The economic score sheet
As we have seen, since 2010, the UK has embedded itself further into Asia’s security institutions and formulated new bilateral arrangements with partners including Japan. In the absence of a more globally pronounced military-security footprint, however, its security presence in Asia is comparatively minor. To reiterate, with the emergence of the pivot traced to the aftermath of the financial and economic crash of 2007/2008, it has always been driven primarily by economic (and diplomatic) motivations. It is in this context by which we are best placed to examine the accomplishments of the pivot to date.
Between 2010 and 2015—the most up-to-date period for which reliable data was available at the time of writing—total UK trade (exports plus imports of goods and services) with its largest Asian trade partners typically increased, in some cases significantly. UK trade with China, for example, increased by 31% in that period, and by 12% with the ten countries of ASEAN. Yet those increases typically compare unfavourably to the preceding (“pre-pivot”) five-year period of 2005–2010, when UK trade with China increased by more than 130%, for example. Trade with India almost doubled between 2005 and 2010, before contracting slightly between 2010 and 2015. UK trade relations with its largest Asian partners: China, India, Japan, Hong Kong, South Korea and the ten member state collective of ASEAN, for the periods 2005–2010 and 2010–2015, appear in Table 1.
Table 1 Total UK trade with largest Asian partners, 2005–2015 Table 1 shows a trend of UK trade increases with top Asian partners for 2005–2010 slowing (and even reversing) during 2010–2015, with the exceptions of Japan and South Korea where increases were larger in the post-2010 period. The targets set between 2010 and 2015 for doubling trade with China, Indonesia and Malaysia were missed, as trade with each in that period increased by 31% (see Table 1) and decreased by 5% and 7% respectively (calculated from ONS 2016a). For context, Table 1 also shows that in 2005–2010, UK trade changes with four of its six top Asian partners compared favourably to its overall global trade increase of 30%. For 2010–2015 however, UK trade changes in Asia with four of its six top partners compared unfavourably to its overall global trade increase of 14% (calculated from ONS 2017).
While UK trade with key Asian partners expanded more slowly, and even declined, during 2010–2015 compared to 2005–2010, its annual balances of payments (BoP) (total exports minus total imports) with the same partners improved. Between 2005 and 2010, the UK’s BoP deficit with ASEAN for example increased by around 13%. By 2015, that deficit had reduced by 52%. The UK’s BoP with its largest Asian partners are shown in Table 2.
Table 2 UK BoP with largest Asian trade partners, 2005–2015 Table 2 shows that the UK’s BoP with each of its largest Asian trade partners improved (or remained static) during 2010–2015 compared with the preceding five-year period (calculated from ONS 2016a). Amidst an overall slowdown in total trade, then, UK exports to Asia performed more strongly than regional imports during 2010–2015 compared to 2005–2010. However, Table 2 also shows that this was not unique to Asia and reflected a wider trend of improvement in the UK’s global BoP trade profile in the post-2010 period (calculated from ONS 2017).
Complete data from 2005 on UK Foreign Direct Investment (FDI) to and from Asia is difficult to collate. However, between 2010 and 2015, annual UK FDI stocks (total direct investment) in China increased by over 40%, from around USD 9 billion to around USD 13 billion, while Chinese FDI stocks in the UK increased by more than 400% over the same period, from around USD 480 million to around USD 2.5 billion. For the same period, UK FDI stocks in Japan increased by around 85%, from around USD 3.5 billion to around USD 6.5 billion. Japanese FDI stocks in the UK increased by more than 75% over the period, from around USD 30 billion to around USD 53.5 billion.
Among ASEAN nations for which complete data for two-way FDI with the UK during 2010–2015 are available, a similar picture emerges. UK FDI stocks in Thailand, Malaysia and Singapore all increased strongly between 2010 and 2015. The same is true of the relationship in reverse, with the exception of Singaporean stocks in the UK which decreased overall by 73% (after strong annual increases until 2014) (calculated from ONS 2016b). UK investment into ASEAN as a whole has fallen steadily in recent years, from around USD 12 billion in 2011 to around USD 7 billion in 2015 (ASEAN 2013, 7; ASEAN 2016a, 5).
