House of Commons Hansard Debates for 27 Apr 1995

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should be that Beijing says clearly to those responsible that it wants to establish the appeal court before 30 June, and has already said what is agreeable to it. Then the Governor is in a position to tell Hong Kong that he is withdrawing any question of a dictated time limit, and he will continue negotiations on what was agreed as long ago as 1991. That is the positive approach to take to all these problems.

The Foreign Secretary mentioned sewerage. Yes, there is a row, not because the Chinese do not want sewerage for their health but because they believe that the proposals will not be adequate for Hong Kong in the future. Surely there is room for discussion. If the Chinese want to do more about sewerage, they will be there in the future, so let everyone agree on what has to be done. It cannot be said that Hong Kong is penniless--far from it. It has the money. For heaven's sake, let us do what both sides agree is necessary for the health and safety of the people of Hong Kong. We cannot have an explosion about that.

What about the general constitutional situation? There has been a complete misjudgment. People thought that the Chinese would not do anything about it, but that, when the time came, they would accept it. It is obvious that they will not. They said that firmly, right from the beginning. As the Foreign Secretary hinted, there are parts of the Basic Law whose meaning is not exactly clear. That is a matter for discussion and something to be thrashed out. It should not be a case of our putting forward a single view and saying that, if the Chinese do not accept it we shall go ahead anyway.

That was particularly the case with the exchange of letters about the elections, in which the Foreign Secretary said at the end that he hoped that that would be accepted. It was a hope; one could say that he was justified in hoping, but it was not an agreement. That is what Beijing said --it was not an agreement. However, without consultation, we go ahead. The result was, of course, an explosion. That is the explanation of what happened. The Chinese will change things again when they take over in 1997. They will go on what was agreed in the Basic Law and in the correspondence that followed. It is pointless to doubt that.

I was glad that the Foreign Secretary mentioned two other important issues. The first was Chinese instability. People right at the top in China believe that we are trading on future Chinese instability. I am afraid that there were many mentions in the report of my right hon. Friend the Member for Guildford (Mr. Howell) that supported them in that view. They think that we believe that they are going the same way as Russia, so we are delaying as much as we can and getting things fixed up that we had not before, and that we think that we can hold on to Hong Kong after 1997 for that reason. The Foreign Secretary stated dogmatically that that is not the case.

Anyone can see that China is not going the way of Russia. If there ever were any danger of that happening, the Chinese, having seen what happened to the Soviet Union, would not allow it to happen to them. They are absolutely clear about that, and will take whatever measures are necessary to prevent it. I also went to Szechwan and the south, where the people do not want to go the way of Russia. They have the utmost contempt for Russia, and the further west, the greater that contempt.

The second matter is the idea that, when Deng Xiaoping dies, there will be an enormous power struggle that will tear China apart and result in collapse. I do not believe

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for one moment that there is any truth in that. Having been there 10 days ago, I can tell the House that I have never seen the top people so relaxed, although I hope they will not mind my saying so. They are relaxed and confident, and have everything at their fingertips. They see that they are in a strong position in world trade; they have substantial financial reserves of $US52 billion and a surplus on the balance of payments which is very large--so much so that people outside are complaining about it. I see no immediate possibility of a great power struggle when Deng Xiaoping dies. I am glad that the Foreign Secretary cleared up those issues. He has done so from the highest level of government, and I hope Beijing will accept what he says. It does not recognise that a parliamentary group does not have any power, and has very little influence. What happens to our trade in these circumstances? There is no doubt that they have been damaging. The Foreign Secretary rightly said that our trade has increased from a small start. Japanese trade is now worth $HK32 billion a year, while ours is approaching $HK4 billion. American trade is worth something over $HK22 billion, and German trade is more than $HK8 billion. Clearly a tremendous amount needs to be done.

The hon. Member for Livingston mentioned human rights. I believe that there has to be a fairly deep re-think about the matter, and in particular, how it should be handled. One of the other messages that I received out there was that China will not be told by anyone what it has to do. That is not peculiar to Asia--I found the same in Moscow under the new regime there. They believe that people can help in various ways, but not tell them what to do. That notion applies to human rights.

If we want action on human rights, we have to be able to influence people and we can best do that by working with them, not by lecturing them all the time from outside. There are changes. I became more and more convinced that people will notice the changes. They will carry on regardless of whether we change--we have seen that in south-east Asia where people say, "Sorry, we shall deal with things as we believe to be right."

There has been economic development, but there has also been political development. It has not been according to our systems, but there is undoubtedly development. I was once told by Deng Xiaoping that China was going to have 1.25 billion people by the year 2000, and he asked what political institutions I would recommend for their lives. How could I say anything? No one had told me what to say. That is a real practical problem in the second largest country in the world.

