The debate over the Hinkley Point reactor highlights broader questions over the future of the UK−China relationship.

Water pumped out from the Hinkley Point B nuclear power station. Photo by Getty Images.

While the general assumption has been that, following the vote to leave the EU, UK relations with China could be even more important than before the referendum, the early indications from the new British government are mixed.

Partly because of preparations for China’s hosting of the G20 in September, the chancellor and trade minister have both already visited China since the referendum, and talked up the UK as a place that remains open for business. Chinese businesses will be pragmatic and continue to invest in the UK where this makes sense, though the immediate attraction is enhanced by cheap assets due to the major decline in sterling.

But as the delay in approving the French and Chinese-invested Hinkley Point nuclear plant shows, Theresa May, the new prime minister, may have doubts about some of the deals struck by her predecessor.

Underlying this uncertainty, and brought to the fore by Brexit, are several interrelated strategic challenges facing London in formulating policy towards China.

The first is the need to unravel UK policy from that of the EU. As in other areas of foreign policy, the UK has been engaged since at least the 1990s in a multi-layered approach to China, operating bilaterally, through the EU, and with other partners and organizations. Losing the EU layer might give greater flexibility on trade deals (though this remains to be seen), but it will also reduce leverage in areas of disagreement such as human rights or trade defence. The UK will be more exposed as a result.

This links to a second issue, that of strategic positioning. Will a post-Brexit UK still seek to align itself broadly with the EU on China? In many areas there is unlikely to be any greater divergence in interests than before the referendum, and it is difficult to see much in the EU policy communication on China (opens in new window) issued on 22 June with which British policy-makers might disagree. This seems more likely than a closer alignment with the US given the greater range of tensions between Washington and Beijing.

Third is the optimal balance between economic and political elements of the relationship. Over the last decade the story of UK−China relations (indeed, those of the EU and China) has partly been a struggle to find such a balance, and this was going to remain difficult whatever the Brexit vote outcome. The Hinckley project is a key test of the new government’s instincts.

All of these questions will be amplified by the fourth challenge, the fact that UK policy towards China is becoming increasingly contested in the UK, as well as with some of Britain’s traditional allies. This has been especially apparent since the 2015 state visit to the UK by President Xi Jinping, and has been reflected in debate within the Conservative Party over human rights as well as discussions around the personal instincts of ministers, old and new. Indeed, the sorry state of British politics means that it is primarily in the Conservative Party where this contestation will play out.

Compounding all of these challenges will be a general difficulty of operating with constrained resources and limited capacity in making and delivering international policy as the UK economy takes a further hit from the Brexit vote. Building post-Brexit relations with the EU will take priority, leaving little capacity for building a sustainable strategy towards China.

With all the other challenges facing the UK, a coherent China strategy may be too much to hope for. And the UK’s approach to China will depend on how relations with the EU pan out. So China policy looks like it will be yet another area of uncertainty for Britain as it extracts itself from the EU.