Ting Zhang, founder and CEO of Crayfish.io, has witnessed dramatic change in the quarter century since she arrived in England, in both her life and in her business ventures – helping bridge the gap between the UK and China. She also reflects on UK-China relationship during this period.
On 22nd September 1997, exactly 25 years ago, I landed at Heathrow airport at 5:30am via a late-night flight from Hong Kong.
That was less than three months after Britain handed over Hong Kong to China smoothly, during an internationally televised official ceremony between the then Chinese president Jiang Zemin, and Prince Charles representing Queen Elizabeth II, on 1st July 1997. Nine weeks later, I watched the sad news of Princess Diana’s tragic death in a car accident and her funeral.
25 years in a flash. This past Monday the country paid its final respects and laid to rest Queen Elizabeth II in an incredible state funeral watched by millions around the world, including many in China. As the country now enters a new era under King Charles III, and the new government is in action to solve many of the pressing challenges facing the United Kingdom, I reflect on the relationship between the UK and China and the many changes that I have seen and experienced over the past 25 years.
1997 – 2008
Britain has one of the West’s most developed and deeply established relationships with China, as the UK was one of the first countries to recognise the People’s Republic of China in 1950. However, up until 1997, the issue of control over Hong Kong had generated tensions between the two countries. But after the handover, that relationship improved gradually, and the two enjoyed a friendly partnership during the then New Labour government, mainly characterised by economic interests in terms of trade and investment.
In the day before I embarked on my journey to Britain, Tony Blair’s government was talking about the potential to “build a more constructive relationship with China”. I could not help but wonder what the UK would be like and how my life would pan out thousands of kilometres away from my home.
What brought me to the UK in 1997 was my earnest pursuit of an MBA from one of the world’s oldest academic institutions. Despite of my university study in Shanghai and a degree in international business, and having already travelled outside China for business and leisure – including a considerable time working in Hong Kong – I was still not prepared for the British culture. It took me years to really appreciate the pub culture and dry humour by my English friends and colleagues.
When I arrived at the Porter’s Lodge at my college in Cambridge on that beautiful early autumn morning in 1997, I naively thought the college porters would take my luggage to my room just as any hotel porters do. So I had to navigate a big trolley on my own with heavy luggage (which included two large Oxford English dictionaries) along a road to my college accommodation. Later that evening, a hungry me hailed a taxi again and asked to be taken to where I could find “something to eat”. I was dropped outside Pizza Hut where I had my first meal in the UK alone. When I walked out afterwards, I was so pleased to see a Chinese restaurant almost right opposite! Nowadays, there is so much information available online about studying and living in the UK for visiting Chinese students to learn before they arrive, there is much less to be “lost in translation”.
China’s entry into the World Trade Organisation (WTO) in December 2001 marked a major milestone for more economic links between the UK and China, as well as for my own career. By that time, I had already set up my own China business consultancy after two years working in the City of London during and after my MBA study at Cambridge. Although it had taken me nearly half a year before landing several well-known local tech firms as my first consulting clients, China was beginning to appear on the boardroom agenda of many businesses, so my expertise became highly demanded, from corporates to government agencies, from top universities to Wall Street financial institutions. It seems everyone wanted to have a piece of the huge pie of the Chinese market. I was fortunate to have opportunities to deal with a few English regions – to help them shape their China strategy which incorporated trade, investment, education, sports and culture.
During the following few years, China went through rapid growth, and the country made ambitious five-year plans centred on science and technology. One of the biggest projects was the development of its own 3G standard (TD-SCDMA), on which the government would spend about $41 billion over the following two years. I remember working on a technology transfer project for a major telco at the time, exploring the possibilities of licensing some of its patents. The response I received from China was warm but there was more curiosity to learn, and I could see that there was a determination to catch up too. It is not surprising that China later became a leader on global standards for 5G and beyond.
2008 – 2015
At the 2008 Beijing Olympics , the entire world was for the first time presented with a modern China, rich with history and traditions yet demonstrating utmost efficiency and desire to succeed. I watched the televised opening ceremony in front of the big screen in my office building and remember the exclamations from the others watching with me,– “wow”, “incredible”, “amazing” . As one of the few Chinese faces there, I was immensely proud. Back home I showed my daughters the playback, and my 4-year-old daughter’s comment was “mummy, there are so many people in China!”
