Should Britain Rely on China?

In opening this discussion, I would first like to draw upon and reference the case study of Abkhazia, a partially recognised state on the eastern coast of the Black Sea.

The Economist reports that whilst Abkhazia is a major producer of hazelnuts, it is mostly unable to sell them to the world market, as it has found itself, as a nation, to be almost entirely dependent on its relationship with Russia for trade.

“Cutting Abkhazia off from Europe will leave it even more dependent on Russia. “Russia is our strategic partner, and demand for hazelnuts is low there,” says Adgur Ardzinba, the economy minister in Abkhazia’s self-proclaimed government, which only Russia and a few other states recognise. “We have to give priority to products that are in high demand [in Russia], such as citrus and wine.”…..”1 (The Economist. 2017. ONLINE)

Therefore, despite Abkhazia having major production potential to grow, harvest and export hazelnuts to the world market (where the demand exists), their production possibilities are being dictated by the demands of their trading partner.

The cost of ignoring the world markets demand of hazelnuts is increasing. The Financial Times reported in May 2017, that “Hazelnut prices have surged almost 10 per cent in the past two weeks, after the Turkish government intervened to support the market for the first time in eight years…”2
The report also went on to identify how “…There are about 4 million people directly and indirectly dependent on the hazelnut sector in Turkey, with the nuts produced by small growers.”2 (Financial Times. 2017. Hazelnut prices to soar after Turkish intervention. [ONLINE])

Not only is Abkhazia forgoing the opportunity to participate in this growing industry ( to be worth $12 billion by 2026)3,(Freshplaza.com 2017.), it is also sacrificing the vast employment opportunities that this industry could create, if they weren’t so constrained by their trade dependency with Russia.
Perhaps what is most upsetting about this though, is that the employment seems to be generated by small independent growers, the hazelnut industry, it would seem, encourages entrepreneurialism in small, rural communities, creating jobs that otherwise might not exist. SMEs are also often the pioneers for community work, development and sustainable growth, and often account for a significant proportion of an economy “SMEs…They employ more than 14 million people and account for an estimated gross value added of £376 bn, equivalent to 49.8% of the UK economy”4. (The Guardian, 2014)

Should Britain rely on China? The answer is unequivocally no.

Whilst China has been, and remains, one of the fastest growing economies in the world, a number of cultural differences exist, and it could prove a very costly transition for the UK to shift its production towards satisfying and complying with those cultural requirements.

Furthermore, as we have been able to realise through the case-study of Abkhazia, it is not healthy to a country’s long-term prosperity to be too closely dependent on a single nation. It can lead to trade restrictions, fuelled by political tensions, and can prove to be costly if that partner nation suffers an economic downturn.

A more appropriate proposition would be: Should Britain enjoy a trade relationship with China? In which case, the answer is: Absolutely.

The United Kingdom is about to commence its exit from the European Union, the result of a democratic process. “Brexit is the stupidest thing any country has done, besides Trump” – Michael Bloomberg, Tuesday 24th October.
Whilst many regard this as being a questionable decision, it will enable the United Kingdom to negotiate new trade agreements, free from interference of the European Union.
As of 2016, the World Bank ranks the United Kingdom as the fifth largest world economy, by GDP5 (WorldBank. GDP ranking | Data. 2017), which we can hope will put the UK in a strong position when establishing these new trade agreements with countries, such as China.

– Seth Wilkinson.

Bibliography:

  1. www.economist.com. 2017. Georgia and Abkhazia are making Nutella’s job harder. [ONLINE] Available at: https://www.economist.com/news/europe/21730456-decades-old-war-may-keep-hazelnuts-reaching-europes-breakfast-tables-georgia-and-abkhazia. [Accessed 26 October 2017].
  2. Financial Times. 2017. Hazelnut prices to soar after Turkish intervention. [ONLINE] Available at: https://www.ft.com/content/96b33994-34ca-11e7-bce4-9023f8c0fd2e?mhq5j=e7. [Accessed 26 October 2017].
  3. Freshplaza.com 2017. Global hazelnut market to be worth $12bn by 2026. 2017. Global hazelnut market to be worth $12bn by 2026. [ONLINE] Available at: http://www.freshplaza.com/article/10516/Global-hazelnut-market-to-be-worth-12bn-by-2026. [Accessed 26 October 2017].
  4. The Guardian. 2014. Small and medium-sized businesses can lead the agenda on sustainable growth | Guardian Sustainable Business | The Guardian. [ONLINE] Available at: https://www.theguardian.com/sustainable-business/2014/nov/04/small-business-smes-sustainable-economic-growth. [Accessed 26 October 2017].
  5. GDP ranking | Data. 2017. GDP ranking | Data. [ONLINE] Available at: https://data.worldbank.org/data-catalog/GDP-ranking-table. [Accessed 26 October 2017]
  6. Topicalminds.org. 2017. Should Britain Rely on China?. [ONLINE] [Accessed 26 October 2017].
26 Oct, 2017 Articles, Topical Essays

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