Why Scotland should embrace China and shun Westminster

TO many, it will be a frightening and humiliating vision of the future: China as the world’s pre-eminent power, Britain reduced to the “vassal” of a diminished America, and India emerging as a global “superstate”.

The fact that it is laid out by Sir Vince Cable, former UK business secretary and president of the board of trade, makes it all the more stark.

However, Cable – who was LibDem leader – tempers his predictions with optimism. He believes that if Britain is wise it can find a safe and prosperous place in this new world order.

If Britain continues with its “paranoid” mindset, though, and fails to find an accommodation with Beijing, Scotland should distance itself as much as possible from the direction of Westminster and seek its own deals with China. Cable’s analysis is complex, troubling and controversial. That’s understandable. He’s trying to tackle the biggest question of the 21st century: how the West comes to terms with the rise of China.

He presents his thesis in an authoritative and powerful new book Eclipsing The West: China, India And The Forging Of A New World.

I met Cable to discuss his thinking in detail. He is a long-time China expert, close to some of the nation’s most powerful and influential thinkers.

Former secretary of state for business, innovation and skills, Sir Vince Cable, arrives to give evidence to the Post Office Horizon IT inquiry at Aldwych House, central London. Picture date: Thursday July 25, 2024..

First some scene-setting statistics. Superficially, America appears to remain in pole position economically across the world. The US market is worth around $27 trillion, China $18trn, and India $4trn.

However, Cable explains, the buying power of Chinese workers makes them richer in real terms than their American counterparts. A more realistic take sees the GDPs of the three nations ranked as follows based on purchasing power: China $33trn, America $27trn, and India $13trn. “That paints a very different picture of China as number one,” says Cable.

Cable is currently a professor at the London School of Economics and a visiting professor at Nottingham University and St Mary’s University. He also teaches in Chinese universities. He is a doctor of economics, and was once Shell’s chief economist.

Closely connected to Scotland, he studied for his Phd at Glasgow University and was a councillor in the city. “The big picture is that the world economy’s centre of gravity is moving to Asia, centred on China and India. The sensible reaction isn’t to close the door or pretend it’s not happening, but recognise the realty and engage with this new world where much of the power is in countries we’ve hitherto dismissed as the Global South, emerging markets, or the developing world. That’s where the future is,” Cable says.

To Cable, what’s happening is “part of a long-term historical cycle”. He adds: “If we go back over the historical record, China had a succession of great civilisations. So did India. They were the two biggest economies in the world before the Industrial Revolution.”

Humilation

CHINA then experienced its “century of humiliation”, when it was predated on by the West, most infamously in the Opium Wars. “And the Indians had the British,” Cable adds.

“Now, though,” says Cable, “by virtue of their size and the fact that over recent decades they pursued sensible economic policies, reform and took advantage of internationally available technology and opportunities in trade, they’ve both grown very rapidly and it’s fairly plausible they’ll continue to do so.

“That’s why I anticipate a world in a generation’s time where they’re the two dominant economies, overtaking America.”

China already vies with America for the top spot. By the mid-21st century, India could be the second most powerful economy. The West as we know it is coming to an end, and that is accelerating under Trump’s isolationism.

China has in some ways already overtaken America. Cable says that across 40 major areas of technological innovation, China leads America in about 30. China has powerful artificial intelligence and biotech industries, and “is already way ahead in low-carbon technology, renewables, electric vehicles, and power generation”.

India “isn’t in the same league, but at the same time they are the world’s largest importer of AI applications. They are in the process of digitising their economy – every Indian now has a digital identity to bank and shop. It’s a quantum leap”.

Cable adds: “Providing these two massive countries don’t crack up – and there’s always a danger of that – a combination of sensible economic policies, their sheer size, their vast internal markets and their better use of technology will take them to the top of the league table.”

Clearly, with economic power “comes the capacity to invest in weapons to show your international influence”. He sees China as a “superpower” already “along with the USA”, while India is best characterised as a “superstate”.

While it can be argued that China is already eclipsing America, the country is “undergoing a crisis of both capitalism and communism. They’ve got very depressed demand because of a collapsing property bubble, and they’ve got a lot of misallocation of capital because of the way the [planned economy] system works”.

