(Bloomberg) -- UK Labour party veteran Peter Mandelson faulted the former Conservative government for failing to sustain “proper channels of communication” with China and not living up to Britain’s responsibilities in Hong Kong.
“It was in danger of operating a boycott of Hong Kong and the necessary communication that Britain needs to maintain with China,” the former British trade secretary said in an interview during his first trip to the Asian finance hub in more than four years. “And that’s what is going to change under the new government.”
The Labour peer is a close adviser to Prime Minister Keir Starmer, who led the party to a landslide election win in July. Mandelson is also a co-founder of Global Counsel, a firm that’s become one of the most influential advisory groups in the UK and has been expanding its coverage of China.
Britain’s relations with China have turned sharply for the worse after what then Prime Minister David Cameron proclaimed was a “golden era” of relations with Beijing when he was in power back in 2015.
In 2021, the Conservatives blocked Huawei Technologies Co. from participating in Britain’s 5G network and more recently traded barbs with Chinese officials over allegations of spying.
Hong Kong
Mandelson, who was an influential figure in the last Labour government under Tony Blair and has been a peer in the House of Lords since 2008, met with Hong Kong officials, top businessmen and bankers during the visit. He said he was shocked that members of the local government were “cold shouldered” by ministers during trips to London earlier this year.
“That’s a serious infringement of Britain’s role and responsibility in Hong Kong,” he said.
The former British colony has faced criticism from Western governments over dismantling many of the freedoms that once set the city apart from the mainland. The US earlier this month issued an advisory that warned businesses operating in Hong Kong could fall afoul of new national security legislation — an announcement the city’s government rejected as “misleading and untruthful.”
While Mandelson said he believes the rule of law remains intact and the judiciary is still independent in Hong Kong, he urged the government to be “very careful” of moving in a direction criticized by its detractors.
“I think very strongly that the Hong Kong authorities have to tread lightly on people’s lives,” he said.
Re-engaging China
The former European trade commissioner said the UK government planned to re-engage with China after a full audit of the bilateral ties, including by re-establishing formal meetings between officials. Starmer has yet to articulate a formal strategy toward the world’s second-largest economy since taking power.
During a phone call seen as laying the ground for a reset between the two countries’ governments, Starmer told Chinese President Xi Jinping last month he was hopeful for “frank, open and honest” talks on areas of disagreement including on Hong Kong. The prime minister additionally referenced Russia’s war in Ukraine and human rights as issues the UK wants to address with China.
The new Labour administration is also crafting an economic agenda to lay out “strategies” for key sectors including electric vehicles. That may provide insight into the country’s position on imports of Chinese EVs, an industry the European Union and the US are targeting with tariffs.
The British government “wants to, in time, recreate the strategic dialogs that Britain has had with China in the past,” Mandelson said. Some of such forums have been halted in recent years, including the UK-China Economic and Finance Dialogue which hasn’t taken place since 2019.
Mandelson also had a word of caution for companies at risk of getting caught in the crosshairs of rising tensions.
“You can operate your business in both the American and Chinese economies, but inevitably you’ve got to be mindful of any downside risks of doing so,” he said. “At the end of the day, it behooves governments of all countries to allow businesses to do business.”
Wrong Turn
The UK’s re-engagement with China would be conditional on Beijing’s condemnation of Russia’s war against Ukraine, according to Mandelson. Responding to a question, he agreed that was a minimum requirement for improving the ties and criticized China’s “wrong turning” over its alignment with Russia.
“It hangs like a cloud, frankly, over China’s relationship with the whole of Europe,” he said. “We would want to see China taking a more responsible approach to that conflict.”
China has cultivated a partnership with the Kremlin despite the 2022 invasion, seeking to portray itself as a neutral actor that can help end the war.
Beijing should use its influence and “premier role” in the international system to bring about a withdrawal by Russia from Ukraine and a settlement between the two countries, Mandelson said.
“China cannot complain on the one hand of threats to its territorial integrity and, in the next moment, stand stand idly by whilst Russia changes Ukraine’s borders by force,” he said. “There is a double standard there and hypocrisy, which does not serve China well.”
