Relations between China and Britain have often been prickly, the two countries prisoners of their shared history. Yet, as the balance of relative strength between the two countries has shifted, so the former island empire has continued to exert a psychological influence on the Middle Kingdom.

Earlier this month it was reported that Beijing was growing increasingly concerned with British-based private schools monopolising the most talented Chinese pupils.

Britain’s public schools now run 47 campuses across China, educating almost 10,000 pupils, with the total number of institutions doubling in just two years, and pupil increasing by 10% in just one.

Wellington – at £41,580-a-year – operates schools in Tianjin, Shanghai and Hangzhou, while the even more expensive Dulwich College has two campuses in Shanghai, plus two more in Beijing and Suzhou.

In total there are almost 25,000 non-British students at overseas British schools, and it has become such an industry that the prestigious teacher-recruiting company Gabbitas has shifted its core business to tutoring pupils for independent school entrance, with offices in Russia, Japan and South Korea, as well as three in China. Large numbers of Chinese pupils are also educated in Britain, enough that boarding schools limit the number of Chinese children in each house.

Britain’s schools are an export market worth £1billion a year, hardly surprising when the private system has continued to maintain its place as the best in the world, even during the 1970s and 80s when the state system was at its worst. And yet Chinese parents often talk of their admiration not just for the education system but Britain and its culture.

Britain’s education industry is a key part of what’s referred to as “soft power”, national strength derived from cultural influence, but it is also a beneficiary of it, taking advantage of a particular idea of Britain and Britishness that attracts people from around the world.

The origin of this soft power runs deep. The ethos of the British public school owes much to Thomas Arnold, the early 19th century reformer who introduced the prefect system and made public schools far more civilised. But Arnold, a devout Christian whose son Matthew went on to write Dover Beach, also did much to create the English gentleman (before Arnold, public schools were violent in a way that now seems comically absurd, with regular riots in which troops had to be called in, and regular firearms-related antics).

The English gentleman was an ideal but it had tangible, real-world effects, contributing in part to the huge change in British behaviour between 1850-1950, when a very violent and boorish country became famously gentle; as Orwell observed, “in no country inhabited by white men is easier to shove people off the pavement”.

Such was the power of the this idea that the rising middle class around the world aped British mores, most noticeably in the adoption of the suit as the global dress – because that was how a gentleman dressed. It helped create an idea of Englishness, an attractive brand that the country’s institutions continue to benefit from.

But soft power is much older even than the Victorians. Long before disputes over burgundy and blue, UK passports weren’t even in English but in French, the language of high culture and diplomacy. This was not just a reflection of historic French military domination, but the leading position of Paris University in the Middle Ages. During the 12th and 13th centuries, when the likes of Thomas Aquinas and Albert the Great graced the Sorbonne, one-third of students there were English, who were even then stereotyped as drunks.

Although the Norman Conquest had a huge impact on our language, the great bulk of French loan words in English arrived much later, in the 13th and 14th centuries, a result of French cultural domination. (Whether the spread of their culture was of any benefit to your average French person is a matter of debate.)

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Today British soft power is likewise strengthened by our university system, which educates as many world leaders as the United States, but this probably has less influence than the country’s cultural capital, and in particular its stories.

For most outsiders, our island story has little to do with the things a nation tells about itself – usually victories in battle – but the narratives we tell; when people think of Britain they immerse themselves in Lord of the Rings, Wind in the Willows, the Narnia tales, James Bond or Paddington.

Places tangibly benefit from the stories attached to them; Edinburgh’s rich literary history aides its ability to draw in not just tourists but the talented people who allow it to compete globally. Dublin will live off the cultural royalties of James Joyce long after the family have stopped getting the cheques from Dubliners. Birmingham even benefits from Peaky Blinders tourism. Some stories grow so powerful that they come to define a country; Walter Scott’s novels didn’t just help Scottish tourism but helped to create the very idea of Scotland. Were it to leave the UK and go it alone, the country would still very much depend on the romantic legacy Scott left it.

Soft power matters more today because global elites are far more mobile, and freer to choose between a number of potential homes; countries are in competition to attract this small pool of talent, who all speak the same global language and could easily settle in any of 20 or 30 global cities. London has an advantage in that wealthy foreigners have a certain idea of England.

Again this is nothing new; the Arthurian tales, which became popular in the 12th century among the French-speaking aristocracy of northern France and England, had such an impact on the imagination that aristocrats like Roger Mortimer and Henry III’s brother Richard ended up spending vast amounts on building castles in the Celtic lands of Wales and Cornwall to indulge their own Arthurian fantasies, stories converting into currency for the local economy.

