George Osborne in China – wide-eyed, innocent and deeply ignorant

Prostituting one's security and economic interests to a country whose values, practices and interests are wholly at odds with one's own is not openness but recklessness.
By Will Hutton

'Bambi in Beijing': George Osborne on last week's trade visit to China. 

Britain must be an open trading nation, welcoming inward investment just as it seeks to invest in others. 

But prostituting one's security and economic interests to a country whose values, practices and interests are wholly at odds with one's own is not openness but recklessness. 

Last week, George Osborne was Bambi in Beijing – wide-eyed and innocent to the threats of the Chinese forest in which he was so ignorantly wandering.
Together, the succession of deals – on banks, nuclear energy and hi-tech – represent such one-sided economic concessions and expose our own fundamental weaknesses that they are embarrassing to the point of humiliation. 

In each, Britain surrendered sovereignty and exposed itself to economic risks that were not worth the potential gain, especially for anybody with even an elementary understanding of contemporary China.
They also showed how indefensible so much financial and industrial policy has been over the past 30 years. Britain has surrendered its capabilities in sector after sector in the name of liberalisation and privatisation, a strategic policy that Bambi is continuing with unquestioning enthusiasm. 

I wonder, as he prostrated himself before the Chinese, whether he asked himself why he – and Britain – had ended up kowtowing to such a degree. 

I doubt it.
The most eye-catching deal was on nuclear power, with the agreement that the Chinese nuclear industry will be able to build and own nuclear power stations in Britain. 

Lady Thatcher boasted, when the electricity industry was privatised, that she was giving power back to the people. 

Thirty years later, we learn it's become a gift to the Chinese Communist party, offering its state-owned nuclear power companies price and profit-margin guarantees that privatisation and liberalisation, wholly unrealistically in such a long-term business, were supposed to have left behind for ever.
This is a breathtaking step in an industry where the sensitivities over operating safety, technical efficiency and waste disposal are so acute. 

Fukushima, Three Mile Island and Chernobyl are remembered around the world. 

Chinese state-owned companies are a byword, not least in China, for inefficiency, loss-making and politicisation of decision-making. 

The party has wrestled for a generation with the reality that these companies, designed by Mao to embody the communist dream of uniting economic and social obligations, abolishing worker exploitation and spearheading modernisation, are sclerotic economic duds.
Of course the party should let go, but it does not operate the kind of market economy that Bambi thought he was admiring. 

This is a system of Leninist corporatism. 

The party sustains its monopoly of power by control of the economy; it owns what it considers strategically important and allows private companies to operate only because they submit to a board of communist officials.
There are thus no sources of independent economic and political power. 

Crucially, the role of the state-owned enterprises is to offer employment, so heading off another potential challenge to party authority from social unrest. 

The job of the state-owned banks is to provide unconditional credit to the loss-making state-owned enterprises so they can avoid cumulative lay-offs that would otherwise run into tens of millions. Unsurprisingly, this politicised system is opaque and corrupt.
The state-owned nuclear power companies are at its heart. 

Last week, Transparency International declared that China's companies were the least transparent of any it surveyed. 

The Chinese nuclear industry is a black box unpenetrated by independent Chinese scrutiny, let alone foreigners. 

But you can be certain that the regulatory processes and decision-making will be as politicised as everything else. 

This is China's strategic and military heartland, central to one-party control.
British energy policy, post-privatisation, is a mess. 

Centrica, which owns British Gas, was EDF's partner in building nuclear power stations. 

It dropped out claiming that the probable financial returns were not high enough and too uncertain, preferring to spend £500m buying back its own shares to support their price and thus the bonuses of its directors, the kind of capitalism Bambi refuses to reform.
British ownership structures and director remuneration should be reconstructed and reconstituted and Centrica offered a long-term energy policy framework in which to invest. 

But that would be the sort of interventionist "socialism" that Ed Miliband favours. 

So, instead, we ask the Chinese Communist party to build nuclear power stations for us. 

Nor will they be as diligent as EDF has been in ensuring as much work as possible is sourced in Britain: the open ambition is to win work for China. 

Only Bambi could end up in such a position.
Compounding the error, he has decided to allow Chinese banks to trade in London through branches. Iceland's bankrupted banks operated in Britain through branches. 

Never again, we said.

If a bank wants to function here, it must put its own capital behind its British operations. 

But desperate to win the City's right to trade in renminbi, Bambi wants to waive this obligation uniquely for Chinese banks. 

China's banking system is precarious; non-performing loans could be as high as $5trn, proportionally far in excess of pre-crisis Iceland. 

At least the British taxpayer will be able to underwrite their British operations when the system crashes, as it almost certainly will.
Every executive from a hi-tech company visiting China is advised to travel with a new laptop, so extensive are the cyber attacks. 

But Bambi, oblivious to this reality, was busy promoting hi-tech collaboration, including with the space industry.
Here, Britain's position is once again crass. 

Eurosceptic Bambi and his party refuse deeper collaboration with the EU on space, recoil before the overt mercantilism of the Americans and so think China offers a blank cheque book. 

Chinese hackers need no longer hack the nuclear, space and other industries for insights and codes they can use for military and commercial advantage. 

Bambi is offering them all on a plate.
A Chinese schoolgirl told him and Thumper, aka Boris Johnson, that China would be concerned if so much of their country was being sold to foreigners. 

Thumper laughed it off. 

But with the People's Daily writing that progress had only been possible because of David Cameron's admission that he had mishandled Tibet (where, since 2009, 100 monks and nuns have set fire to themselves in protest against Chinese rule), Britain's abasement was complete. 

Economically misgoverned for a generation, we are reduced to being principle-free economic mendicants, with Bambi Osborne and Thumper Johnson touring the world for hand-outs. 

I don't know about you, but I am ashamed.