With regard to its primary aims of boosting British economic activity in Asia, then, the UK’s post-2010 pivot leaves a mixed picture of slowing trade increases during 2010–2015 compared to 2005–2010, but with improvements in the UK’s regional balances of payments (though only in line with the UK’s global trend) and generally healthy increases in two-way FDI stocks. Overall, this has done little to improve the UK’s standing as a tertiary-level trade and investment partner of Asia, behind the most prominent economies of China, the USA and Japan, and such regional and extra-regional secondary partners as Singapore, Australia and the EU. Around 20% of Vietnam’s exports go to the USA, for example, and almost 30% of its imports come from China, compared with around 3% and 0.5% respectively for the UK (calculated from World Integrated Trade Solution 2018).
The UK’s regional role and importance
From a broadly unaltered position as a tertiary-level regional partner, what is the UK’s importance to Asia today? The UK’s post-colonial role and identity is debated. Some designate it a “great power” (Gilley and O’Neil 2014, pp. 4–5), others a “middle ranking European power” (Croft and Dorman 2014, p. 29). The intention here is not to reinforce or challenge these labels, but nonetheless speak to the “difficulties in capturing the particular position of…the UK in global affairs” (Gaskarth 2013, p. 84). To begin with, the UK’s role in, and importance to, Asia (and beyond) lies not primarily with its quantities of (especially military and economic) power—as illustrated so far—but with its qualities of power. Qualities of power are understood here to be skills and specialisms utilised by international actors in the pursuit of foreign policy objectives.
This reliance on particular specialisms points to the concept of niche diplomacy (Cooper 1997). To utilise niche diplomacy means “concentrating resources in specific areas best able to generate returns worth having, rather than trying to cover the field” (former Australian Foreign Minister Gareth Evans, quoted in Cooper 1997, p.5). The concept of niche diplomacy also encourages escape from overly materialistic and somewhat limiting designations of the UK and others as “great” or “middle” powers, by highlighting the importance of, for example, persuasive actor influence and such roles as political intermediary (Henrikson 2005, p. 67). As shown below, the UK’s pivot to Asia, while in many respects partial and limited in scope, has been built around core specialisms of perceived value.
First, without a comprehensive physical stature and corresponding quantities of power in Asia, the UK constitutes a regional subcontractor, employed for tasks at which it excels rather than an overall driver of Asian affairs (interview with diplomat F, London, 14 March 2016). Experience in international bureaucracy and management, for example, from leading positions in multilateral organisations, is considered an asset (interview with diplomat B, London, 16 January 2016). This is complemented by London’s envisaged position as a centre of global finance (interview with diplomat B, London, 16 January 2016), with what Liu Xiaoming described as its “mature management system” (UK Embassy of China 2017). The UK’s decision to join the AIIB, despite protestation from Washington, was especially well received (interview with diplomat A, London, 11 December 2015).
While the UK no longer represents a traditional military power in Asia, it is the world’s second largest arms exporter. Between 2012 and 2016, India and Indonesia were its second and third largest customers (Fleurant et al. 2016), with China and Japan other significant destinations (Kift and Page 2016). The UK also boasts expertise in sub-national or “non-conventional” arenas of security. In 2016, the UK was the world’s fifth largest security exporter, covering such industries as cyber and border security, policing and counter-terrorism, and infrastructure protection (Department for International Trade 2017, 4).
In this sense, the UK represents a regional (and even global) security power in Asia, from skills and competencies which facilitate its entrance to, and agency within, a security environment where it boasts an otherwise modest presence. The Asia Pacific, indeed, accounts for almost a quarter of UK security sales (Department for International Trade 2017, 15). As a leading security subcontractor, the UK secured the Defence Equipment Cooperation Framework with Japan in 2013 and integrated itself into the security and intelligence groupings detailed earlier, including the ReCAAP and the Shangri La Dialogue. The UK now boasts the most comprehensive regional security involvement of any non-regional actor other than the USA. As William Hague noted in 2012, “we are not a significant military power in Asia, but our…defence expertise as a nation mean that we have a role to play” (FCO 2012).