Mention was made of Tibet. I went there myself a few years ago, and I have talked frequently to the Dalai Lama. He made an agreement with Mao Tse-Tung in 1953 about Tibet, its future and its relationships. That was accepted by both sides, and as a result, the monasteries were opened.

I spoke to the people who came out of the monasteries. There is a big monastery some 20 miles outside Lhasa. Its 11,000 monks had been put there by their families. Under old Tibetan law, the fourth child had to be put into a monastery. After the monks had been given their freedom, 229 were left. I spoke to one who was farming outside. He told me: "I can never get rid of the mark it has left on me mentally, but I decided to come out."

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The Dalai Lama, who had made the agreement, escaped from the military rising in Tibet in 1959. It was not his rising, but he decided that his only option was to escape. I spoke to him on various occasions, and some 10 years ago I asked Deng Xiaoping: "Can he not come back?" and he replied, "Yes, he can come back. He can come to Beijing, and we will provide him with a house and everything he requires to live there, and he will be able to go to Tibet whenever he likes. There is only one condition, and that is that he goes to Tibet as the spiritual leader, and not the political leader of a party."

Mr. Chris Mullin (Sunderland, South): I have also been to Tibet. Does the right hon. Gentleman agree that the people of Tibet should decide whether the Dalai Lama should be allowed to return and what system of government should exist in their country?

Sir Edward Heath: It would be fashionable for them to have a referendum, but I do not know whether the hon. Gentleman would accept the result. It may well be that the great majority of people in Tibet today do not want the Dalai Lama back, but if he wants to return, he was told 10 years ago that he could go back as the spiritual leader of all his flock in Tibet. In that respect, he cannot complain, but he has never gone back. He has never gone to Beijing to discuss it further.

In respect of our overall position, we must now settle the appeal court. We must deal with the other problems, working with the appeal court and recognising that it will have the ultimate decision. It is difficult to see any way in which we can get over the problem of elections. I am absolutely convinced that it was a terrible mistake, as are a large number of people in Hong Kong now that they see the outcome of the decision. I have spoken to them, and that is their view. They want to settle the matter, get 30 June behind them, and carry on with their trade and business.

We heard just now all about corruption. Yes, there is corruption in Hong Kong. I was given graphic descriptions of how the Mafia is now working. It is trying to establish a connection on the other side of the border, so that, when Hong Kong becomes part of the mainland, it will still be able to operate. I have the utmost admiration for the police chief and the work he is doing, and he will stay on. The trade from Taiwan has greatly increased over the past three years, because it goes through Hong Kong and into mainland China. I asked those responsible in Beijing whether that trade will continue when Hong Kong becomes part of the mainland. They told me that they have already decided that Taiwan can continue to trade through Hong Kong after 30 June 1997. That is one reassurance for Hong Kong as well as for Taiwan, and is fully justified. I hope, therefore, that the Foreign Secretary will be able to continue that reconciliation and recognise that the ultimate decision rests with China, whether we like it or not.

We have been in Hong Kong as leaseholder, and now we are handing it back to its owner. When one does that, one has some obligations. As has already been said, we have had Hong Kong for nearly 150 years, and what did we do about all those issues? We did nothing. Only when the time came to hand it back did we say that they all should be addressed immediately and in exactly the way

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we wanted. The House and the Government cannot get away with that. We must be realistic, and I hope that the Foreign Secretary will be so in the remaining 800 days.

5.24 pm

Sir David Steel (Tweeddale, Ettrick and Lauderdale): On this occasion, I am not in total agreement with the former Prime Minister, the right hon. Member for Old Bexley and Sidcup (Sir E. Heath), but I certainly bow to his superior experience of life in China. I agree with the right hon. Gentleman's last point: that the Chinese Government have consistently wondered why only now, at the point of handover and in the past few years, we have expressed any great interest in democracy in Hong Kong. I hope that I am not breaking a confidence when I say that one of those who expressed such a view some years ago was the then hon. Member for Bath, Chris Patten, after a parliamentary visit to Hong Kong. In common with many of us who have been to Hong Kong, he expressed concern at the lack of any democratic development and other items of progress, over which he has belatedly been presiding as Governor.

The impact of the change in China on someone such as myself, who has not visited China anything like as often as the right hon. Gentleman, and who has been there only twice with a gap of 10 years between, may be even more dramatic than it is on a regular visitor. I have never seen anything as astonishing as the gap in Chinese economic development that has been overcome in a decade. It is absolutely staggering.

The right hon. Gentleman is quite right to remind the House of the present and future power of the Chinese economy. I found it interesting that China is developing faster economically the nearer one gets to Hong Kong from Shanghai southwards. The political climate is by no means monolithic. It is easier to have free political conversation in the parts of China that are economically developed than in the historic capital. That gives me hope that there will be change in the long run.

