Watching the crowds gathered in London last week for the stately Xi Jinping and his stylish wife, it occurred to me that there’s a vital difference between Indians and Chinese in Britain. The Chinese here — inhabitants of small Chinatowns in London, Manchester and Liverpool, more than 100,000 students or businessmen — all represent the People’s Republic of China. But the Indians — even those who are now rich or exalted — are fortune seekers who came to Britain to better themselves. It’s in their own interest that they are now preparing with gusto to celebrate Prime Minister Narendra Modi’s visit next month.
That makes for a qualitative difference between Indo-British and Sino-British relations. It also sets the tone for the Sino-Indian equation in Britain. Mr Modi may drool over Mr Xi being his good (albeit not quite as good as Barack Obama) friend, but China has dealt a severe blow to Indian pretensions. The Chinese are held responsible for the decision by Tata, Britain’s biggest steel manufacturer and eulogised until only the other day as the epitome of efficient corporate management and ideal employer-employee relations, to retrench 1,200 workers. It was followed by another setback to India’s entrepreneurial image, also in the steel sector. PricewaterhouseCoopers’ insolvency accountants have taken over 20 businesses belonging to the controversial Lord (Swraj) Paul’s Caparo Industries. Another 1,700 jobs may be at risk.
The “Two Great Nations, One Glorious Future” theme touted for Mr Modi’s visit will be under some strain if nearly 3,000 Britons are thrown out of their jobs. In contrast, British Prime Minister David Cameron and his colleagues stress that Mr Xi’s four-day visit which ended in Manchester will create 3,900 new jobs. The expected £30 billion package of Chinese investments will transform the face of the less developed north of England (hence the concluding trip to Manchester), and give Britain a fillip in developing nuclear energy.
So far, Chinese expertise, which has produced 23 nuclear plants at home, has been exported only to Pakistan, Romania and Argentina.
China needs to show the world it can transfer technology to developed countries too. Britain is happy to oblige by giving the Chinese a one-third stake in the proposed Anglo-French nuclear power station at Hinkley Point in Somerset. Budgeted at £16 billion in 2012, the plant is now likely to cost in the region of £24 billion. Further genuflecting to China’s technological superiority, the British also expect a £50 million deal (part of a £325 million package of partnerships) between Aston Martin and China Equity to develop their zero-emission RapidE sports car. With everyone, Queen Elizabeth downward, kowtowing to Mr Xi, and the awe-struck Mr Cameron determined to make Britain “China’s best partner in the West”, only independent observers blame the domestic (read Tata) steel industry’s plight on Chinese dumping. China’s steel industry has expanded rapidly and now accounts for more than 50 per cent of global production. With Chinese growth slowing down to seven per cent from double-digit figures, there is massive overcapacity and demand lags far behind supply.
No wonder Britain’s steel imports from China have quadrupled, causing a steep fall of about 45 per cent in prices. According to Tata, the latest job cuts were “in response to a shift in market conditions caused by a flood of cheap imports, particularly from China, a strong pound and high electricity costs.” Mr Cameron and Mr Xi “should hang their heads in shame,” says Roy Rickhuss, general secretary of the steel union, Community. “The cruel irony of the Prime Minister welcoming the Chinese Premier as UK steel jobs are cut partly due to Chinese steel dumping will not be lost on the UK’s steelworkers and their communities,” Mr Rickhuss said.
Media commentators have been far more scathing about Mr Cameron’s perceived subservience to Mr Xi. He is accused of “grovelling to every dictatorship going.” However, not all the woes of Indian investors can be laid at China’s doors. The steel crisis that has led to 4,000 redundancies across the five plants owned by Tata Steel and SSI (which is Thai-owned) is not wholly to be blamed for the plight of some of Lord Paul’s enterprises. While falling steel prices because of Chinese stock-dumping and soaring energy prices have affected some Caparo businesses, sources claim that mismanagement and the financial structure of the companies are equally responsible. Cross guarantees for loans mean that units in trouble drag down those that are not. Caparo Vehicle Technology in Leamington Spa and Bridge Aluminium in Wednesbury are said to be two Caparo companies with long-established skills and manufacturing technologies. But, as always, the failures attract more attention than the successes. What matters more is that Mr Modi and India are not central to
Mr Cameron’s subtle dual policy. On the one hand, his government is anxious to displace Germany to emerge as China’s most important economic partner in the European Union. On the other, Britain yearns to regain an international strategic identity that is independent of the United States. The rising might of China is obviously pivotal to both ambitions. Mr Cameron might argue that the equation also allows enough scope for an active Indo-British role. Perhaps it does, but only if India can mobilise sufficient trade and capital to compensate for the Tata and Caparo stumbles and give contemporary meaning to traditional linkages.
Despite a 1.5 million strong diaspora, British Indian grandees can’t be expected to produce more than peripheral explosions of sight and sound like the “Olympic style” reception Mr Modi has been promised in the huge Wembley Stadium. Even Mr Cameron might turn up there to clap hands and dance a round of bhangra. The event will dominate TV channels and create an illusion of substance in India. But it will be just another tamasha, not an exercise of quiet power like Mr Xi’s visit.
The writer is a senior journalist, columnist and author
