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LONDON — The U.S. government has been consulting British companies about their links to China as the U.K. considers banning its firms from investing in some areas of the Chinese economy.
Business and Trade Minister Nus Ghani told POLITICO that the U.K. government was waiting on the results of the U.S. survey to make a decision on whether to follow America’s lead and clamp down on British investment into China.
It comes after Rishi Sunak and Joe Biden agreed to work together to address the national security risks posed by “certain types” of outbound investment when they signed the joint Atlantic Declaration in July.
The White House has already imposed capital controls on U.S. firms trying to invest in Chinese companies developing technologies like advanced semiconductors, quantum computing sensors and some forms of artificial intelligence (AI).
The U.S. began to restrict economic cooperation with China in emerging technologies under former President Donald Trump. Biden has only accelerated this push.
“I think in many ways the Sunak government has positioned itself closely to the U.S. government, but he’s not blindly following what the U.S. is doing,” said Sam Hogg, a China analyst who founded the weekly briefing Beijing to Britain.
“It’s important that the U.K. pays attention to what the U.S. does and looks at the data that comes in from the U.S. side and then makes its own decision — if it aligns with our security goals, then we should come to the same conclusion,” Hogg added.
POLITICO reported earlier this year that the U.K. had also been surveying British companies on this issue and was considering implementing similar curbs on British investment into China.
Ghani would not rule out curbing outward investment in an interview with POLITICO.
“Over the summer [the U.S. is] reaching out and consulting with businesses in the U.K.,” she said.
“I want to see what the responses to their consultation will be. I’m catching up with the American minister responsible for that to get the feedback from U.K. businesses.”
Sunak’s government is trying to re-energize economic ties with China on the proviso that any inbound investment must not threaten national security.
Foreign Secretary James Cleverly said on a recent trip to Beijing that the U.K. is “open for business” to Chinese investors.
But imposing curbs on British firms trying to invest in the Chinese tech sector may prompt retaliation. China’s ambassador to Washington responded to the United States’ own investment controls by saying Beijing “will not flinch from provocations” and that “China definitely will make our response.”
However, China has not hit back with retaliatory measures as of yet.
Sophia Gaston, head of foreign policy at the center-right think tank Policy Exchange, said the U.K. should start looking at “outbound investment flows” into China.
“We will not necessarily align perfectly with all of the areas the U.S. has identified for its own restrictions,” she said.
“But we should certainly consider the geopolitical implications of British businesses investing in the sectors that are going to be the key battlegrounds of strategic advantage and resilience in the coming decade.”