I agree with what the right hon. Gentleman said about false comparisons with the Soviet Union. The Chinese Government have a right to be irritated by those who think that China may go the same way as the Soviet Union. They hope not, and we must too. There can be a process of evolutionary change, starting with substantial changes in the market economy, that goes further than the pandas he mentioned, and is real and substantial in that extraordinary country. The parallel growth and success of the economy in Hong Kong and mainland China must be the basis of our optimism that, despite all its difficulties, the transition will be successful.

I have a particular affection for Hong Kong, because it happened to be the first territory that I visited as a new Member of Parliament way back in 1965. I have been there half a dozen times since--on the last occasion, about six months ago. What struck me forcibly on that last visit--again, with some surprise--was how optimistic people were, and how they were getting on with the job of making a success of their lives.

A few years ago, great anxiety was expressed that, as 1997 approached, everything would wind down and there might be an economic slump. On the contrary, investment is continuing, people are leading normal lives and there is a certain amount of optimism.

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Where I disagree with the right hon. Gentleman is that I am not quite so sanguine about the views of the business men, whom I have also met. Business men are not notoriously deeply concerned about such issues as human rights and democratic development. They are naturally concerned with making money; that is their purpose. We are politicians. We are supposed to be concerned about those wider issues, and we would be failing in our responsibilities to the people of Hong Kong if we ignored the fact that, in recent years, as democratic developments have been offered to them, they have seized them with both hands, and have elected their own choice of politicians to LegCo. That cannot be undone. Whatever decision the Chinese Government may take about how they treat LegCo after the transition in 1997, I trust that there will be no absurd short-sighted vendetta against those who have now been elected. Those members of LegCo were chosen by the citizens of Hong Kong to represent them, so they have a particular status and standing. I thank the Minister of State for the excellent letter he sent those of us interested in the subject, which brought up to date the Government's relations with China in respect of Hong Kong. Like the former Prime Minister, I hope that settlement will be reached on the Court of Final Appeal. I support the proposal for a human rights commission by the Foreign Affairs Select Committee. I am concerned that that has not been accepted by the Government, and that there is no Bill of Rights.

I said when I intervened on the Foreign Secretary that there is as yet no sign of China ratifying the international covenant on civil and political rights. The joint declaration states:

"The provisions of the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights as applied to Hong Kong shall remain in force." We must have known in 1984 that those covenants, as applied to Hong Kong, cannot remain in force until and unless China ratifies them. The British Government's pledge to uphold those covenants ties the joint declaration to the broader structure of international law in an important and concrete way.

It disturbs me that when Li Peng visited Hong Kong last year, he said that Bejiing was not obliged to make reports to the United Nations Commission on Human Rights after 1997. There appears to be a complete impasse, with the British Government saying that the covenants apply to Hong Kong and remain in force, but a lack of any mechanism to make them remain in force. I should be grateful if the Minister will comment when he winds up.

We have dealt badly with the ethnic minority of non-Chinese in Hong Kong who hold British passports. They number 7,000--the Minister will correct me if I am wrong. It is unfair not to have granted them full citizenship rights in Britain. Not many have expressed a wish to take up residence in this country, but we have not dealt fairly with them.

There is a curious disparity between our treatment of those 7,000 people and the 100,000 in Macao who have been granted Portuguese citizenship and who, under the European Union, will have the right to come to Britain. It seems bizarre that 100,000 people sitting in Macao can have the theoretical right of residence here, but that 7, 000 persons in Hong Kong for whom we are responsible do

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not have that right. I should be grateful for further clarification of the Government's intentions for that minority.

The Foreign Secretary referred to the Governor's review of some existing legislation, particularly that affecting press freedom. I hope that he will closely examine all Hong Kong's statutory provisions. There are examples of colonies where we left behind emergency legislation from the colonial era that was subsequently used against the population. It would be a terrible indictment of our legacy if we were to leave on the statute book measures that could be used by a future Government to restrict press freedom and other freedoms in Hong Kong.

The constitution of Kenya, for example, still contains provisions from the Mau Mau emergency that we imposed in the early 1950s. They should not be there, but are used wrongly on occasions by the Government. We do not want the same mistake made again in Hong Kong. I would welcome the Minister's clear assurance on that point. The final round of democratic elections will be held in September. I hope that the Chinese Government will change their mind and live with the existing LegCo--that must be our first position. If they do not, I hope that they will recognise the status of the successful candidates in the elections. Is it the British Government's intention to treat those elections the same way as others and to send international observers to oversee the freeness and fairness of those elections? That might be a useful precedent.

The political arguments are bound to continue when the transition is reached and there is the one country, two systems, on which the British and Chinese Governments have agreed. People in Hong Kong ask for minimal interference from Beijing. It is not unreasonable for Beijing to be entitled to ask for minimal interference from Hong Kong.

