When their area of responsibility was a trans-regional colonial empire, British decision-makers were systematically obliged to adopt the kinds of Global perspectives that unfortunately have not been effectively carried over into post-colonial Britain. This was recently acknowledged by Britain’s Secretary of State for Business, Dr Vince Cable when, as leader of a British delegation to India, he observed: ‘There is no future for Britain looking inward and backward, or being trapped in a Eurocentric world. Our country must be open for global business.’
The risk of Britain being ‘trapped in a Eurocentric world’ that it could not control was dramatically demonstrated last year in the eurozone debt crisis, publicly characterised as a ‘game of chicken’ between the European Central Bank and Germany as to who protects the relevant financial system. Germany’s dominance over the sixteen other eurozone member states has reflected not only the size of her economy but also her vital advantage in being the largest creditor nation with the best sovereign credit. Within this context, Germany has clearly emerged as the central European power, not only in geographical but also in political and economic terms. Understandably, this has frequently given rise to the query: ‘Does Germany want a more European Germany or a more German Europe?’
In view of the demonstrably increasing power of Germany within the eurozone (to which Britain does not belong) and the consequent rise in the status and influence of Germany within the wider 27-member European Union (to which Britain does belong), the terms of British participation in the EU need to be carefully reassessed and unambiguously defined. The reassessment requires not crude sloganeering but measured and intellectually imaginative debate about how best to protect and promote British interests through the intelligent design and implementation of effective eurozone and EU budgetary reform, involving at least an enforceable insistence on greater budgetary thrift on the part of member countries. Of course this is extremely difficult, if not impossible, to achieve unless there is a shared understanding and open admission by all concerned that the unresolved chaos within the eurozone is the product of a liquidity crisis that has occurred in the worst possible kind of environment: one where the unrestrained profligacy of some irresponsible member countries was possible because of the absence from the eurozone and EU operational framework of the essential fiscal counterpart to the monetary union.
Given the complexity and scale of Europe’s financial and consequent social problems, Britain’s economic interests are unambiguously best served by British decision makers devoting a greater proportion of their time and energy to identifying and cultivating new and, in many cases, far more lucrative economic opportunities elsewhere. In this context, British business interests have cause to regret the failure of the British imperial power to encourage, on independence, a continuity of mutually beneficial involvement in an Indian economy that is now displaying a potential for highly impressive economic growth. Within the last decade, the primary locus of global growth has switched fromWest to East, in part a reflection of the transition of both India and China from rural economies to what Westerners often describe as service and manufacturing ‘powerhouses’. In the context of what has variously been called an actual or potential global economic ‘revolution’, the major challenge for Britain is to interpret the rise of China, India and other ‘emerging’ economies as presenting, in a highly competitive environment, a rare opportunity for British decision-makers to identify and capitalise on at least some of the major new trans-regional opportunities from which Britain is well placed to profit.
The origin of such potentially profitable trans-regional opportunities can be illustrated in the highly impressive set of statistics provided by the Chairman of the United States Federal Reserve, who noted that in the second quarter of 2010 the aggregate real output of ‘emerging’ economies was 41% higher than at the beginning of 2005. (Significantly, this statistic includes the even more impressive real output statistics of 55% higher for India and 70% higher for China, that in 2010 overtook Japan as the world’s second-largest economy.) In stark contrast with the economic performance of the ‘emerging’ economies, the aggregate real output of advanced economies in the so-called ‘rich’ world was a mere 5% higher in mid-2010 than at the beginning of 2005.
In the context of a 2010 economic growth rate of 9.5% for China and 8.5% for India, China’s Premier, Wen Jiabao told business leaders during a visit to the Indian capital: ‘The 21st century is the Asian century…where China and India can make great achievements.’
The challenge for British decision-makers is to avoid the negative reaction of fear or resentment at the prospect of such Chinese and Indian achievements. Instead, the positive and rational response would be to make every effort to ensure that, wherever possible, Britain is a creatively active participant in facilitating those achievements in such a way as to secure mutual economic – and possibly also mutual political – gain.
Currently, the European Union is China’s largest export market with two-way trade valued at $434 billion in the first eleven months of 2010. This gives China a strong vested interest in supporting European regional stability, as illustrated in China’s promise to take further ‘concerted action’ to support European financial stabilisation, including continuing to buy the bonds of countries at the centre of the sovereign debt crisis.
A less rosy picture emerges from an examination of Britain’s trading relationship with India. As acknowledged by Britain’s Secretary of State for Business on his visit to India in July 2010, there is an urgent need to restore Britain to its former position of being, as it was as recently as 2005, the fifth largest exporter to India. By 2010 Britain’s share had dropped to eighteenth position, with the value of merchandise falling from $6.5 billion in 2008 to $4.5 billion in 2009. This rapid decline in the strength of the Indian-British trade relationship might strike the historian as an ironic form of role-reversal, in view of the depth and length of Britain’s imperial association with colonial India.
There is, however, a more significant observation to be made about Britain’s failure to build and sustain a sufficiently close and soundly-based relationship with India after, as well as during, colonial rule. The outcome might have been more positive and mutually more economically beneficial if the potential of Asia had been fully comprehended by British decision-makers, who chose instead to be almost completely preoccupied with the complexities of the European Union.
A significant side-effect of this concentration on Europe was Britain’s failure to recognise and fulfil the enormous potential of the global and trans-regional links that were available to be used to great effect within the functional framework of the Commonwealth association of nations, each of whose member states had been exposed during British colonial rule to what I have described elsewhere as ‘a common business culture’. To the extent that Commonwealth links have in fact been used, they have been important in facilitating and consolidating bilateral and multilateral trade and investment contacts between and among Commonwealth countries in different parts of the world.
While ‘a common business culture’ has been a defining feature of the modern Commonwealth, it does not apply to relations between two key economic players outside the Commonwealth such as China and India. Those asked about the difference between doing business with China and doing business with India typically make the same point, if not in the same words: ‘In China you’re dealing with the government. In India you’re dealing with companies.’ Some, however, controversially elaborate upon the distinction by saying that in the former case there is the risk that it might lead to global capitalism being radically changed to a system where resources are allocated by government rather than by the market, and the driving force becomes politics rather than profit.