Cable, however, believes China will continue to improve. “Though it could go badly wrong,” he caveats. Cable even says he’s “optimistic” about China’s future.

But isn’t such optimism misplaced? Doesn’t the rise of China depend on the West’s decline?

The future is certainly “uncomfortable” for Western nations, but Cable believes it is debatable whether “the Chinese are enemies”. China, he says, offers “both threats and opportunities”.

His comments will be seen as controversial. This month, MI5 warned MPs that Chinese spies were targeting them.

Should Scotland forge its own relationship with China?

Communist

ON issues like climate change and global financial risks, the West and China “need to work together whether we like it or not. Many in the West aren’t comfortable with the Chinese Communist Party. I understand that. But they’re competent. They’re a competent autocracy and we have to do business with them”.

China’s “competency” is an important asset, Cable believes, in an era in which America is seen as an increasingly untrustworthy player.

Significantly, Britain has become a “vassal” of America. Brexit “put us in a very exposed position and made us even more dependent on the US than before. We depend on them for defence, but it’s gone way beyond that”.

He says the terms of the agreement between the Labour government and America on Donald Trump’s tariffs include “clauses where we have to get their approval if we want to regulate or tax their tech companies”.

Britain “dispensed with Huawei [the Chinese company] and kicked them out of our telecoms systems entirely at America’s insistence. Britain’s national interest lay in maintaining some relationship. So we’re in an uncomfortable position”.

Cable adds: “If we had complete freedom of choice, we would be doing what Western Europe is doing – hedging: recognising dependence on America for defence because of Russia, but maintaining a working relationship with China.”

American opposition to China holds Britain back as Westminster must follow Washington’s lead, he adds.

The EU is “a major force in the world but we walked away from it and are now very much one of the middle powers”. Britain’s economy has just been “overtaken by Indonesia. We must be realistic about our strengths. Relative to the superpowers, we’re nowhere”.

Being “forced to choose” between appeasing America and a better relationship with China is an invidious position.

If America keeps turning inwards and China and India become the leading nations, the world will be a very different place, Cable believes. The best scenario would be what he terms the creation of the “Global West” where America continues to lead alongside the EU and nations like Canada, Australia and Japan, and “co-opts India”.

India could easily join this “Global West’ club as “it feels threatened by China”. However, Cable believes any hope of creating a “Global West” is over. “Trump has trashed the whole idea by retreating inwards, and burning bridges with friends and allies including India,” he adds.

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Nightmare

HE says Trump’s decision to “break the extremely valuable relationship” America had with India by “imposing tariffs, visa restrictions and cuddling up to Pakistan, was extraordinary, a complete nightmare.

“So this concept of the Global West has taken a hammering and if America continues to operate in this highly dysfunctional way there’s no prospect of it being realised.”

Even if Trump were gone tomorrow, trust in America is shattered. Beyond Europe, most major southeast Asian economies have made a “very distinct shift towards China – not based on loving them, they’re actually very nervous about China – but based on simply respecting them and recognising that they’re reliable and consistent. You can do deals and have long-term relationships, whereas America is all over the place”.

China has built alliances in developing nations through its “belt and road initiative” which sees Beijing funding infrastructure projects. Some argue it is reminiscent of “19th-century colonial Britain”, but “if you’re a political leader in an emerging economy and want quick results you ask China to do it”.

China’s “trustworthiness” has become an asset which Beijing “capitalises on” and has allowed them to “build close diplomatic and economic ties with almost every country in Africa, most of Latin America, and southeast Asia. Most will take China’s position on international issues now”.

The number of nations which recognise Taiwan has fallen dramatically. That was one of China’s “objectives”. Simultaneously, Trump made “China the scapegoat for America’s difficulties”.

Disturbingly, the rise of China and India presents a “really rather high” possibility of war between the two nations, including “the ultimate horror: nuclear weapons”.

The Himalayas is a flashpoint over disputed borders, where the two nations have engaged in low-intensity conflict. In 2020, both took fatalities there.