There must be some sort of self-denying ordinance on the part of Hong Kong politicians to mind their own business and not to meddle in China's internal affairs. If they exercise such a self-denying ordinance, their position will be more respected, not less respected, in Bejiing. However, that does not involve the rest of us in the international community in making any similar self-denying ordinance.

It was a terrible mistake to state in the joint agreement with China--I do not know how on earth we ever assented to this--that democratic politicians in Hong Kong must not have links with international organisations. I find that particularly sad because I am currently serving as president of Liberal International, which is not allowed to invite colleagues in Hong Kong to its meetings. In south-east Asia, there is a new, self-generated organisation--the Council of Asian Liberals and Democrats. It includes the governing party in Thailand and the opposition party in Taiwan, but it cannot invite fellow democrats from Hong Kong to participate in its meetings. That cannot be right, and I hope that that restriction will be removed in time.

I note that the President of the Board of Trade is soon to visit China. I hope that, in our trade links, we will continue to raise human rights questions. I disagree with the former Prime Minister--we cannot pretend that, because China has a different culture, events such as

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Tiananmen square do not matter and can be forgotten as years pass. We cannot completely ignore events inside Tibet under the Chinese authorities, much as I agree that there should be dialogue between Peking and the Dalai Lama. Also, while we have been extremely immobile in our Government policy on Taiwan, Cabinet Ministers from France and Canada have visited the country. We have not got even that far.

There is a useful and constructive engagement to be had with China. It ought to be positive, but our trading links should not be purely that. They must also sustain a dialogue on wider issues. The People's Republic of China is getting its economy right, but it has some way to go before we can fully and rationally accept it in the comity of nations.

5.37 pm

Mr. Tim Renton (Mid-Sussex): I am glad to have caught your eye, Madam Deputy Speaker, because I have a number of interests to declare. I am vice-chairman of the British Council, and will refer later to its work in Hong Kong and China. I am a consultant to Robert Fleming, the international investment bank, which has made many successful investments in Hong Kong and China.

I am also chairman of the all-party parliamentary group on Britain and Hong Kong. My right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) was right to say that, like other all-party groups, it does not have any particular influence or standing. However, in the nearly three years that I have been its chairman--and at a time when, for one reason or another, we have not debated the issue in the House--that all-party group, which is always well attended by Members of both Houses, has provided a useful forum. It has provided a forum for the Governor, who has been able to make his views known to parliamentarians of all parties, and for visiting LegCo members, who were often not fully in agreement with my right hon. Friend the Foreign Secretary or the Governor and were able to give us their views. Yesterday, the Chinese ambassador, Mr. Ma, addressed the all- party group, and made plain--using extremely blunt language, extremely well delivered--China's current views on some of the problems mentioned this afternoon.

By far and away my greatest interest in Hong Kong, though, is simply that of a visitor, business man, politician, and former Foreign Office Minister, who has visited it regularly, and did so one year after the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel), who speaks for the Liberal Democrats. I first went to Hong Kong in 1966 as a fairly young business man. I was, like so many of us, immediately struck by the extraordinary excitement, drive and dynamism of the place. I suppose that if I had invested all my meagre net worth in some tiny corner of a dilapidated warehouse on the waterfront in Kowloon, I would now be very rich indeed. Unfortunately, I did not do that.

Every time that I go back to Hong Kong, I am, like other hon. Members, always immensely struck by the fact that there are more tunnels under the harbour, built with incredible speed; more high-rise housing--the flats are treasured by those who live in them--more schools; and more and better skyscrapers. Indeed, if one looks at the recent budget in Hong Kong--my right hon. Friend the Foreign Secretary referred to some of the details-- one

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sees that it really is mouthwatering stuff: an increase in $HK210 million for funds for technology development; $HK2.5 billion to be spent on purchasing premises for welfare services; and another $HK1 billion to build the new Tsing Yi bridge. I remember that when I was first staying with Chris Patten--he was about to make his first address to the Legislative Council, in October 1992, to which I shall refer in a minute--he said to me, "Any British Chancellor of the Exchequer, any British spending Minister, would simply love to have the resources that are available to the Hong Kong Administration." The new Financial Secretary, Donald Tsang, who has just been appointed, is taking over from Sir Hamish Macleod in September, and is the first local to occupy that extremely important post.

Mr. Hugh Dykes (Harrow, East): I apologise to my right hon. Friend for intervening, as the point has long since past, so it seems illogical to intervene, but let me return to what he said earlier about his own group, which he chairs with great skill. I think that he may have been mistaken, because my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) has just told me that he was thinking of the Foreign Affairs Select Committee, not the Hong Kong all-party group, when making his comments.

Mr. Renton: I am sure that my right hon. Friend the Member for Guildford (Mr. Howell) will be able to answer that more than adequately when he catches your eye, Madam Deputy Speaker.

