Book: 'Turning to Face the East: How Britain Can Prosper in the Asian Century', by Liam Byrne

I recently finished Turning to Face the East: How Britain Can Prosper in the Asian Century by Liam Byrne, Birmingham Hodge Hill MP and former Chief Secretary of the Treasury and shadow secretary for Work and Pensions. This book masterfully examines the rise of China and assesses the economic challenges (and opportunities) it represents for Britain.



UK/China People to People Dialogue, London's V&A, 2012 (FCO/Flickr)

Though as predicted Byrne was bounced out of his Work and Pensions post and 'demoted' to a junior BIS role under Chuka Umunna in last October’s reshuffle, I like Liam Byrne and still feel his talents should be missed in the shadow cabinet. He has only been in parliament since 2004, so he's not one of the "greybeards" Ed has ruled out putting back in cabinet, and DWP is a tricky brief for any Labour politician. And putting aside his unfocused admission in 2012 that he’d like to be Mayor of Birmingham and the “there’s no money left” gaffe - both of which he has already paid dearly for - Byrne was one of few on the Labour frontbench with the sort of real-world business heft that is valued by both the City and the electorate. He’s exactly the sort of person people mean when they say they want a politician “who’s done something” - an MBA from Harvard, time at Accenture and N.M. Rothschild & Sons and then co-founder of a tech firm, the e-Government Solutions Group. 

I’d also remind that Labour may still have given up some of its union funding under the terms of current party reforms, despite Ed Miliband's pledges that the reforms do not amount to "unilateral disarmament" on party funding. What's more, while The Mirror’s Jason Beattie tweeted last year that “One Labour MP on right of party believes [the] shortfall from union cash will be compensated by more private sector donations”, the presence of people like Byrne on Labour's front bench is probably vital if that solution is to be viable. Indeed, a plausible guess as to the identity of that anonymous MP could be Byrne himself – in the 90s, he essentially acted as New Labour’s ambassador to the business community. Throughout Turning to Face the East, Byrne’s thoughtful analysis of the greatest economic and international relations shift of our time provides yet more proof of why the party sorely needs him.

But clearly, I digress. The rise of China - along with the rest of the BRICS and other east Asian nations - is a major development in international relations and global political economy that I have been hearing about for years, but confess that a knew little of until I read this book. Perhaps one of the best things about reading Turning to Face the East is that Byrne himself is fairly candid that the same was true with him up until relatively recently too, however. For example, Byrne at one point says that he once assumed that if nothing else, as a nominally communist nation China would at least have a good universal welfare state, only to discover this was not so (China has huge problems providing affordable healthcare, education and benefits to its population, especially given the organisational challenge thrown up by urban-rural migration, he goes on to elaborate). He leads the reader through his journey to learning more about China's emerging role in the world - one that all Western politicians and businessmen must make - which started for him in 2006 as a young Home Office minister grappling with the issue of Chinese immigration. It was then, while on a visit, that he first began to realise China's immense complexity and importance.

Early on the book, Byrne goes through China's deep trade history, including its longstanding penchant for nationalistic independence and its deep entanglements with Britain dating back centuries. This account of history appears well-researched and will probably fill a gap  in the knowledge of many a Westerner. Later in the book, he notes that in late 2012 China changed leaders -  albeit quietly, and according to obscure bureaucratic protocol - at the same time as the November 2012 US presidential election. However, the latter event drew much more attention among politicians and the press in the UK, demonstrating the extent to which we are still America-centric and insufficiently oriented towards the east (again, this too was an insight that applied to my own field of interest in terms of world politics, I realised). 

Further, despite the trading ties imperial Britain and imperial China may once have had, Byrne makes clear how much further we have to come if we are to catch up with other nations that are expanding their modern-day links with China (especially Germany) and reorient our trade balance outward and eastward. At one point, Byrne reveals that the UK still conducts more trade with the Republic of Ireland than we do with Brazil, Russia, India and China combined. At another, he mentions how an initial launch by Marks & Spencer in China spectacularly failed due to a lack of research into the Chinese market (M&S tried to market oven-cooked rice-based ready meals, when few homes in Beijing are equipped with ovens and most residents made far cheaper versions of such meals for themselves on a regular basis). Byrne also stresses the need to be humble about our past when dealing with the Chinese on the thorny issues of human rights and democratic reform, given China's encounters with a less civilised and more aggressive Britain back in the imperial days.

More generally, Byrne reveals that although Britain's brand is associated with many top-quality products and firms, our somewhat 'traditional' image means that associating the UK with cutting-edge emerging technology remains a priority. He also notes how London, however, is perceived as a cosmopolitan world city, somewhat breaking with quainter side of the British stereotype. Looking at several of our competitors for trade with China - notably the US, Germany and Israel - Byrne suggests a strategy for the UK, going forward. For example, he suggests we set up something similar to Israel's Office of the Chief Scientist, a government-funded research investment agency that aims to 'pick winners' (though actually, the Israeli Chief Scientist elaborates to Byrne that if three-quarters of his investments succeed, he's not taking enough risk on new start-ups). 

He also recommends we invest in education, universities, key service sectors and our city regions, while using our culture and EU membership to strengthen our place in the world. Byrne repeatedly makes clear that our status as a member of the EU is absolutely vital if we are to build a better trading relationship with China. The EU collectively has more leverage with China that we do alone, he reasons, and argues that an EU-China investment deal would be beneficial. He adds that "Our free-trade outlook is in fact one of the reasons the Chinese want the UK to be influential in the EU: through our influence we keep markets open". Over time, he argues that we may be able to open up the Chinese services market (banking, telecoms, media, insurance etc), where we are world leaders but the Chinese are presently protectionist.

It's also interesting to consider the book in light of current Labour thinking on industrial strategy, corporate governance and other related topics. Byrne references Lord Sainsbury and 'Progressive Capitalism' several times. His defence of foreign ownership on page 213-215, however, is particularly interesting in light of comments by Patrick Diamond and other Labour thinkers about the need to prevent quick foreign takeovers (e.g. the Kraft's controversial takeover of Cadbury, which Byrne acknowledges). While stating that national security and infrastructure must remain under British control, on balance Byrne seems to endorse largely accepting foreign ownership as part of the new globalised world order, a somewhat laissez-faire take that is less likely to prove popular and is perhaps at odds with the current One Nation trend in the party. He does however acknowledge that globalisation's "price and prize are quite simply out of balance", noting his impoverished home constituency in Birmingham as an example, and quotes Dani Rodrik.



Author Liam Byrne MP addressing a Chinese New Year

event in Birmingham, Feb 2013 (Lee.Harper/Flickr)

Overall, Byrne provides a good beginners' account of a complex challenge, one that many (myself included) in the UK and wider West don't seem yet to understand fully. He bluntly gets across the size and urgency of the task ahead of us as we set about reorienting our trade balance towards the east (one of his seven concluding recommendations is "innovate, or we're finished"), while also providing Britons with a good idea of what weaknesses we must offset and strengths we can harness in order to achieve the goal. 

I look forward to more on this crucial subject from him, and hope he remains in a position to help put it into practice. Given the prominence that Byrne gives to Britain's universities in the book, and the role they can play both in educating our workforce for an eastern-oriented future and building research ties with Chinese counterparts, maybe his new education brief within BIS should be viewed as an opportunity for Labour as the party plots its modern industrial strategy, rather than the 'demotion' most initially took it as.