Pakistan complicates tensions. Indian and Pakistan have a “very fractious relationship. They almost went to war recently. Pakistan has moved closer to China, becoming more dependent for arms supplies and economic support. It’s a complex triangular relationship. It’s not difficult to imagine things going very badly wrong”.

A clash between India and Pakistan could easily draw in China.

In terms of America, we need to keep matters in perspective. America’s economy “isn’t moribund”, but “is in relative decline” compared to the “very dynamic economies” of China and India.

Trump, however, has “made bad problems worse”.

Attacking universities and using migration policies to keep out foreign talent undermines “America’s sources of strength”.

Additionally, no Western economy has fully recovered from the 2008 crash. Cable warns that America’s “relative decline might become absolute decline if Trump does any more damage”.

Elon Musk, President Donald Trump and JD Vance

Insult

TRUMP’S threats towards allies like Canada and Denmark undermined America, and false claims of genocide against South Africa’s white minority “insulted all of Africa”.

Europe is struggling more than America economically. Many resources are “diverted into armaments to strengthen defences rather than more productive innovation”. Cable blames Europe’s lack of dynamism on failing to “deepen political integration”.

Europe is trapped in a “vicious circle”. A more federal Europe would create stronger economies. However, populist parties prevent that. So economies “stagnate”. That gives populists even more support.

Cable calls this “the Vortex, where bad things lead to more bad things. That’s where the EU is stuck, and perhaps the Western world in general”. Additionally, the West is ageing. “If you take a demographic view of history, the future lies with India, south Asia and Africa”. He’s aware that from the Western perspective this seems “apocalyptic”.

One area where European nations like Britain remain strong is culture. English is the world’s language while Britain and America dominate media and entertainment internationally. It would be difficult for China to challenge Western cultural dominance.

“That’s where, despite relative economic decline, we have a lot of soft power. The reason we’ve got small boats is that people want to live here, they like our culture. That’s something China doesn’t offer.”

Meanwhile, “India’s ruling class” see an American green card as their “ideal”. India has no “exportable model” of culture either, Cable believes.

British culture also attracts lucrative foreign university students – often Chinese and Indian. However, politicians “are trying to keep them out” due to immigration. Cable believes, however, that British people are more “open and accepting of multiculturalism” than the press or politicians claim.

What does this all mean for Britain and Scotland? There are long-running claims that China threatens national security.

The SNP government has been criticised – sometimes from within the party – for being overly exposed to Chinese power through Beijing’s influence in Scottish universities, and dependency on its technology for green industries.

“I don’t think blaming the Scottish Government is terribly helpful,” Cable says. He adds that during the Tory-LibDem coalition, his government “talked about a ‘golden era’ in Chinese relations. I went there four times to build up trade and university exchanges. It was the right thing to do. I don’t think the Scottish Government should be apologetic any more than the government I was in should be apologetic”.

Cable continues: “But we need to be careful. The Communist Party is a formidable organisation and can be ruthless. We have large numbers of Chinese students and there are suggestions that party people are keeping an eye on them and if they speak out of turn they’re reported.

“Certainly, if there’s evidence of that, the offenders should be thrown out. We shouldn’t accept anyone dictating to British universities what we teach and research. We must stand up for our own standards.”

Spying

HOWEVER, he claims that the collapse of the recent spying case allegedly involving China was “ludicrous” as the information which was reportedly gathered “could have been read about in national newspapers”.

Chinese agents have tried to get close to parliamentarians and influence them. However, Cable considers “this behaviour unfriendly for sure, but there’s no comparison to Elon Musk telling us we should be changing our government and using his massive power and influence over Britain, and his control of social media”.

He adds: “I don’t doubt that Chinese agencies try to promote Chinese interests in the political world – what some people call ‘spying’. Obviously, we need to be vigilant, but compared to [US vice-President JD] Vance and Musk effectively telling the British government what they have to do, the Chinese encroachment is trivially small and sometimes borderline comic: the ‘spies’ who uncovered ‘secrets’ about Conservative figures which were available in the press.”

We should be “prudent” about China, “not paranoid”. When Cable was in government, he asked security advisers about China’s “intimate involvement in some of our quite sensitive communications work. The answer was ‘we know what they’re capable of, but we’re perfectly capable of managing it’. That argument is as true today as then.

