China proved it was not the force for good Cameron hoped it would become.

Even as the politics of engagement with China changed, institutional path dependencies remained. In 2020, though the government designated Chinese telecoms company Huawei as a ‘high-risk vendor’, they permitted the company to compete for up to 35 per cent market share of the country’s access network (such as antennas). Given the security concerns expressed at the time, it was surprising that Huawei was given the green light when Ericsson and Nokia, two Scandinavian companies, were plausible alternatives from friendly countries. A key reason that Huawei was not banned was because barring it from the network would reduce choice on the provision of the UK’s 5G network down to just Ericsson and Nokia – limiting market competition and increasing the UK’s dependence on a small pool of friendly, though still foreign vendors. The ability to remove Huawei from this discussion entirely would have necessitated a governmental commitment to funding alternatives over decades. Cameron was right to believe this would not be necessary when he was working under the assumption that China could be a responsible partner. When that assumption changed, however, and a decision on the future of the UK’s 5G network was required it was already too late.

Cameron’s approach has been rejected in the years since his resignation as prime minister, with tensions escalating between China and the West. Yet it would be a mistake to view him simply as the ‘smiling face of Chinese interests’. His view of China rested on a series of assumptions that were critically shaped by the Chinese response to the 2008 Financial Crisis. Cameron came to see China as an integral actor in the management of the global economy and – given the centrality of economic issues in his worldview – international order more broadly. He believed that Britain could play an important role in helping China to be a positive force in world affairs, despite US reservations. The crackdown in Hong Kong proved that this worldview could not stand indefinitely without making decisions that would have deep ramifications for British foreign policy. While Cameron will undoubtedly continue to view China as a crucial player in world affairs, he will have a much greater sense of the limits of this thinking.


Oliver Yule-Smith