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Cameron cannot afford a dispute with China over steel

Terry MurdenChinese president Xi Jinping arrives in Britain today facing a list of demands that make this more than a routine diplomatic visit. They don’t get any bigger than human rights, world trade, nuclear energy and endangered species. The meetings could define UK-China relations for many years.

For David Cameron, this is a crucial week in which he must perform the mother of all balancing acts. He wants the week to end with something to satisfy the British public which has been angered by news of subsidised steel flooding into Europe and putting 1,800 jobs at risk.

He knows there is simmering discomfort over repeated tales of poor conditions for Chinese workers making western goods, and of factories continuing to ply a trade in ivory that threatens the elephant population.

But Mr Xi (pictured below) also arrives bearing gifts. He is offering to provide vital funds to support HS2, the high speed rail project, and for Britain’s energy sector, not only in nuclear but in renewables. Wealthy Chinese are pouring money into green projects in Britain.

The Chinese are supporting the British economy in other ways, They have today committed £2 billion in Orthios Eco Parks to develop waste power and food stations, initially at Holyhead and Port Talbot in Wales, and £100 million for a £3.2 billion Disneyland-style theme park being built on the site of a cement works in Kent which is described as a nationally significant infrastructure project.

President XiChina is an important export market for Britain, buying our whisky, cars and technology. It is not a good idea for Britain to fall out with the world’s second biggest economy. The economy may have slowed, but only to a rate that remains the envy of other countries.

Yet it will be the impact of cheap steel that will be uppermost in the public’s – and the media’s – minds. For Mr Cameron the steel issue goes to the heart of the clash of economic cultures: on the one hand an economy able to be supported by public subsidy, while the other is hidebound by European and other international protocols that prevent state support.

For this reason alone it is difficult to see how Mr Cameron can achieve much for the steelworkers beyond sparking a trade dispute with China which he would ultimately lose.

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