Tackling Scotland’s China conundrum – Daily Business Magazine

Contract rows over buses and a turbine factory go to the heart of trading relations with the Chinese, writes TERRY MURDEN

One of the final acts of the outgoing Scottish government was to award funding for the latest round of zero-emission bus orders which threw a lifeline to the manufacturer Alexander Dennis. It enabled outgoing ministers to leave office with a spring in their step, having delivered some good news for the company’s workforce, the supply chain and the environment..

It didn’t quite go to plan. Within hours of the funding share-out being announced, the billionaire brothers Sandy and James Easdale, who own McGill’s Buses, the largest private operator in the UK, cried foul and demanded to know why their bid for 33 buses worth £16m to Alexander Dennis had been rejected. Suspicions that their recent donation to the Labour Party was a factor were quickly denied by the SNP government.

Further infuriating the Easdales was the decision to grant the biggest single award – worth just over £13m – to an intercity coach operator to add 100 Chinese coaches to its existing network. The Easdales pointed out that they would not replace a single diesel vehicle on Scotland’s roads. Not only that, but this was more work leaving Scotland, and instead being switched overseas.

The awarding of bus manufacturing to the Chinese gets to the heart of growing claims of political subterfuge and untold explanation in UK-China trading relations.

James Easdale noted that the First Minister and SNP leader John Swinney had criticised the UK government for “blindsiding” his ministers by blocking the Chinese firm Ming Yang from investing in a turbine factory in Scotland. At the same time he was overseeing a process that sneaked out the electric bus fund details just as Holyrood was shutting up shop for the election campaign.

However, the Easdales have overlooked two important issues. Firstly, there is no guarantee that the Alexander Dennis buses will be built either partially or wholly at its Falkirk plant. Secondly, concern over awards going east are a result of China setting up companies based in the UK to secure work that is then transferred to its own manufacturers. This has enabled China to increase its share of procurement from 25% in 2024 to 50% last year. There is every likelihood of this share increasing as China steps up its export of other vehicles into the UK market.

Scottish Labour transport spokesperson Daniel Johnson joined the outrage by claiming Mr Swinney’s government was again sending work to China, but he also failed to acknowledge a key point: that the funding goes to the bus operators and it is they, not the government, which negotiate with their chosen manufacturer. To that extent, Scottish ministers have their hands tied unless they want to snub more operators.

It also needs to be said that McGill’s has played its part in handing work to the Chinese. It introduced 12 Yutong zero-emission double-decker buses to its fleet as part of an investment to support decarbonised transport in Dundee. It later claimed that Alexander Dennis buses were not up to scratch.

In the meantime, the SNP candidate for Inverness and Nairn, Emma Roddick, has added her own accusations of hypocrisy by saying Scottish industry and workers have been punished by the UK Labour Government as a multitude of Chinese backed projects are waved through in England.

She may have a valid point. Having denied Scotland Ming Yang’s promise of a £1.5 billion factory and 1,500 jobs, the UK Government has approved nuclear plants, a super-Embassy, investment at Heathrow Airport and in English power networks and battery sides.

However, questions over Ming Yang were linked with concerns over “national security”. This has not been fleshed out, probably for self-evident security reasons, though there apear to be fears that the technology in the turbines could be used to allow spying and industrial espionage. The Conservative shadow Scottish secretary Andrew Bowie has raised the prospect of China being able to “spy on British seas, defence submarine programmes and the layout of our energy infrastructure” if Chinese turbines are erected off the coast.

Even so, it is not the first time that espionage has been raised in connection with Chinese investment. Concerns like this led the UK government to strip out technology from the Chinese telecoms company Huawei from the country’s 5G network. This followed active campaigning by the US against Huawei’s involvement in European telecoms projects.

There have been reports that US government officials have issued similar warnings to British counterparts about the risk of approving the Ming Yang project.

Earlier this year Sir Keir Starmer became the first UK leader to visit China since 2018 as part of a charm offensive to boost trade between China and the UK. The Ming Yang investment at Ardersier was obviously one step too far and the consequences of such a snub are yet to unfold. Ming Yang has indicated that it is not done yet with its plans to invest in the UK and it threatens to become a cross-border battle between the Labour government and the new team at Holyrood.

Scotland’s outgoing Deputy First Minister Kate Forbes claimed it was “simply sabotage of Scotland’s industrial future”, though with an election to be fought it was an opportunity to set aside the wider complications of UK-China relations in order to score a political point.

To that end, the awarding of 166 electric buses for Scotland’s roads to Yutong is being flagged more for its net zero credentials than a gain for industrial superiority or national security and it may help keep China sweet for the incoming administration in May.

Terry Murden was Scotland Editor and Business Editor at The Sunday Times, Business Editor at The Scotsman, and Business and City Editor at Scotland on Sunday. He is now Editor of Daily Business

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