“Unlike the Russians, who are clearly involving in sabotage and other nefarious things, we don’t have evidence that China is doing that. They may be gathering intelligence, but then all agencies collect intelligence.

“I was in the diplomatic service earlier in my career. We spy on people, they spy on us. It’s not inherently unusual. So we need to be careful. There are potential risks in terms of cybersecurity – however, that’s what we employ security analysts for, to identify and stop it. But that shouldn’t stop us having businesslike relations with China.”

Compared to China, the behaviour of “sinister” tech moguls like Musk “is a much bigger and more direct threat to our sovereignty and integrity as a country”.

Cable said the Scottish Government has a “substantial amount of devolved authority in particular around universities and attracting inward investment”, adding: “I don’t see why the Scottish Government shouldn’t form its own view about dealings with China, and pursue them in a more pragmatic and positive way than the government in London.

“I would encourage Scots to form their own view and not simply be drawn along in what’s happening in Whitehall. That’s also true in dealings with America. We know Scotland has a distinct political culture and is reacting against the Trump administration more strongly than some in London. I’ve always strongly supported Scottish devolution. Take advantage of it.”

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Invasion

HE cautioned, though, that “Scotland is obviously constrained by UK defence and security policy”, adding: “But Scotland has its own school and university system and can modestly develop research collaboration on common interests like the climate, renewable energy and health, promote mutual exchanges, and promote trade and investment.

“There is a middle ground between naïveté and paranoia.”

What about China sparking war over Taiwan? Beijing does intend “taking Taiwan back into the fold” by the late 2040s. However, Taiwan, Cable claims, “isn’t in the same position as Ukraine. It doesn’t exist in theory. Everybody recognised Ukraine before it was invaded”.

Cable doesn’t believe China wants to invade Taiwan. “It requires an amphibious operation, which makes D-Day look like a picnic.” The Chinese military, while huge, “isn’t particularly forbidding. They’ve only fought one war in 40 years and lost that against Vietnam. No Chinese soldiers have battle experience. They’d go to great lengths to avoid war”.

He accepts that war could erupt, though, due to “the President’s ego, just like with Putin”, or an incident which escalates conflict. However, he insists: “When the Chinese do their calculations, an invasion of Taiwan isn’t something they’d seriously undertake.”

Beijing is aggressive in the Pacific and South China seas, “bullying countries like the Philippines, but it’s nothing like Japan in the 1930s, wanting to create an Asian empire”. Although Japan and China are hostile, they’re “economically highly integrated”.

Xi Jinping is unquestionably a dictator. He’s “lord of all”. Until Xi, China’s leader was replaced every decade. “Xi tore that up. He’s in power as long as he wants.

Despite being “rational”, he’s ageing – so his behaviour could become “unpredictable”. Xi also made “terrible mistakes”, particularly around Covid. The West’s biggest worry, however, should be Xi’s successor, Cable believes.

Wouldn’t reaching compromise with China undermine our values given Beijing’s human rights abuses? “Many countries we deal with have human rights concerns,” Cable adds, including India.

He noted that the UN was “damning” about China’s treatment of its Uighur minority but “didn’t use the word genocide”.

“Genocide is a word that’s thrown at everything to the point that it’s no longer meaningful,” he claims.

He said of China and the Uighurs: “They’re locking up large numbers of people in preventative detention which is extreme but it’s not genocide.

“When I raise this issue with the Chinese, they say ‘well, you guys had your War on Terror and you killed hundreds of thousands in Iraq and Afghanistan, and locked people up in black sites. Now, we’ve our war on terror and unfortunately heads get broken’.”

Democracy

CABLE says that in government he “wanted nothing to do with Saudi Arabia” but had to accept the relationship. “If Britain doesn’t just want to sit in the corner, preaching to the world, we must deal with people we don’t like.”

The notion that took root in the 1990s that trade with China would lead to Beijing adopting democracy didn’t materialise. “The Chinese are unapologetic about their system. They say, ‘what you call democracy isn’t working. You get decisions like Brexit, you get chaotic churn in government, there’s nobody capable of making long-term decisions. So we’ll keep our system, thank you’.”