Mr. David Howell: I certainly will.

Mr. Renton: My right hon. Friend does not need me to speak for him.

There is no doubt that the administration in Hong Kong in recent years has been fantastically successful. It is a record of which the United Kingdom will be able to be extraordinarily proud at the time of the handover of territory on 30 June 1997.

As I have just mentioned, I had the good fortune to be staying at Government House with Chris Patten when he made his speech to the Legislative Council on 7 October 1992. I must say to my right hon. and very good Friend--I hope that he does not mind me referring to him as such--the Member for Old Bexley and Sidcup, that I stayed on in Hong Kong for quite a few days afterwards. I remember the tremendous enthusiasm with which Chris Patten's speech was greeted, on all sides--from taxi drivers, to whom I spoke, to senior civil servants. The only group who differed from the views put forward by Chris Patten, in those three or four busy days, was a small group of business men whom I met on my last day in Hong Kong before going up to Shenzhen and travelling through Guangdong, at the invitation of the Chinese Government. They said that the constitutional changes, the changes in electoral reform, which the Governor was suggesting, simply would not be acceptable to China. In particular, the extension of the franchise in the functional constituencies would not be accepted. Alas, those business men were right.

To draw an analogy from tennis, I think that our good friend Chris Patten made an opening serve with the ball marked "constitutional reform" and the Chinese simply never returned the ball. That is a matter of very considerable regret. I believe that Chris Patten, in his speech to the Legislative Council, had a clear mission in

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his mind. That mission was firmly rooted in his own highly successful career as a liberally minded politician in this country. The mission was to leave a legacy of a very well-founded democracy in Hong Kong from 1 July 1997 onwards--a democracy that is based not on factions, oligarchies or a few cronies but on the worth and standing in the community of those who are elected from many different sections and areas by a substantial number of voters. Of course, the aim of a legacy is, by definition, that it should survive, not only for a few years but for generations, growing and becoming stronger within the unique framework of one country, two systems.

I believe that Chris Patten, both as Governor and as an individual, could not have done more to achieve that democratic legacy. All of us, from whatever party and whatever our views about the future relationship with Beijing, to which I shall refer later, must regret that the tennis ball was never returned in any shape or form and that 17 rounds of talking on constitutional issues have led to 17 stalemates. That is an issue on which the United Kingdom, Hong Kong and Beijing have simply failed to agree.

As my right hon. Friend the Foreign Secretary, and indeed, my right hon. Friend the Member for Old Bexley and Sidcup have said, quite rightly, this is a leaf in the book of continuing relationships, which simply must be put behind us. We must now look forward and consider what other things need to be done in the 796 days that remain until 30 June 1997.

I now touch briefly on two matters that have not yet been raised in the comprehensive speeches made by other hon. Members.

Sir Edward Heath: I agree entirely with what my right hon. Friend said about the reception that Chris Patten's speech received. One must accept that the taxi drivers and others were not really fully aware of the Basic Law or of the exchange of letters between the Foreign Secretary and the Chinese. They just saw it, quite naturally, as opportunities to vote. That atmosphere has changed very considerably, I can assure my right hon. Friend. Would it not have been more appropriate if Chris Patten had accepted the invitation to go and discuss it all with the Chinese before he made his speech? Would there not have been less chance of an explosion if he had done that? Those are the problems and they have left a legacy with which we are now trying to deal, as he is.

Mr. Renton: I understand what my right hon. Friend has said. Perhaps we should not go further down that path now. He will remember the speech as well as I do, and, of course, Chris Patten made the point very clearly that, having made those proposals, he was going to Beijing to discuss them just a few weeks later. There it is. That is behind us and we must now look forward. Obviously, the wish of the House and of the Hong Kong Administration is to make the next 800 days as fruitful as possible for the future success of Hong Kong after 1 July 1997.

I want to touch on the matter of the British Council, of which I am a vice- chairman. The teaching of English in Hong Kong, the training of people to teach English and the exhibitions of contemporary British art and culture that the British Council has sent to Hong Kong, have formed an important part of our activities over a number of years. We first established the council in Hong Kong in 1948 and English language teaching started in 1975. The aim has been to help to secure Britain's long-standing and mutually beneficial relationship with Hong Kong in

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the run-up to 1997 and to turn that into a lasting and productive relationship with the special administrative region and the People's Republic of China.

More recently, the council has reopened its offices in China. It was represented in China from the early 1940s to 1952. Operations began again, really rather early, in January 1979 when a British Council officer was attached to the embassy. In 1991, the council moved away from the embassy to its own office block, which has open public access--the same being true of its office in Shanghai. The council's aim is, of course, to promote a wider knowledge of the United Kingdom and the English language and to foster a positive Sino-British relationship. The policies that it is pursuing to achieve those aims are, first, to enhance among decision makers, opinion formers and future leaders a British reputation as a source of high-quality products, services and expertise; secondly, to promote the effective use of English in trade, social development and education; thirdly, to improve access to British information and resources; and fourthly, to increase awareness of British education and training and the opportunities that they offer to China's institutions and individuals.

