David Cameron's cold relationship with China

Interesting story on the front page of the Sunday Times (£) which claims there's a cabinet split caused by differences between ministers over how to confront "bullying by Beijing".

The article goes on to describe how William Hague, the Foreign Secretary, and Nick Clegg, the Deputy Prime Minister, favour a tougher approach when dealing with the Chinese leadership.

The two cabinet ministers, the paper suggests, want to raise concerns about Human Rights and Tibet with their counterparts in China and not show any weakness; even in the face of "increasing hostility".

The story does stand up to some scrutiny. Certainly when compared to the sense you get from conversations with Western diplomats here in Beijing. China does appear to be giving the UK the cold shoulder.

The fact that David Cameron has not visited China since November 2010 speaks for itself.

Meanwhile, the Chinese have rolled out the red carpet for the Irish PM, the EU and continue to focus on trade links with Germany.

Then there is the reaction from the Chinese when Mr Cameron and Mr Clegg met the Dalai Lama, the Tibetan spiritual leader, during one of his two visits to the UK last year.

The foreign ministry here threatened to suspend ministerial level meetings as retaliation for the Dalai Lama meeting, even if it was deliberately not held inside Downing Street.

This week David Cameron is due to be in India, which will not help relations either. China and India are economic rivals and often bicker over disputed territory, water rights and borders.

It becomes even more noticeable that by the end if week the PM will have visited Delhi, last year made a trip to Tokyo but has not made it to the one country with the largest economy in the region, for years.

The Foreign Office tries to put a brave face on soured relations with the Chinese, pointing at large scale investments in the UK by Chinese firms which have bought chunks of Thames Water and Heathrow's owning company.

Huawei the firm which denies accusations of being involved in cyber spying, recently announced it was investing a further £1.3 billion in its UK operations.

However, business is business. What the Sunday Times is talking about and what I have also written about in previous blogs is the evidence for deteriorating political relations with China. The lack of high level meetings is surely the clearest sign.

The Chancellor, George Osborne, has visited China since November 2010, and is always keen to promote the City of London becoming an RMB trading hub. Again business, it would be remarkable if China; which wants to expand trading in its currency, did not have major transactions possible in the City - it is a world renowned banking centre.

Mr Osborne has often said that for the UK economy to grow it needs trade with China and other emerging counties to expand.

Despite the investment by Chinese companies, the old stat is often trotted out: that exports to China are only around 2% of the total, we sell more to Ireland than we do to the vast Chinese markets. That export figure is slowly growing, but not by much.

So in real terms we have tiny trade figures and depressing diplomatic relations with the world's second largest economy. That is before we even get onto cyber espionage. In briefings, I have been told that every UK government department has been hacked by the Chinese, at some point and the major ones repeatedly.

Sometimes its so called 'red' hackers doing it for patriotic reasons while sometimes it is more sinister and organised by state security. The vast amount of hacking should not be a surprise when you think of the huge numbers recruited by the People's Liberation Army.

There is a reluctance to raise the issue with Chinese ministers, mainly because it does not get any results. The Chinese simply say, yes we know, we are also the victims of hacking. Recent figures released by the China National Computer response centre claim that more than a 100 million computers in China have been hacked by US based IP addresses.

The other reason hacking is not raised with the Chinese is that if Western security agencies definitely know it is the Chinese state behind an attack, they do not want to let the hackers know they know. It would stop, if they let on, but only because the hackers would find better ways of hiding their traces.

Of course meetings between British diplomats, ministers and Chinese counterparts go on all the time. There is communication. China's most senior foreign affairs figure, Dai Bingguo, a state councillor, was in London for the Olympics and by all accounts got on well with cabinet ministers he met.

The problem lies with the symbolism of the Prime Minister not enjoying high profile, in depth, talks with the Chinese top leadership for more than two years now. This is a culture which puts great meaning on the concept of 'face' and no face to face talks for such a long time means the mood is icy.

This year it is meant to be the turn of the Chinese to visit the UK under the biannual summit arrangements.

Perhaps, David Cameron's cancelled/postponed/delayed 2012 visit will instead go ahead and the PM will make it here to meet China's new leaders. If it does happen this year, then that would be seen as the first sign of a thaw between Beijing and Downing Street.