The Liberal Democrat conference in Bournemouth this week felt like the political equivalent of a convention for model railway enthusiasts. The policy debates were a fine technical replica of the issues facing a full-scale government, but none of it seemed relevant to the people elsewhere, heading to work on real trains.

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This problem predates the Lib Dems’ eviction from office. It expresses their historic loss of a monopoly on the idea that should give them political identity. There are plenty of liberals and democrats in Britain, but they are not neatly aligned to one party. Liberalism colonised the centre of British politics in the 20th century by capturing the upper echelons of the big two. In the 1960s, Labour oversaw a social emancipation from the repressive pettiness of class, religious and cultural establishments; in the 1980s, the Conservatives made a dogma of free enterprise. The two strands then cross-fertilised. Tony Blair disavowed his party’s attachment to state control of the economy; David Cameron imposed tolerance of ethnic and sexual diversity on his tribe.

Those shifts have provoked symmetrical dissent. Ukip’s growth after 2010 was driven in large part by conservative reaction against a metropolitan elite bias in Cameron’s first phase of “modernisation”. There was too much cultural continuity from New Labour. The election of Jeremy Corbyn expresses frustration that has brewed for years on the left with New Labour’s economic continuity from Thatcherism. Both phenomena contain a complaint about the consequences of Britain’s embrace of liberal globalisation. Resurgent socialism demands state coercion of markets to level out uneven wealth distribution. A new nationalism demands protection for an imagined indigenous identity with tighter border controls.

Tim Farron’s misfortune is to lead a party that bears the name of an elite consensus but sees itself as a band of plucky outsiders. Kippers and Corbynites wave pitchforks against the orthodoxy, while Lib Dems knock politely and ask for readmittance. Locked out of their own tradition, they look in at the windows and grumble that the place is being trashed by political squatters.

Liberalism’s next chapter is being written not by Farron but by George Osborne, thousands of miles from Bournemouth. The chancellor is on a visit to China with the primary purpose of drumming up investment and the auxiliary goal of burnishing his credentials as a prime minister-in-waiting. The trip is a statement of intent to make Britain as eager a participant in 21st-century globalisation as it was in the last century, and the one before that. The emblem of this mission is a prospective deal, lubricated with Treasury guarantees, that would allow Chinese companies, in partnership with French-owned EDF, to build a new generation of nuclear power plants in the UK. There are not many developed countries that would allow a foreign state, let alone China, to take such a significant stake in their strategic infrastructure. But that is Osborne’s point. He is placing a bet on Beijing as a source of global growth, and pushing to the front of the queue. “No economy in the world is as open to Chinese investment as the UK,” he said on arrival. The chancellor used a speech at Shanghai’s stock exchange to spell out his confidence that a recent market crash there was just passing volatility; no cause for alarm. “Whatever the headlines … we shouldn’t be running away from China,” he said. “Through the ups and downs, let’s stick together.”

Facebook Twitter Pinterest George Osborne delivers a speech at the Shanghai Stock Exchange. Photograph: Aly Song/Reuters

This gamble is born partly of necessity and partly of conviction. Osborne is not a laissez-faire fundamentalist. He has an appetite for intervention, with a particular interest in building things. He may have cultivated a political brand as a fiscal disciplinarian, but he would also like his legacy to include the honour of having refurbished Britain, making it fighting fit for the economic future. The two ambitions collide. Infrastructure costs money but he has made a taboo of public borrowing. Chinese cash is meant to bridge the gap. In exchange he offers Britain’s expertise in finance and high-skilled services.

A strategic punt on this scale ought to be the subject of intense political scrutiny. Yet the question of whether authoritarian China will be a trustworthy or morally decent shareholder in UK plc is hardly discussed. Beijing does not plug capital shortfalls in Europe, nor open its markets to imports, out of charity. There is a diplomatic as well as an economic quid pro quo. Osborne slipped a reference to Britain’s status as a democracy into his Shanghai speech, but as a minor cultural difference between friends, to be handled with “mutual respect”. This is liberalism stripped of the cumbersome apparatus of civil rights and political freedom to be more economically streamlined.

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Osborne is blessed with opposition still struggling to cope with the stage of globalisation where rules were set to a “Washington consensus”. Labour hasn’t begun to get its head around the Beijing-friendly version. Jeremy Corbyn’s only apparent beef with the Chinese Communist party is that its embrace of “market philosophy” has been bad for workers’ health and safety. The Lib Dems will complain from the sidelines about the environment, civil liberties and constitutional reform, but that is pressure-group stuff. They are in no state to posit a rival governing creed.

The New Labour settlement accepted that government could not tame globalisation but might divert some of the proceeds to spend on public services and compensate those left behind with benefits or tax credits to top up wages. The financial crisis exposed the brittleness of that bargain. It revealed the narrowness of the Treasury’s tax base: its reliance on the City, private debt and a housing bubble to simulate rising prosperity. Recession and stagnation then laid bare a deeper cultural alienation from the whole arrangement – grievances that are as much about national identity, migration and job insecurity as they are about take-home pay.

Those problems haven’t gone away, but there is little sign that Osborne is engaged with them. They threaten the consensus that has governed Britain for a generation, of which he is the custodian. Without debate or challenge, the chancellor is steering the country into uncharted waters. He is putting a lot of faith in Beijing, without a backwards glance for Bournemouth. There are liberals in all parties who should find that unsettling.