Scotland should not get too cosy with Communist China as others ‘de-risk’ – Stewart McDonald

Unlike Jeremy Hunt’s autumn statement, the Scottish Budget needs to recognise the historic realignment in the global economy and prioritise resilience, aspiration, prosperity and fairness

It’s the economy, stupid. From JM Keynes to Friedrich Hayek, it is those visionaries who recognised that economic policy forms the absolute foundation of our society, the base upon which political and cultural life is built, who have bequeathed the most profound and enduring legacies to future generations. Margaret Thatcher, as much as it is unfashionable among my party to recognise, was one such person. In words that could have been lifted straight from The Communist Manifesto, she once quipped: “Economics is the method. The object is to change the soul.”

Just 40 years ago, the United Kingdom had a Prime Minister who stood proudly at her podium and, with only a sprinkling of melodrama, vowed to find the policy levers that would let her tinker with the human soul. The scale of her ambition was such that, decades after she left office, her legacy continues to blight communities up and down the UK.

And what do we have now? A Chancellor who stands in the Commons amid a historic realignment in the global economy and promises to tinker with the rules about ISAs. It hardly gets the pulse racing. Indeed, the autumn statement which promised to “back British business” by removing red tape, cutting taxes and reforming welfare could have been given by a Conservative Chancellor at any point in the past 50 years. It’s the same recipe UK citizens have been eating for the past decade – the same one that has made this country so sick.

Liberal internationalism and overseas aid

The Scottish Government, in preparing its Budget to be given next month, needs to think bigger. We all know that the devolution settlement binds their hands, restricting the fiscal and economic levers available to them. This, however, does not have to stop the government from using decisions about public spending to tell a coherent story about Scotland and its place in the world: just think of David Cameron in 2013 when his government first spent 0.7 per cent of gross national income on overseas aid. As well as making the case, roundly ignored by his acolytes and successors, that this spending was in the UK’s national economic interest, he also used it to put forward a new vision of Britain on the international stage, one grounded in responsible global citizenship and liberal internationalism.

Previous First Ministers have done the same. The Labour First Minister Jack McConnell, as part of his drive to establish Scotland “among the leading legislative regions of the EU”, directed his government to forge economic ties and partnerships with regions across Europe such as Tuscany, Bavaria and North-Rhine Westphalia. Later SNP governments turned their attention to sovereign governments, deepening economic ties with Iceland, Ireland and the Nordic countries to tell a different story about Scotland as a northern European state-in-waiting. In lifting policies like the baby box from states like Finland, the Scottish Government was able to simultaneously make effective and impactful public policy decisions and tell a compelling story about Scotland and its place in the world at the same time.

China a threat to Scotland’s economic security

External Affairs Secretary Angus Robertson has been visiting a number of Chinese cities (Picture: Scottish Parliament/PA Wire)

Those countries which will thrive in the 21st century are those which can see these links between the domestic and international, and those that can think in 20 or even 50-year terms. It will be those governments with their feet planted firmly in the here and now and their eyes fixed firmly on the future that will find themselves able to build an economy fit for the decades to come. For the Scottish Government, that means thinking not just about Scotland’s relationship with Westminster, but also its current and future relationships across an interconnected, insecure and rapidly changing world.

My eyebrow was more than a little raised when I read of the current Scottish Government ministerial visit to China. While the EU and other allies are talking of “de-risking” businesses which source from China, the Scottish Government seems set on deepening economic ties. This is not in our national interest. Indeed, nor is it in the interest of our university sector to have a quarter of the international student body drawn solely from a country that represents the biggest state-based threat to Scotland’s economic security. Far from being “a benefit”, it is a worrying example of over-reliance, and a liability in both the political and economic sense that we should urgently be seeking to remedy, not celebrate.

None of this is to say that Chinese nationals are unwelcome in Scotland. They absolutely are. As I have written in these pages before, we cannot allow the debate on China, which, in Scotland, currently stands at about ten years behind other like-minded democracies, to descend into Sinophobia. But we must engage with China as it is – a serious threat to Scotland’s economic resilience – not as we might have wished it to be ten or 15 years ago.

Four pillars for a strong economy

So, whilst our engagement with China, and visits such as this one, are necessary, we must be clear-eyed about the country we are engaging with, not only when it comes to the Communist party’s catastrophic human rights record; we should deepen our understanding of the areas of risk of overreliance in Scotland’s economy and institutions, be it in higher education, food and drink, or our energy and chemicals sectors, and have a long-term economic plan to de-risk. In that endeavour, we must strive for a consensus across politics and industry, and work in concert with like-minded countries.

These words – resilience, aspiration, prosperity, fairness – should be at the heart of the Scottish Government’s long-term economic and policy planning. As ministers ready next month’s Scottish Budget, they have a chance to present an economic framework underpinned by those four pillars, securing Scotland’s long-term prospects in the context of a major global economic realignment, shunning the short-termism that blights the UK, and delivering a new economic settlement for Scotland. We should seize that opportunity with both hands.

Stewart McDonald is SNP MP for Glasgow South