“China is vital to our future”, the Chancellor George Osborne told the Tories at their conference, but he went on to admit that but it’s “not growing as strongly as it was”. And, he added, “the Eurozone is still very weak”.
So where else do we look to shore up our not-so-brilliant trade performance?
The answer could lie in something we heard David Cameron say last May as he was touring Asia: “I want us to be nothing less than the modern world’s most open, trade-minded nation. To do that, we must tap into markets outside Europe; to look to the Commonwealth and beyond.”
That’s a change of music. Until now the great new markets of the modern Commonwealth have not had much of a mention at the top. But with Europe stagnating and China slowing, could it be that the top advisors and mandarins in Whitehall have at last grasped a fundamental fact about new global trade patterns – namely, that despite their understandable preoccupation with EU renegotiation the big economic prizes for Britain in the future lie elsewhere?
If so, that’s a welcome step towards realism. The European market obviously remains important but it is in the expanding markets of Asia, Africa and even Latin America that our export underperformance has to be reversed and in which Britain will either survive or succumb. And while China is obviously the colossus amongst these much less notice has hitherto given to the 53-nation Commonwealth which, while it has many small and developing states, also embraces some of the fastest growing economies and most lucrative new consumer markets on earth.
India, Australia, Malaysia, Canada, Singapore, South Africa, Nigeria are emerging economic players in an increasingly networked world. And in turn they form the gateways to the other rising markets and new trade routes taking shape. Some people believe that India could yet prove the winning tortoise to the Chinese hare. Either way the UK would be foolish to miss out.
It is true that the Commonwealth is not a traditional trade ‘bloc’ and nor should it be seen as such. And it is true that the bulk of our official trade policy is in the hands of the EU. But as Brussels officials slog away trying to put together elaborate trade deals with other regions a different world is unfolding round them which they hardly seem to recognise.
Thanks to the digital age and the stunning advances in almost total global connectivity modern trade is vastly more knowledge-laden and information-intensive than even a few years ago. The picture of export and import being solely a matter of giant container ships, manufactures and raw materials now has to be revised. Services of every kind and digitalised information now form a larger part of international business than ever before. UK services are world leaders. International trade links and supply chains have grown infinitely and rapidly more complex, outdating and invalidating the 20th century pattern of trade blocs and protected regions.
To all of these new challenges the modern Commonwealth network is ideally suited, not by any imposed design but by evolution and adaptation. And it is of course the common language, understanding and sheer affinity of outlook between Commonwealth countries which links Commonwealth markets, allows the communication of complex ideas and significantly lowers barriers to the conduct of this new kind of business.
Intra-commonwealth trade which shrank steadily from the 1950s to the 1990s, is now rising, and there are strong grounds for expecting it to continue rapidly in these completely transformed world business conditions.
For Britain the importance of these new patterns cannot be over-emphasised. The great British strength nowadays, in the information age, lies in the immense ingenuity, novelty and sheer creative power of our service sector. Success in manufacturing and services are all woven together. In almost every professional field an extraordinary and dense weave of live, instant and continuous intra-Commonwealth relationships has now emerged, thanks to the universal use of English and the way we are all connected at the click of a button.
Importantly too, as vital and rich new trade routes and supply chains open up, their protection, stability, and the friendliness of the regions they cross suddenly leap up the scale of importance for the security and defence dispositions of many Commonwealth states. This should become a growing priority.
Britain is correct to woo China early, but we should not put Britain’s future prosperity all on red. As in personal investment it is prudent to have a diverse portfolio, spread across numerous zones. The same is true for a country’s trade and investment strategy. The modern Commonwealth is emerging as a key part of the new pattern. With all of the Commonwealth’s advantages and underpinnings, it is becoming not just a matter of opportunities. It is becoming a matter of survival.
This article was co-authored with Tim Hewish. It first appeared in City AM on 13 October 2015
The views and opinions expressed are those of the authors and do not necessarily represent those of The Royal Commonwealth Society.