The UK might be forgiven for thinking it had two Prime Ministers. George Osborne, Chancellor of the Exchequer and (this is important) First Secretary of State, has already emerged as the power in the first majority Tory Government in five elections. His incisive style, precise purpose and clear explanations are entirely different to the avuncular waffle of the official PM. Cameron never answers a question and is forever ‘doing the right thing.’ But nobody is sure what the thing is, let alone whether it is right.
Osborne’s visit to China is momentous because it shifts the emphasis from quarrelsome Europe to a new dynamic with the world’s second biggest economy, soon to be the biggest. The timing is perfect. China is trying to achieve a shift from an export driven economy to one in which domestic consumption plays a bigger role and where overseas investment, already strong in Asia, extends its global reach. Osborne declared that Britain aimed to become ‘China’s best partner in the West’. He said this at the Shanghai Stock Exchange while announcing that plans are afoot to link the Shanghai and London stock exchanges in an epoch changing development of flexible trading. He had already announced inducements to encourage wide ranging Chinese investment in the UK including nuclear power and railways.
Coming upon the recent thaw, albeit a slow drip, in relations with Moscow to make common cause against IS, there begins to emerge after years of muddle, a coherent strategic direction for the UK. It is to be on good terms with each of the three Superpowers. The US is the military partner, Russia will slowly emerge as the strategic political partner in Europe and the Middle East and China will be the business partner. Among them all the UK will be the only one buddies with all three. So far this may be more by accident than design and the foreign office has an uncanny ability to screw up.
Unfortunately for Osborne all this is not matched by a coherent domestic economic policy, wedded ideologically to cuts, in which bad news is piling up in small doses. Wages up is good. Unemployment up, falling industrial production, a bigger budget deficit than in August 2014 and exports falling are not. Perhaps China will have some suggestions.