The UK should expect retaliation after rebuking China for cyber-attack

A strongly worded statement by Deputy Prime Minister Oliver Dowden in the House of Commons is not the most devastating opening salvo imaginable – but the UK should brace for Chinese retaliation.

Mr Dowden announced on Monday that the Government was imposing sanctions on a Chinese technology company for carrying out a malicious cyber campaign targeting several MPs and the Electoral Commission, compromising the personal data of around 40 million voters.

The measures mean that Wuhan Xiaoruizhi Science and Technology Company Ltd, and two Chinese citizens, Zhao Guangzong and Ni Gaobin, effectively cannot do business in or with the UK and will have their assets frozen.

To underscore the message, the Foreign Secretary, Lord Cameron, will summon China’s ambassador to the UK, Zheng Zeguang, “to account for China’s conduct in these incidents”.

It seems a long time since Cameron and President Xi Jinping were savouring a pint of pale ale at The Plough in Cadsden, during the Chinese leader’s 2015 state visit. Whether Zeguang – a 40-year veteran of the Ministry of Foreign Affairs who spent a year reading law at Cardiff University in the 80s – regards his encounter with Cameron as a terrifying prospect is uncertain.

We should not be too exceptionalist about this.

The Chinese embassy has dismissed the UK Government’s “outright political manipulation and malicious slander”, demanding that it “immediately stop spreading false information”. But when the Chinese leadership reviews Monday’s events, it is likely to focus more on the fact that sanctions similar to those announced by Mr Dowden were also unveiled by the US Treasury.

Washington is pressing criminal charges against seven Chinese hackers and offering a reward of up to $10m for information on those it has identified as miscreants.

What’s next? The Chinese embassy barbed its statement with the catty observation that “we have no interest or need to meddle in the UK’s internal affairs” – but trade between the UK and the People’s Republic of China last year amounted to £100bn, and China is our fifth-largest commercial partner.

That said, less than one per cent of UK foreign direct investment (FDI) goes to China, while China’s FDI in the UK is less than half a per cent of the total investment here.

So far, the Chinese response has been pious protestations of innocence and lofty distaste for crude Western lies and propaganda, but they will not leave it there.

Retaliatory sanctions are almost inevitable, if only because the Western stereotype of a Chinese obsession with “losing face” is grounded in an element of truth, and China may well find a handful of scapegoats.

This will not, however, be the opening shots of a full-scale economic or commercial conflict.

China’s economic growth has slowed, and its government is taking the unusual step of actively promoting the good news: last week vice-minister of finance Liao Min gave an upbeat statement on budget data for January and February, an hour ahead of the usual comment-free publication of statistics.

It came less than three weeks after a bullish briefing on exports by commerce minister Wang Wentao.

The Chinese regime is famed for its ability to take a long view of politics, a capacity thrown into stark relief by Westminster’s recent culture of regarding getting to the end of the week as a major achievement.

It knows its economic outlook is at a difficult stage, with a property slump and looming deflationary crisis. It knows too that there is a good chance of Donald Trump being re-elected president in November, and he has threatened to impose tariffs of more than 60 per cent on Chinese imports into the US.

In the next few years there will be a crisis over Taiwan. Even if China stops short of full-scale military action, the “reunification” is so fundamental to Xi’s conception of the world that he will make some aggressive gesture.

China’s defence spending will rise by seven per cent this year, and the People’s Liberation Army Navy is already the biggest in the world, with nearly 800 ships and 380,000 active personnel. Xi has reason to suspect that a Trump presidency’s reflexive defence of Taiwan is not guaranteed.

What happens now with the UK, therefore, must fit into a wider pattern.

Doubtless the Chinese government is irritated by the sanctions announced, and will want to respond.

But the broader picture is everything, and at least some voices in the Standing Committee of the Chinese Communist Party will be recounting the apocryphal last words of Voltaire when asked to renounce Satan: “This is no time to be making new enemies.”