Stories are central to the human psyche, and for Britain there is one like no other when it comes to drawing people to these shores. When a writer from Times Higher Education visited Durham University and asked Chinese students why they had chosen the city, the young people all gave the same response, one that will be wearily predictable to parents across the land: “Harry Potter”.

Durham featured in the film series and its architecture and location, accessed by King’s Cross, gives it some of that cash-convertible Potter magic. Realising this potential, and with universities as competitive as cities in trying to attract global talent, the college has even taken to sorting its students into Hogwarts houses.

Harry Potter, it’s fair to say, is more than just a book; its fans – my daughters among them – treat it more akin to a religion, and it seriously influences their worldview and even politics.

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And the world J.K. Rowling created speaks hugely about the modern British brand. It is a curious mixture of progressive political values – Gryffindor v Slytherin is a thinly disguised conflict between liberals and reactionaries – and very traditional aesthetic styles, in particular its Gothic-Romanesque hybrid boarding school (not to mention the conservative idea of a boy chosen not for any great meritocratic abilities but who his parents were). Rowling’s vision is very much of the current year, but it certainly owes something to Arnold, that deeply ingrained idea of gentleness.

In this world tolerance is a key virtue, as much as “love” is for Pauline Christianity, reflecting its centrality to modern-day British culture. Indeed, when Tony Blair’s government started talking about “British values” in the 2000s as something to be taught to an increasingly fractured society, “tolerance” was presented as something inescapably British, as if other nations define themselves by their intolerance.

This modern idea of Britishness is very much seen in films like Paddington 2 or the revamped Mary Poppins, which curiously combine modern social mores – “it’s okay to be different” – with very traditional architecture and visual aesthetics. The Notting Hill of Paddington, with evenly-distributed ethnic groups and social classes living side by side in a friendly urban environment, is obviously a charming fantasy, and one that particularly appeals to 21st century Britain’s Bobo ruling class.

Yet Britishness now transcends geography, so much so that it can be replicated in Changzhou or Chengdu. This is something new, as for most people historically a country is defined by place, patriotism being a love of a particular spot, reflecting the Greek etymolgy of patri, “father land”. This is why the inherently conservative country music so readily fixes on a particular town or space, as do pretty much all folk traditions.

For those of a more progressive worldview, however, a nation is also an ideal, the land being merely the body beyond which there is a “soul” of a nation. This is certainly true of Britishness, which has developed into something far more than a physical country, let alone an ethnic group. Britishness has become a sort of idea – and a very profitable one at that.

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Today British values are intimately tied up with liberalism, the country being one of the most proselytising about gay rights, literally flying the flag from its embassies. Just as British national identity is in decline at home, facing both Scottish and English nationalism and – more damaging still – a university-educated middle class who regard national feeling as déclassé (something they’ve made quite clear since June 2016), so it has gained new life as sort of global ideology, inseparable from progressive values of tolerance. Britain has lost the Raj and all the flags have come down, but it has gained a spiritual empire.

History once again provides a template. After Rome fell it was still able to project its cultural values, worldview and language across most of Europe through the Roman spiritual empire, or as it’s better known, the Catholic Church. Christianity was relatively new to Rome by the fall of the western empire, and to a third century Roman it would have been as incomprehensible as the “British values” of gay marriage and trans rights would have been to our great-grandparents; yet the liberal doctrine of tolerance has become as intertwined with Britishness as Catholicism came to be with Rome.

We certainly benefit from the stories that have come to be associated with these islands, just as the Eternal City has done through the ages. While Game of Thrones is worth £200m a year to Northern Ireland, Harry Potter’s value to the UK economy is incalculable, but Rowling has arguably put more cash into the British treasury than anyone in history.

Perhaps it’s something we should be more aggressively profiting from; we could redesign Luton or Stansted Airport to look like Hogwarts and divert the trains so that visitors came into King’s Cross platform 9 or 10. Birmingham could certainly take more advantage of its Tolkien connections, not to mention the obvious trick of renaming its airport after Shakespeare.

Would that be to make England an amusement park? Perhaps. In Julian Barnes’s novel England, England an entrepreneur turns the Isle of Wight into a sort of miniature fantasy England, complete with recreations of the Battle of Britain and a scale model of Buckingham Palace; he even persuades the king to move there, but then the British royal family is, after all, ersatz anyway.

In the story the replica proves so successful that the Isle of Wight becomes a thriving independent state, while the rest of the country – Old England – turns into a depopulated hell. As one of the characters explains, people prefer the fake to the original these days; but then perhaps they always have. As T.S Eliot observed, “Humankind cannot bear very much reality”.