Just a month after that, while China was still enjoying success from the Olympics, the Western world was almost brought to its knees by the Global Financial Crisis, with the bankruptcy of Lehman Brothers on September 15, 2008. The recession affected nearly all the businesses I worked with in the UK, leading to financial difficulties and layoffs, no matter what the size or sector. Even the UK government had to restructure its finance. However, China introduced the world’s largest stimulus package late that year and became the first major economy in the world to emerge from the crisis. The Chinese economy grew by 8.7% in 2009 and by 10.4% in 2010. It was widely acknowledged at the time that China’s successful effort to keep its economy growing was an important source of global demand which helped the worldwide economy recover from the crisis, including the UK.
It was also after the 2008 financial crisis that Chinese investment in the UK started to pick up momentum. According to research by independent think tank Civitas, £61.7bn ($80.4bn) of Chinese deals were struck over the 10-year period from 2009 to 2019, covering real estate, banking/finance and energy mainly, as well as retail, leisure and manufacturing. Some of these were loosely related to the ‘Belt and Road Initiative’ which was first adopted by the Chinese government in 2013 to invest in nearly 150 countries and international organisations. The UK benefited from this grand initiative too, receiving Chinese investment in specific areas – from airport infrastructure to reinsurance and wealth management; from climate change projects to green finance in recent years. On the business side, there were a lot of commercial deals happening between the UK and China, and I was personally involved in some, covering software and PC games, as well as education and advanced manufacturing.
2015-2019 (The Golden Era)
Of those £61.7bn of Chinese deals from 2009 to 2019, most of the investment – approximately £42bn (or 68%) – was completed during a period hailed as the UK-China ‘Golden Era’, which was kicked off by Chinese president Xi Jinping’s state visit in Oct 2015. The late Queen and Duke of Edinburgh formally welcomed President Xi and Madame Peng on Horse Guards Parade and hosted a state banquet at Buckingham Palace. In Xi’s speech at the Palace of Westminster, he focused on historic bi-national ties, law and order, and China’s burgeoning economy. He also cited Shakespeare’s The Tempest, that “what’s past is prologue”.
The visit fanfare was positively reported in both the UK and China. The UK government website news read: “The State Visit is the crowning highlight in a special year for the UK-China relationship – a global partnership for the 21st century – and a spectacular celebration of our shared appreciation of heritage and culture. This partnership shows that our two countries are open for business, that we are the economies of the future and that we work closely on the international stage.” And from the Chinese side – “In the context of the new era, China and the UK must seize the opportunities to ride on the momentum and take President Xi Jinping’s visit to the UK as a new starting point to open up a new chapter in bilateral relations”.
As someone who had been facilitating UK-China business and investment for over a decade at the time, I was really excited to see the elevated bilateral relationship and I started contemplating a more efficient way to help British SMEs to take the great opportunity to do business in China. Many smaller businesses were generally keen to do so but lacked affordable resources to do it properly. Inspired by the likes of Uber, I launched the Crayfish.io platform in 2017, connecting small businesses with freelancers and individual service providers, providing them real time access to Chinese-speaking expertise at the click of a button. We received encouraging feedback from users in both countries and the outlook of UK-China business looked brighter than ever.
2020 and beyond
Then 2020 saw the outbreak of Covid in China and the UK soon entered a long battle with the Pandemic. UK-China relationship deteriorated into a “deep freeze.” From the Chinese side, the Golden Era could be seen as officially ended when the UK government announced a ban on the Chinese tech champion Huawei in Britain’s 5G mobile networks on security grounds in November 2020, public criticism by UK MPs and media on China’s human rights record, and sanctions imposed on Chinese officials in March 2021. From the UK side, serious concerns on the treatment of Uyghur Muslims in Xinjiang, democratic development in Hong Kong, perceived asset striping by Chinese investors in the UK tech sector, and China’s response to Russia’s invasion of Ukraine, all contributed to the deteriorated UK-China relationship in the last two years. There appears to have been a negative change in public opinion towards China, reflected in increased anti-Chinese behaviour in the UK.