The UK’s tertiary education system is another vehicle for British influence. As of 2017, more government leaders and heads of state were educated in the UK than anywhere else, including those of Malaysia, Brunei, Taiwan and Singapore (Higher Education Policy Institute 2017). British universities score well in global rankings, and the UK hosts more than 10% of the world’s foreign students, second only to the USA on both measures. Six of the top ten home countries of non-EU students in the UK are Asian (HESA 2017), and interviewees indicated their governments’ desires to see more Asian students granted access to Britain, more educational exchange programmes and increased funding for UK scholarships (diplomat A, London, 11 December 2015; diplomat B, London, 16 January 2016; diplomat D, London, 3 February 2016; diplomat E, London, 3 February 2016). Student visa restrictions are a point of contention in UK trade negotiations with India and Australia (Sengupta 2017; Smyth 2017), demonstrating the political weight of the globalised education industry.
Second, along with its status as subcontractor, the UK represents a facilitator for regional partners. This facilitating role begins with aiding access to Europe, since those with UK investments benefit from entry to the European Union’s single market of goods, capital, services and labour. The UK government has relished its role as a “gateway to Europe for many Asian businesses” (FCO 2015), a point acknowledged by its own research (Department for International Trade 2017, 14). To global partners, Britain represents one of the more liberal, less protectionist, European trading nations, and both Asian leaders and regional diplomats affirm the perceived benefits of its gateway status (Japanese Ministry of Foreign Affairs 2016b; interviews with diplomat A, London, 11 December 2015; diplomat D, London, 3 February 2016), pointing to the UK as one of Europe’s primary diplomatic and economic “hubs” (interview with diplomat D, London, 3 February 2016).
In a 2016 letter to the British and EU leaderships, the Japanese government highlighted numerous areas in which it derives benefits from Britain’s EU membership, including favourable cross-border tariffs; worker mobility; the passport system for financial services; and access to EU research and development funds (Japanese Ministry of Foreign Affairs 2016b). In 2015, Xi Jinping implored Britain to use its policy influence in Europe to facilitate “an even more positive and constructive role in promoting the deepening development of China-EU ties” (quoted in Young and Blanchard 2015). London has previously touted these bridging attributes in support of its pivot: “Britain seeks to multiply our impact by working with our European partners…to drive a deeper, more comprehensive EU engagement with Asia” (FCO 2014).
Beyond Europe, Britain’s facilitating role in Asia extends to a more generalised ability to expedite policy goals. The UK’s entry to the AIIB for instance—aided by its perceived competency in international organisations—prompted European neighbours to follow, enhancing the credibility and potency of the project (Ren 2016; Anderlini 2015). The UK argues Gaskarth (2013, pp. 85–86) holds an “exalted” place in international affairs by virtue of high-ranking memberships of global organisations and institutions, bringing additional gravity to this facilitating role. Japan’s enhanced security coordination with Britain is driven partly by its ambition to become a permanent member of the UN Security Council, for which it requires support from existing members. As one of the five permanent occupants, the UK represents a useful intermediary by supporting permanent Japanese (and Indian) entry to the Council (UK Government 2015).
The UK’s reputation as a “rule of law state” also means that a consistent rhetorical theme of its pivot has been the defence of the rules-based international order (FCO 2012, 2014, 2015). The durability of this “order” is of increasing interest to the Philippines, Vietnam, Taiwan and others, as they pursue UN legal rulings against China’s claims in the South China Sea (BBC 2016). As among the UN’s most influential members (Dee and Smith 2017), with corresponding persuasive influence (Henriksen 2005, p. 67), the UK recently made tentative commitments to protect Freedom of Navigation laws in response to China’s claims (Parameswaran 2017). It is also part of the influential G7 which reinforces the claims of China’s neighbours, helping to ensure the continuation of debate (G7 2017).