China courts Scottish business as geopolitics reshapes UK ties

Over cured Scottish salmon and Highland venison fillet, attendees including Scottish government officials politely applauded a series of speeches, including one by Ren Hongbin, chairman of the China Council for the Promotion of International Trade (CCPIT).

The organisation, which sits under China’s Ministry of Commerce, exists to promote trade and investment internationally, as well as to foster Beijing’s links with foreign business communities. It co-hosted the dinner with the London-based China-Britain Business Council (CBBC), which promotes trade and investment with China.

While delegations from China were rare in the UK during years of diplomatic frostiness between London and Beijing, this visit was striking - and not just because it took place in Edinburgh.

First, it was headed by Ren who is also a vice-minister in the Chinese government hierarchy. This made him the most senior official to have visited Scotland since 2018 when Cai Qi, a member of the ruling Chinese Communist Party’s politburo, met Nicola Sturgeon at Bute House.

It was Ren who gave opening remarks at the start of a China-UK business forum hosted in January by the CCPIT in Beijing for Keir Starmer, who was on the first visit to China by a British prime minister for eight years.

Second, the Edinburgh visit was organised in only a month. This sort of thing normally takes some herding of cats. But the CBBC and Chinese side pulled together a delegation made up not only of businesses like Glasgow-based Weir Group, but also executives from 18 Chinese entities including China Telecom Europe; SDIC, a state-owned power company based in Beijing; and five executives from the London branch of ICBC, China’s largest bank by assets.

At the dinner, Ren lavished praise on the UK-China relationship, saying the stage had been set for a “long term, stable, strategic partnership”, involving the upgrading of bilateral trade and increased Chinese investments in the UK, particularly in clean energy.

Lin Shunjie, head of China’s International Exhibition Centre Group, a major exhibition enterprise under the CCPIT, invited Scottish businesses to Beijing to take part in the 4th China International Supply Chain Expo in June.

He explained how China’s supply chain was “built for cooperation, not competition”. For added effect, a video clip showed chipmaker Nvidia’s chief executive Jensen Huang at last year’s expo, describing the “miracle” of China’s supply chain.

Yet it was not until the speech by China’s consul general in Edinburgh, Zhang Biao, that China’s message became crystal clear. “As the famous Chinese saying goes: ‘Opportunity knocks only once’,” he declared. “In the face of such new opportunities, action is what matters most.”

China is clearly determined to follow through on the UK-China reset by seizing business opportunities. The expectation is that the UK does the same. The unspoken context is clear: amid chaotic geopolitics and capricious, coercive policies coming out of the Trump White House, China’s vast industrial and technology supply chain offers a stable alternative.

"China sees this time as an unprecedented moment in history,” explains James Kynge, a senior research fellow at Chatham House in London. “They know that their technology companies have pulled ahead of the US in almost all areas for the first time and they want to capitalise on it.”

So why Scotland? There’s a “long and distinguished tradition of Scottish- Chinese commercial relations”, as Peter Burnett, CBBC chief executive, pointed out. Hongkong and Shanghai Banking Corporation, now HSBC, was founded in 1865 by Scottish banker Thomas Sutherland.

China is the largest market for Scottish salmon after France and the US. Much of that goes by air from Prestwick Airport, which this week announced Air China had increased its cargo service from Prestwick to Chengdu, in southwestern China, from four flights a week to daily. Meanwhile, sales of Chinese-made electric vehicles in Scotland are growing.

But it’s clean energy that offers the biggest prize for Beijing. China’s investment in Scotland’s wind sector has been growing, spearheaded by Red Rock Renewables, an Edinburgh-based company that’s owned by SDIC. Together with Ireland’s ESB energy group it’s building one of the largest offshore wind farms, Inch Cape, using components from Chinese company Dajin Heavy Industries that are being assembled at Port of Leith. Red Rock also has a 25 per cent share in Beatrice, a wind farm that’s been operating off the Caithness coast since 2019.

Moreover, the company owns three onshore wind farms in Scotland. They include Benbrack in Dumfries & Galloway, a project which secured £62 million in project financing two days before last week’s dinner. The three lenders were Lloyds, HSBC and China Construction Bank, one of China’s biggest banks.

Yet there are complexities. As Kynge points out: “The subtext for any country in the West of integrating with the Chinese supply chain has a risky undertow, unless it is done with great care, given dependency risks.”

Nowhere is this issue more evident than in the dilemma faced by the UK government as it grapples with whether to allow Ming Yang, the Chinese wind turbine manufacturer, into the UK supply chain by building a £1.5 billion blade factory in the Highlands.

It is a mistake instinctively to demonise China and its offer. But it is also a mistake naively to glamourise it. As we move into a period of increasingly contested geoeconomics, Scotland should certainly grasp opportunities. But it should also heed another Chinese saying, attributed to former leader Deng Xiaoping: “Crossing the river by feeling the stones”.