Is there a risk that democracy just withers as the West declines and autocracies like China rise? Cable “hates” talk of “Broken Britain”, adding: “Maybe people who say that should live in broken countries and find out what they’re like. Britain in general and Scotland in particular are healthy democracies. I see no appetite for that fading away.

“Some of the most admirable countries are in Scandinavia – generous social democracies. Democracy is a very durable model.”

He says that even in countries which “embraced the dark side” – like Italy with its far-right government – those in power “adapted to democratic norms. European civilisation may be in relative decline but it’s resilient. I’m not pessimistic”.

Cable believes fears of a Western “identity crisis” as China rises to dominance amount to “talking ourselves into paranoia. You can have relative economic decline without it meaning your culture is broken”.

Britain, he suggests, should see itself like Portugal, another former empire. “It is now a small place but with a high level of contentment. It accepted its diminished status. It is multicultural with a rich history. We should think of Britain more as Portugal.”

The “backward-looking” attachment to past glories like empire, “essentially among older people”, caused Brexit. “That was a mistake.” He counsels England to have a view of identity more like Scotland if it is to cope with the future.

Many Scots, he says, have regional identities – like Shetlanders – but also feel Scottish, British and European. “They have multiple identities. It’s a rich way of living.

“Maybe some of the more intolerant people in the south of England should learn from that.”

The best way for Britain to insulate against the rise of China is to “rebuild our relationship with Europe”, “help Ukraine defeat invasion”, and “stand up to Trump”.

Britain, though, won’t return fully to the EU as Europeans “don’t want us back. We became a headache and wasted five years of their time”. But closer economic ties can be forged.

Britain can’t “walk away from the transatlantic relationship but we should distance ourselves as much as possible”. The UK can “pragmatically build bridges with China”, particularly around non-controversial issues like green technology.

When it comes to China, Britain should “distinguish between prudence and paranoia”.

He referenced media reports recently that China could turn off the ability to run electric buses which had been sold to Britain. There have been claims that China could “take over” energy infrastructure if it’s permitted a role.

Intelligence

RATHER than fearing China, Cable says we should be “hard-headed” in business, extracting technology where we can, and good deals for our economy.

He notes there has been talk of Britain withholding some intelligence from America due to concerns over how it might be “misused”. We haven’t ceased intelligence-sharing but have become “more selective and cautious”.

Cable says tariff negotiations gave America the power of veto over decisions around UK investments with China. “That’s very unhealthy.” Britain should emulate Brazil, Canada and India which have “stood up” to America. The BBC should be defended against threats by Trump. Is he more worried about China or America when it comes to British interests? “Currently, the Americans. There are threats where China is concerned, but I don’t go along with the current paranoia.”

There have been claims that China’s new mega-embassy will be used for spying. Cable says we should view the embassy positively as it shows China still views Britain as a “major cultural, financial and educational centre”.

There is some “arrogance” in China towards the West given its decline, mostly from “nationalists, or in a more polite way from party people”.

“Liberal-minded” Chinese people are more friendly. “However, these days the Chinese are assertive. They don’t tolerate criticism. If people are rude, they’re rude back.”

Cable says he has cautioned his “Chinese government friends” not to target British MPs such as Iain Duncan Smith, who was sanctioned. Cable deems their criticism of Beijing “ill-informed”, and calls anti-China hawks “angry people. Why make martyrs of them”?

China, Cable says, has “no great love for Putin”. The relationship is “transactional”. China’s biggest worry is that Russia collapses into anarchy or Putin is replaced by a pro-Western leader. “They tread a fine line between keeping Putin going but without totally burning their boats with Europe.”

He believes there’s “a risk” that Nigel Farage becomes the next UK Prime Minister, but the best defence against that is to continually link him to Brexit which caused Britain’s decline. Farage’s Brexit campaign put Britain in the weakest possible position in terms of dealing with the rise of China.

“Saying ‘he’s a racist’ is completely counterproductive,” Cable adds. “It’s much more meaningful to say ‘you’re

the author of Brexit and look where that got us’.”