Stephen Chen of the South China Morning Post (SCMP) reported on November 5th that an anonymous UK defense manufacturer had been awarded the license to sell “unlimited” quantities of defense assets to China. The merchandise will include airborne radar technology that the PLA could be suing soon.
The manufacturer landed the plum contract under the “open individual export license” or the OIEL, soon after the Prime Minister Theresa May’s visit to Beijing.
Until now, all UK arms and defense deals with China had an upper value and amount limit. However, this new contract ushers the UK in an era of “unlimited” supply. This is a blanket policy that allows unlimited sale of hardware and software including equipment, parts, and technology related to military surveillance systems.
A Big Deal
The deal is big, claims Andrew Smith, spokesman of the NGO Campaign Against Arms Trade. The OIEL license categorically mentions the end-beneficiary as the Chinese air force, and it is valid for between five to ten years. Deducting from this, the contract value ought to be significant, added Smith.
SCMP’s Stephen Chen pointed out that the deal has been executed notwithstanding the continuing trade war between the US and China. He also said that this is not a standalone deal; many other arms supplying countries have also signed contracts with China.
This implies that countries are now following independent trade policies based on their bilateral relations with China. They are not letting the US-China trade war perspective influence their economic and foreign policy outlook with China.
It is a widespread view that post-Brexit, Britain will be up against multiple challenges including economic difficulties. Given this outlook, the deal could well be a signal to the world that the UK will not let its allies’ foreign and trade policies govern its own interests; in particular, the US-China tariff war.
It will adapt to post-Brexit realities and do business with any partner country that does not threaten UK’s integrity and interests which is controversial since China is anti-freedom and anti-democratic and the UK is democratic.
It is not lost on any independent international trade observer that in the last year, China has increased its direct investment in UK two-fold, to over $20 billion. This appears to be a tacit indicator of China’s economic support to the UK in the aftermath of Brexit.
Some experts in the international think-tank suspect that although the new deal under the OIEL license is “unlimited” in nature, the UK may exercise restraint in passing on sensitive technologies and hardware to China.
Xidian University’s Wang Tong is of the opinion that considering the “massive” amount of continuous exchange of sensitive information between the UK and the US, the former is not likely to follow the “unlimited” contract clause in letter and spirit.
There will be implied limitations dictated by the long-standing US-UK defense and military intelligence cooperation. In that sense, the deal would be “limited.”