The future development of the British Council on mainland China and its continuance in Hong Kong will be an important tool of British diplomacy over the years immediately ahead. The British Council has adopted worthy objectives. I trust, therefore--and I say this conscious of the fact that my right hon. Friend the Minister of State is sitting on the Front Bench-- that future allocations of grant in aid to the British Council from the Foreign and Commonwealth Office and the Overseas Development Administration will fully allow the council to achieve its important objectives. It can play a vital part in the wider British objective of close relations with China, to the benefit of trade and understanding between our two countries.

I want to ask my right hon. Friend the Minister a few questions about the Vietnamese refugees and what is likely to be the further clarification of the process of repatriating the Vietnamese migrants who remain in Hong Kong. My understanding is that those who have been identified as refugees with a well-founded fear of persecution will not be returned to Vietnam, but will be settled in a third country. It would be helpful if my right hon. Friend could tell us a little about how the process of resettlement is proceeding and also about the simplified repatriation procedures, to which Vietnam has recently agreed. Speaking as an ex-Home Office Minister responsible for immigration, as well as an ex-Foreign Minister, I remember the very great problems of the Vietnamese refugees. I know that progress is being made and I would like to hear a little more about the final resolution of the matter.

I am sure that everyone in the House would agree that the unsolved riddle for China is whether the move towards the free market, a market economy and regional independence can, in the long run, be compatible with the continuing sovereignty of the Chinese Communist party. That issue is unresolved. As the succession in Beijing fully takes over from Deng Xiaoping--and I listened with interest to what my right hon. Friend the Member for Old

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Bexley and Sidcup said on that subject--the solution to the riddle will become clear. However, it is obviously a matter of concern to Hong Kong.

In the years when I had the job now held by my right hon. Friend the Minister of State, I was responsible, under Geoffrey Howe--now Lord Howe-- for Hong Kong during 1985 to 1987, very soon after the joint agreement had been signed, and when convergence was all the fashion. We talked all the time about convergence, about through trains and about trains that would go over the 1997 junction without too much of a jolt. Those phrases, for reasons that have already been stated this afternoon, have become less fashionable. I regret that. The Chinese ambassador, Mr. Ma, when speaking to us frankly yesterday afternoon, made the point that the Chinese were seeking co-operation, not confrontation. I was reminded of the old Chinese proverb, "You can't clap with a single hand." Co-operation is clearly in the interests of the three parties--the United Kingdom, Hong Kong and the People's Republic of China. We all have so much to respect, appreciate and learn from each other, but it is not a one-sided business. The treaties that ceded Hong Kong, Kowloon and the new territories to the United Kingdom have often been described as an historic humiliation for China. Surely great countries have the capacity to put historic humiliation behind them and not let the disasters of the past govern their future actions and opinions. Britain did just that in relation to the Boer war; the United States had to do it with Pearl harbour and Vietnam; and France had to do it with the events of 1940.

China is a great country and it will become yet greater. It can afford to put the humiliation that Hong Kong has possibly represented in the past well behind it and, from 1 July 1997 onwards, to treasure Hong Kong--there is no other word for it--as a golden nugget, as an economic miracle and as an example of extremely well-ordered and good government. One country, two systems must, by definition, be extraordinarily difficult to put into effect. After July 1997, the rest of the world will be watching to see how it is done. The greater the success of Hong Kong as an autonomous region within China--as a special administrative region--the more the world will learn about China itself. It will come to respect a China that can absorb-- fairly, with justice and with human rights--an ex-British colony, a system that is so different from the rest of China and a system that has been so astonishingly successful in its own right. 5.57 pm

Dr. Jeremy Bray (Motherwell, South): The right hon. Member for Mid- Sussex (Mr. Renton), following the speeches of the former Prime Minister, the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) and the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel), did much to reassure the Chinese that there is no question of our seeking any extension of British interest in Hong Kong after 1997; that there is no question of relying on any collapse of the Chinese Government, with the departure of Deng Xiaoping; and that both sides of the House seek co- operation, as the Chinese ambassador put it.

The perspective of the right hon. Member for Mid-Sussex of the Chinese hold on Hong Kong is not one that I really recognise. China has never regarded Hong

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Kong as an embarrassment; it has regarded it as unfinished business, about which it was concerned long before we were and will be concerned long after we have departed.

Not every Financial Secretary can open his budget speech with a quotation from Xunsi, a sage of the third century BC, on how to govern one's country, as happened in Hong Kong last month. Xunsi said:

"The way to make a community prosperous is to be prudent in public spending, to improve the well-being of the people, and"-- yes--

"to maintain good reserves."

