Trading With China – As Good As It Seems?

We are constantly being told how important trade with China is and never has this issue more prevalent than this week with the visit of Chinese premier Li Kequiang, but can there really only be an upside to dealing with the world’s second largest economy?

Mr Li came to London with apparently £17 billion in his back pocket in the form of infrastructure deals and other investments in exchange for…we are not sure yet, but visa restrictions are being relaxed to encourage Chinese businessmen.

The way politicians speak you would naturally assume there are only massive plus points for the UK increasing its trading partnerships with China.

In fact UK trade with China has, according to the Chinese ambassador to the UK Liu Xiaoming, increased nearly 14% in the last year, faster than any other EU country.

Yes Mr Farage, that’s right. The UK has increased its trade with China, like that economic powerhouse of Iceland, whilst still part of the EU.

However, it should under no circumstances be assumed this is all good news and in fact closer Sino-UK trading ties should be treated very delicately.

Firstly China is a massive producer, but is not yet a nation of consumers.

Yes, UK companies exported more than £12bn of goods and services in 2013, but the UK imported well over £30bn and this is very dangerous.

With the World Cup currently in progress, Brazil has been a central to the news recently and is a great example of a country which has not benefitted from Chinese imports, despite the country investing in South America.

The Brazilian market has been flooded with cheap Chinese merchandise which has put many domestic producers out of businesses and this is a trend seen in many other countries, not least in America.

In exchange Brazil and many other developing nations in Africa and South America were supposed to benefit both socially and economically from infrastructure deals completed by the Chinese.

However, what ended up happening was a Sinification of public services where the only winners where the Chinese state owned companies who pillaged the land for natural resources in exchange for construction projects carried out by workers from China, not locals.

At a time when America is issuing arrest warrants for Chinese computer hacking of military and commercial computers is this really a nation you want to invite into your country to build a new generation of nuclear power plants and high speed railways?

Human rights also matter…a lot.

Contrary to the opinion of Tory minister Michael Fallon, who said human rights dialogue should not get in the way of trade deals, the way a country treats its people does matter.

How is China able to be competitive on the world stage? Quite simple really. The workers in China are basically treated as slave labour so there are no production costs.

This is how they are able to sell things around the world at knock down prices.

Yes, human rights violations and trade are two separate topics, but there has to be bilateral action to tackle both topics as they are both intrinsically linked.

Until China agrees to play by the same trading rules as everyone else it will always benefit disproportionally more than other countries.

Massive state owned monopolies dominate the industry, there are no health and safety costs, no minimum wage, at best rudimental free markets, pretty much non-existent environmental controls and massive violation of international copyrights.

Pollution levels are appalling and a blatant public health risk and yet there is no effort in China to curb the rapid increase in consumption of carbon based fuels.

Most importantly however, the Chinese currency is still not openly traded.

For years the value of the Yuan, or Renminbi, was pegged to the dollar and it is only in very recent years any effort at all has been made to open up this market.

This makes China unnaturally competitive, especially against the large economies of America and Europe.

The combination of all the aforementioned factors is especially dangerous for the UK and Europe, economies which produce high value products, in particular cars.

China desperately wants to export more vehicles to the US and EU, however Europe is also home to some of the world’s biggest and best car manufacturers.

In the past China has less than subtly ripped off European designs and the cars produced in the country would never pass EU safety standards and crash tests, not to mention they can be produced at remarkably low costs thanks to state funding and what is essentially slave labour.

With many car companies, particularly from Japan, setting up manufacturing bases in the UK and the likes of BMW, Mercedes and Volkswagen, Audi and Ferrari based on the continent it is in our interests to protect the car industry.

While it is undeniably important to increase trade and diplomatic ties with the world’s second largest economy, it is equally important to remember dealing with China has the potential to be a very one sided affair, as many countries in Africa have discovered to their detriment.

Political Warfare - The Battle of Newark

Following UKIPs historic victory in the European elections all of the noise was surrounding the so called political earthquake, but before the results were even in those who understand how the British electoral system works had already turned our attention somewhere else.

Our focus instantly switched to a small town North East of Nottingham on the River Trent, to the constituency of Newark.

While the purples success in the race to Brussels was expected, getting seats in Westminster has proved problematic for them, not least because of the first-past-the-post system (don’t blame me I voted for AV).

However, with their current undeniable momentum Newark offers an interesting opportunity for them and the polls suggest they could do well, but with the circus now firmly focuses on the midlands this is going to be no ordinary by-election.

Under normal circumstance this would be a forgone conclusion with a massive Conservative majority, but following the resignation of Patrick Mercer in a lobbying scandal there is potential for an upset.

The first poll out of Newark by Survation suggests the Tory’s are winning with 36%, UKIP second on 28%, just ahead of Labour on 27%.

With a week to go, a lot of media attention and the election machines in full swing this is not set in stone and the outcome is far from guaranteed

But regardless of who wins the result is going to be interesting, so what will end up happening?

Con Hold – By far the most likely outcome, but by how much they win will be a telling factor.

It is unlikely they will extend or even get a similar majority, but this was to be expected following the nature of the former MPs resignation.

However, a strong performance with an eight point margin (as the current polls suggest) would be a great result even if a lot of ground would have been lost, while a four point win would be more than acceptable.

This would allow the Conservatives the chance to claim UKIP are not a national force and the government’s economic policies are benefiting the British people, but all this assumes it stays roughly the same.

Con Hold, but only just – With UKIP and Labour snapping at the Conservatives heals the result could be a lot tighter than currently predicted.

If the Tory’s win by just a couple of points then the pressure to address the UKIP issue and the fact they are hurting the blues more than the reds will only mount on David Cameron.

However, the person under the most pressure might be Nigel Farage as it could be argued his personality could possibly have tipped UKIP over the top and gained them their first Westminster representative.

UKIP Win – Given the conservative leanings of the constituency this is probably the second most likely outcome after a Tory win and would signal the earthquake promised by Mr Farage.

It is going to take a big swing and it is unlikely UKIP candidate Roger Helmer will be able to bridge the gap given his age and previously expressed opinions on certain issues, most recently the weekends newspaper story about his views on the disproved theory of gay conversion therapy.

Similarly, the Conservatives have more backing and greater experience in running these campaigns so it would be difficult for UKIP to overturn the lead.

This said the Tory’s are down 18% on 2010 and most of this seems to be going to UKIP so in fact all that is required is a four point swing to the purples and we could have a UKIP MP.

Labour Win – Very unlikely, but with UKIP splitting the Tory vote then it is possible. This would be a massive win for Ed Miliband and the red team, who last won Newark in the 1997 landslide.

Overall second place, or a close third would be a relatively successful day for the red corner. The problems only really start with a distant third or a significant Labour voter swing to UKIP.

However, a win is not impossible, just unlikely.

Everybody Wins – Sounds ridiculous, but arguably the most likely scenario would see everybody happy and claiming a victory, or at least a moral one.

Tory’s hold the seat by a few points with UKIP a Labour on similar scores allows everybody to save face as Conservatives can claim the actual win, while UKIP will point to a massive increase in vote share and Labour promoting the strong gains in a difficult seat.

Conclusion – This could be a very close election and will go a long way to assessing UKIPs long-term success on the national stage, but it is difficult to look past a relatively easy Tory win, or as easy as can be expected when the former MP was forced to resign in disgrace.

However, we will have to wait until Friday morning to have any idea just how much the political landscape has changed.