In November 2020, I was invited to be a witness at a UK parliament Foreign Affairs Committee hearing, which was looking into the risks arising from foreign investments in UK tech businesses, particularly from China, ahead of the UK’s introduction of a new National Security and Investment (NSI) Act. I argued that the UK needs a balanced approach which, while protecting national security, ensures that the UK remains an open and free economy, as well as an attractive and predictable legal environment for foreign investment. Since the NSI Act came into force in January 2022, a number of acquisitions from China have been suspended or blocked, further dampening interest from Chinese investors.
Britain and China appear to be moving in opposite directions. But can this still be reversed?
For any who are familiar with the Chinese cultural concept of “face”, they know that criticism is best given discreetly, and a hard scolding approach does not work for the Chinese government, and indeed I would argue the same could apply to the British side. Politicians are human beings representing their own country. They want to maintain their dignity and equally important, to keep the respect of their own people. That’s why a private, closed-door high-level dialogue will do much better in helping them to find some middle ground and foster mutual understanding, rather than denouncing each other’s behaviours on national media which leaves no room for face-keeping and instead results in only more aggressive responses.
Just like any professional relationship, managing expectation and consistency in approach could also have avoided the sudden deterioration. China had not been known to provide a level-playing field for foreign companies so nobody in the West would expect it to open up freely and quickly when it entered the WTO. Meanwhile, the UK has always been seen as an open economy, and indeed the Cameron government welcomed billions of Chinese investments with open arms. If the national security concerns had been communicated with the Chinese investors right at the outset perhaps it would not have needed such a drastic overturn on Chinese technology. The Huawei ban was also unnecessarily high profile, which caused huge public embarrassment to the company and the Chinese government.
Despite the rhetoric, decoupling is not happening at the economic and businesses levels. Amid the challenging geopolitics, UK policy changes and global supply chain problems, the UK still imported £63.6bn of goods from China in 2021 – 13.3% of all goods imports – making China the UK’s largest importing partner. China was also the UK’s sixth-largest exporting partner, with UK exports to China growing to £18.1bn in 2021. In addition, there were £8.2 billion of services exports to China (2.7% of all services exports), making China the UK’s seventh-largest exporting partner.
In arts, culture, music and sports, connections are made all the time, bringing positive social impacts to people in both countries. It is true that China is becoming less attractive for those totally new to the market, especially for SMEs. But most of Crayfish’s British clients who are already doing business in China are still expanding in the market by stepping up investment in their local operations, which in turn may result in tangible benefits for the parent company.
We also saw that the Beijing Winter Olympics 2022, in a less spectacular show compared to 2008, presented clear evidence that a highly digitally powered China is moving to an even stronger nation, with or without the West. In my humble view, it is in the UK’s own interest not to push China further away by classifying the country as a “threat”. As someone who has lived in both China and the UK, I would call on both British and Chinese governments to make a baby step by restarting the official dialogue. Reviving a UK-China economic partnership is not only important for the attainment of commercial objectives, but also for continuous collaboration in tackling common global issues like climate change.
The new Prime Minister Liz Truss delivered the first major foreign policy speech of her premiership at the United Nations General Assembly overnight yesterday (Weds 21st Sept). It had all the familiar rhetoric about democracy, freedom, free enterprise and safeguarding the economy, but did not name China. I wonder whether we could regard this as a subtle change in her government’s thinking on the UK-China relationship?
In Chinese Foreign Minister Wang Yi ‘s words commenting on the state visit to the UK in 2015 – “The history and practice of China-UK relations have repeatedly shown that despite different social systems, development stages, histories and cultures, as long as the two countries respect each other and treat each other equally, continuously enhance political mutual trust and always view the bilateral relations from a long-term and strategic perspective, China-UK relations will be able to maintain sustainable, stable and healthy development.”
The “Golden Era” was not that long ago. 2022 marked the 50th anniversary of the establishment of diplomatic relations at the ambassadorial level between China and the UK. Perhaps we could do with some ice-breaking spirit again, which inspired a British trade delegation of 48 businessmen (the “Icebreakers”) who travelled to China in 1954 to establish trading relations between the two countries.
Time has flown since my arrival in Cambridge 25 years ago. I now have two mixed British-Chinese adult daughters who are proud of their Chinese heritage and love to visit China whenever they can. For their sake, I hope to see the UK and China repair their relationship and bring it back on track.