Cover of MoneyWeek magazine issue no 765, Friday 23 October 2015

Wooing China

22 October 2015 / Issue 765

A “first date” with China – but who will end up paying the bill? Peter Frankopan asks if Britain's relationship with China has a future, or if it will all end in tears. Read this week's cover story here.

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Podcast – Britain and China’s coy first date

In this week’s MoneyWeek podcast, Merryn and John talk about Britain’s new romance with China, the decline of Britain’s steel industry, and our position in the EU.

Merryn Somerset WebbEDITOR'S LETTER

Merryn Somerset Webb

Why we should embrace the Chinese dragon

It’s been a long time since we believed that China was growing at 7%. So we aren’t much bothered by – or even very interested in – the official numbers out this week showing that it definitely isn’t. What we are interested in is how China is changing as it moves out of its super-fast growth phase – and just how that will change things for us in the UK.

We’ve written several times over the last few months that we don’t see China as taking a particularly different development path to that trodden by the likes of Japan and Korea. It has spent a few decades driving growth via fast export growth and infrastructure development. Now it wants to move to a more consumer-based economy; to build a strong middle class; and to carve out a new international role for itself.

It is looking outwards for new investments, new relationships and new markets. You can see that in its One Belt One Road (OBOR) strategy to revitalise the routes of the old Silk Roads; in its creation of the Asian Infrastructure Investment Bank (AIIB, designed to support infrastructure in the Asia Pacific region); in its investments across Africa; and in the way it is courting the likes of us.

President Xi hasn’t come to the UK to sightsee. He’s come to make deals and friends. Should we be making those deals and friendships? Yes. It isn’t exactly risk-free (or comfortable), but at a time when the global centre of economic gravity is shifting East we need to be pivoting that way too. After all, everyone else is.

• Read the full editor’s letter here: Why we should embrace the Chinese dragon