I doubt whether we had a currency, let alone an economic policy, in the third century BC. There were other ancient civilisations, but no others have survived to form within one nation a population of 1.2 billion--more than one fifth of the world's population.

China sometimes complains, and with some justice, that other countries do not understand the complexities of governing such a country. We must, of course, continue to express our concerns about human rights, but if one puts together the whole of Europe and the United States of America and asks what civil rights abuses occur there today, if one compares the time scales over which political and social traditions that are still alive have accumulated or if one asks what communication problems exist in the European Union or the Federal Government of the United States, one moves only part way towards a comparison with the problems facing the Chinese Government, who have learnt so many lessons from their past and who are still learning, as we all are.

If one considers the strength of the efforts to tackle those problems in China, it is less easy to criticise. Justifiable concern exists about the environment. Yes, China is increasing coal production by 40 million tonnes annually, which will increase carbon dioxide, but the developed nations account for only 20 per cent. of the world's population yet consume 80 per cent. of the world's resources.

Where developing countries can act for the future of the world community is on population. China's population is still increasing, but its fierce one- child family planning policy has reduced the size of its population growth by some 300 million in the past 20 years. China's population is smaller than it would otherwise have been by a number equal to the population of the United States and Britain combined.

As hon. Members on both sides of the House have said, in production and trade China is moving extremely fast. In the past five years, output has been increasing in the high-tech, development zones in different parts of China not at 9 to 11 per cent., as has GDP, but at 25 to 30 per cent. per annum. Those developments are spreading further west within China.

The concern is not whether China is growing fast enough but whether it is growing at a pace that it cannot sustain and that will inevitably lead to recession. The problem of economic management, which even medium-sized countries such as Britain find difficult enough, is compounded by the sheer size and diversity of the Chinese economy, the vigorous entrepreneurship of Chinese business people, the number of enterprising provincial and city governments and the increasingly open economy.

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Like other Governments, the Chinese Government must be concerned about the dangers of inflation and the massive social problems of millions of unemployed young people moving around China without homes, jobs or prospects. In China, the problems are simply larger. The astonishing feature of the development debate in the past 30 years is that we are now so concerned with the problems of success as China moves increasingly into world trade and the world community generally.

The starting point must therefore be that bilateral and international relations with China have a broad base and are of the highest importance. In world trade, in international investment, as permanent members of the Security Council, on security issues and in education and research exchanges it is important that Britain and China work together. It is therefore encouraging to reflect that practical relations with China are improving--I do not think that Ambassador Ma would disagree. That only leads us to ask why they have not been better in the past. The answer is simply because of the differences on transitional issues in the restoration of Hong Kong to China in 1997, in what is now less than the proverbial 800 days. The biggest issue has been the basis for the 1995 elections to the Legislative Council. The decisions have been taken--they are past. The elections are about to take place and will be vigorously fought by parties of all hues. Those parties have become successfully established in Hong Kong. It is best to put those decisions behind us as we look forward to the important tasks that remain in securing a smooth transition.

There is no need to remind people in China or Hong Kong of what the differences have been, but we need to remind ourselves of them in the House, as we face the inevitability of an election and the strong possibility of a change of Government in the United Kingdom before 30 June 1997.

The practical reality is that the Prime Minister has said that he will seek to take this Parliament to its full term. A Labour Government entering office in the last few months before the handover of Hong Kong would not be able or willing to make any drastic changes in any arrangements for which the UK still remained responsible. I say that they would not be willing, and that would be so if by some happy circumstance a general election were to be held tomorrow. Let me explain why, and I shall speak frankly. The Labour party has no political interest in saving the face of the Governor, Chris Patten, when he returns to Britain in 1997. He may return to Westminster politics, where in the likely state of the Tory party he may feel that he has a job to do. We have no interest in facilitating that job. Our primary interest and duty is in seeking the well-being and interests of the people of Hong Kong. To be fair, that interest has been shared by Chris Patten in what he has attempted to do in Hong Kong.

Labour Members are asked, and ask themselves, why Britain has suddenly become so concerned about elections in Hong Kong on the brink of handing it over when we managed without democracy for most of the 150 years of our exercise of sovereignty. This is the point at which the right hon. Member for Mid-Sussex might feel that I take a different view of Hong Kong's past.

There were inglorious and, in modern terms, shameful circumstances in the original establishment of Hong Kong as a British colony in the opium war, in which Britain

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fought to defend the rights of British drug dealers massively to corrupt the people of China with their opium cargoes. In the years since, however, much has been done in Hong Kong to atone for those deeds. Most of it has been done by the Chinese people but, under the umbrella provided by British rule, with the help of countless teachers, doctors, nurses, magistrates, missionaries, journalists, civil servants and, yes, traders, industrialists and bankers from this country and from all over the world. A fair share of adventurers, characters and rogues exist among them, but the result, as the world has seen and as I have known it before and since the war, is nothing of which we need be ashamed.

