THE BLOG
03/12/2013 05:00 GMT | Updated 01/02/2014 05:59 GMT

'Game-changing' Strategic Opportunity in China Is Missed by the United Kingdom

This article is co-authored with Terry Townshend who is the Beijing-based Deputy Secretary General and Director of Policy for The Global Legislators Organisation (GLOBE)

In recent weeks the media agenda in the UK has been dominated by energy prices with the government seemingly intent on rolling back 'green' levies, encouraged by a vocal minority who perceive environmental taxes as "red tape" and a drag on growth. By contrast, at the same time, the world's largest economy in waiting is increasing on a staggering scale its investment in clean energy supply, resource efficiency and environmental technologies.

And China wants to talk to the United Kingdom about tapping into its expertise. Unfortunately, the UK is not listening.

This week Prime Minister David Cameron is making his first visit to China under the new leadership of President Xi Jinping and Premier Li Keqiang, who are both likely to be in power until 2022. It is a once in a decade opportunity to prepare the foundations for a strong and mutually beneficial relationship that has the potential to make a significant contribution to the UK's prosperity for years to come.

The statistics makes clear just how big the opportunity is. If we assume that China's meets its current GDP growth target of 7.5% per annum between now and 2022 (the likely term of the Xi-Li leadership), this means that the Chinese economy will grow by more than 7.3 trillion US dollars. Remarkably, that is more than the value of the Japanese economy today.

So where are the economic opportunities?

China faces serious air and water pollution, growing energy insecurity (China is more reliant on imports of oil than the United States), and stubborn resource inefficiency, combined with the challenge of moving more than 100 million people from the countryside to cities over the next decade (the world's largest ever migration). In this context, China's leadership is committed to transforming its economy away from energy intensive, inefficient and dirty industry towards cleaner energy, greater energy independence, increased efficiency and cleaner air and water.

The planned investment in these areas is staggering as the following four examples highlight:

1) Urbanisation -- 48 trillion Yuan (GBP 4.8 trillion) between now and 2020 for urbanisation, with a focus on efficient, clean and low carbon infrastructure.

2) Power Generation and Transmission -- 2-3 trillion Yuan (GBP 200-300 billion) in renewable energy over the next 10 years; 466 billion Yuan (GBP 47 billion) in UHV Transmission; and 3.8 trillion Yuan (GBP 380 billion) on "smart" grids.

3) Energy and Environmental Management -- China's energy saving and environmental protection sector is expected to be worth 4.5 trillion Yuan (GBP 450 billion) by 2015.

4) Air Pollution -- the public outcry over Beijing's air quality in January 2013, sparked by record high levels of pollution (over 40 times the World Health Organisation's recommended limits), prompted the Chinese government to develop a comprehensive plan to tackle air pollution supported by a 1.7 trillion Yuan (GBP 170 billion) investment.

The United Kingdom is well positioned as a leader in many of these areas, in particular energy management systems, offshore wind and expertise to tackle air pollution. And, as the United Kingdom renews its own energy infrastructure, there are huge opportunities for collaboration.

It is therefore surprising that, despite taking 9 ministers to China, the UK delegation apparently does not have anybody from the UK's Department of Energy and Climate Change or the Department for Environment, Food and Rural Affairs. More worryingly though is the decision that 'green issues' were not a priority for the visit -- despite the knowledge of the economic opportunity.

The decision not to use this visit to discuss the issues of most interest to China, as well as to overlook the sector of the UK economy that has bucked the trend in recent years and delivered strong growth, will be viewed by many as a mistake. What is clear is that China is not lacking in potential economic suitors from within Europe and from the United States.

With the United Kingdom failing to prioritise the clean energy and low carbon agenda, China's attention will now more likely be focused elsewhere for deals worth many billions of dollars over the next decade. This is a major missed strategic opportunity.