In the Easter Adjournment debate on 11 April 1963 I secured the first debate on Hong Kong in the House of Commons since the war. Those were the days of decolonisation, and naturally the question came to mind with regard to Hong Kong. The judgment in Hong Kong at that time was that any election would become a cockpit for a bloody fight between the KMT--the nationalists, based in Taiwan--and the Chinese Communist party, just across the border.

There were good reasons for that judgment. It was acknowledged that if at any time China wished to resume the exercise of sovereignty in Hong Kong, the people's army could just walk across the border and would be in Government House in a few days. China chose not to intervene, then or since.

As everybody has said, Hong Kong is now the most prosperous part of China, with an average income higher than in the United Kingdom and a gross domestic product accounting for 25 per cent. of China's as a whole, although Hong Kong contains only 0.5 per cent. of China's population. Furthermore, and most important, Hong Kong is a free society.

In my view, there were opportunities in the 1970s and early 1980s when it would have been to the advantage of the people of Hong Kong to introduce direct elections for the legislature, and democratic government. I said so at the time both in Hong Kong and in the House.

It was said that there was no demand for such democratic government in Hong Kong, so I argued for and encouraged the development of embryonic political parties that could express that demand, believing it to be necessary to secure the foundation of a prosperous, free and just society, whatever the future sovereignty of Hong Kong might be. By 1984, when it was getting very late, I was disappointed that the joint declaration did not go further and faster towards direct elections and democracy--and I said so, as did some of my hon. Friends. Lord Healey, who was then the shadow Foreign Secretary, simply supported Lord Howe, who was then Foreign Secretary. Nevertheless, to be fair, the joint declaration and the Basic Law are remarkable documents, and our duty now is to exercise what influence we have to ensure that they are honoured and fulfilled, to create the conditions in which our aim can be secured.

I apologise to the people in Hong Kong, who seem to be listening to a broadcast of the debate, because they need no reminding of the history, but the circumstances of Hong Kong and its history are less well known to some of my newer hon. Friends, who are busy in their constituencies winning local elections, and who are as

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keen as I am to secure orders from China for engineering firms in our constituencies. Those orders are coming through, and will continue to increase.

A question faced the Opposition when the Chris Patten whom we knew so well appeared as a somewhat belated knight in shining armour in Hong Kong, seeking ingeniously to squeeze the last ounce of democracy out of the arrangements that he found had already been made there, even at the risk of upsetting Chinese friends in Beijing. I was in Shanghai at the time, and I must confess that my reaction was to cheer.

I do not want to irritate Chinese friends in Beijing by speculating about what developments there may be in the government of China. I agree with all that has been said about the unlikelihood of any major disturbance or change after the departure of Deng Xiaoping. Just as China has left us to be responsible for Hong Kong until 30 June 1997, the Chinese will be responsible after that date, and there is nothing that we can or should do to interfere.

The changes in China in recent years have been quite remarkable. The Chinese Government have been skilful in managing the transition to a market economy, and there have been many developments in political and social policies too. The right hon. Member for Old Bexley and Sidcup was right to attribute much of that to the institutions and to the commitment to the idea of China throughout the population, but another important influence has been the sheer drive and ingenuity, and the skills, of the people of China, where the tradition of entrepreneurship is very different from that within the former Soviet Union.

In the fullness of time there may be things for both Britain and China to excuse in their past relationships, as they build policies for the future, but I believe that, in circumstances that are becoming better, we should persist in the path that has been set until 30 June 1997.

There are outstanding issues, but I hope and believe that the political judgment and statesmanship on both sides will reach a resolution. Those issues have been enumerated: the setting up of a Court of Final Appeal, airport financing, the adaptation of local laws, the completion of civil rights laws and institutions--including, I hope, a human rights commission- -an access to information Bill and an independent legal aid department.

Those are all consistent with the Basic Law; indeed, they are necessary and appropriate for its implementation. The go-ahead for container terminal 9 will certainly greatly help to consolidate vital international confidence. I trust that civil servants will co-operate fully with the preparatory committee when it is set up, and that the Governor will see his way to relax the arrangements for working with the preliminary working committee meanwhile.

The joint declaration and the Basic Law enshrine the principle of "one country, two systems". It would increase the confidence of the people in Hong Kong and of the international community in that principle if the Chinese Communist party made it clear that it will not operate in Hong Kong as it does within the rest of China. The arrangements announced by the Financial Secretary for informing and then involving the Chinese Government in the budgetary process should be used to the full on both sides, because that, perhaps, is the most vital arrangement for securing a smooth transition.

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