Memorandum submitted by Mr Stephen Perry,
London Export Ltd
China may soon become the third power in the
world, after the US and Europe, surpassing Japan.
The UK's relations with China exist and must
be considered within a context in which they are ultimately strategically
subordinate to the Sino-American and Sino-European relationships.
The UK can punch above its weight because China
places a high priority on relations with the Permanent Members
of the UN Security Council.
We are a unique source of understanding of both
US and European positions for the Chinese.
We are also a world player and the British experience
of reforming our economy mirrors in many ways the Chinese challenge,
especially in privatisation (commercialisation for the Chinese),
regional regeneration, and the challenges of the welfare state.
By adopting a distinctive approach compared
to our international competitors, strategically focused on the
top priorities of the Chinese leadership, we can become, at relatively
low cost and with relatively quick returns, a close confidant
and trusted interlocutor of the Chinese government with regard
to many of the challenges facing them in their move towards becoming
leading players in both the global economy and global civil society.
Our concerns about human rights can be best handled within this
framework.
By reforming our infrastructure for dealing
with China we can focus our efforts on the main challenges facing
that country's leaders and better pursue the British national
interest in that way.
Our existing structures place more emphasis
on form than essence. They need to be transformed into focused
and professional institutions, with clearly set goals and targets,
and with mechanisms for review and assessment.
The British resources are currently scattered
over too many organisations, the civil service does not contain
sufficient actual China experience and demarcations are unclear
in terms of both governmental and non-governmental functions and
responsibilities, and between policy and implementation.
A task force needs to be established to refocus
and update our work on China based on the principles outlined
above.
The 48 Group name is one of the UK's single
greatest assets in China, being known throughout the country as
their oldest friends in the trade field, and mentioned specifically
by Jiang Zemin, Zhu Rongji and every top Chinese leader in their
speeches. Yet it is pushed to the borders of obscurity by those
who resent its past achievements and who remain irritated by its
challenges to government policy in the early and mid '50s.
ASSISTING CHINA'S LONG MARCH TO FULL GLOBAL
CITIZENSHIP
I am very pleased to take up the invitation
to present a memorandum to this inquiry. Although I will touch
on other areas, my comments will essentially focus on four main
ones, the strategic context of our relations with China, the question
of human rights, a new approach to co-ordinating our national
China effort, and business and trade relations.
I address myself to these areas on the basis
of having spent my entire working life since graduation in the
field of trade and the broadest range of commercial relations
with China. In the course of this work, I have learned that success
in China does not depend on business acumen alone, but also requires
an awareness and sensitivity to a wide range of political, cultural
and other considerations. The same holds good for those whose
dealings with China concern other areas.
I am the Chairman of the 48 Group Club and Vice-President
of the China-Britain Business Council, but this submission is
written in my personal capacity and is my responsibility alone.
STRAGETIC CONTEXT
The timing of this inquiry is excellent. In
the three years since the handover of Hong Kong, Sino-British
relations have been transformed thanks to a first class effort
by both sides. The level and intensity of continuing ministerial
and other high-level exchanges is unprecedented. Indeed, we can
say that this is the first time ever that we have fully comprehensive,
smoothly functioning Sino-British friendly relations.
The effort that has been and is being put into
this by the UK side was necessary and justified. Prior to the
Hong Kong handover, the crucial basis for our relations with China
was pretty clear to all parties concerned. Particularly considering
the acrimony in the period leading up to the handover, it was
debatable just what emphasis and importance the Chinese might
place on their relations with Britain in the new period. Correspondingly,
there was a need for us to redefine and restate the nature of
our relations with China.
Through leading the work of the China Strategy
Group which has met under the auspices of Chatham House since
1997, it became increasingly clear to me that what was of greatest
importance to the Chinese when they came to assess their relations
with Britain was our permanent membership of the United Nations
Security Council, especially when combined with our unique pattern
of relations with and insights into both the United States and
Europe.
China puts a huge premium on the Security Council
as they believe, just as the United Nations Charter itself asserts,
that this is the body whose responsibility it is to maintain international
peace and security, something that the Chinese, in turn, see as
the crucial prerequisite for developing countries, including themselves,
to be able to develop their economies.
This is why China has been strongly opposed
to unilateral actions taken by the US and UK in Iraq and the Balkans,
which, in the latter case, inter alia, led to the bombing of China's
embassy in Belgrade and the deaths of three Chinese citizens.
However, China, in common with all other nations,
develops all her policies on the basis of her own national priorities
(asserting that this is the best contribution she can make to
common human interests) and is also noted for the way in which
she attaches priority to long-term considerations. Therefore,
for so long as she considers good relations with the UK to be
in her overall interests, she will not easily allow herself to
be swayed from the pursuit of this objective in any fundamental
way.
We are now entering a new situation with regard
to China and her place in the world. Her imminent entry into the
WTO, following the conclusion of relevant agreements with the
US and the EU and the US ratification of Permanent Normal Trade
Relations (PNTR), serves to underline the point. For China, this
means that she must now meet the challenges of globalisation head
on, with all that this means for her national priorities, including
development of the western regions, reform of the state-owned
enterprises, establishing pension and social security systems,
halting and reversing the depredation of the natural environment,
and promoting the development of high technology and the knowledge-based
economy.
Changes in China's external environment are
no less dramatic and radical than those on the home front. China
can no longer be written off as a semi-pariah nation or a peripheral
player in the world economy. Already in regional terms, it is
clear that no major problem can be resolved without China's active
involvement. Whatever the future holds for the relations between
the two Koreas, China has emerged as the outside power with the
most influence over, and deriving the most benefit from, the recent
North-South Summit.
Indeed, China may well be on the way to becoming
the third major player in the world after the United States and
Europe, taking into account Japan's relative economic decline
and the continued constitutional and regional constraints on its
military powers, as well as Russia's economic contraction and
still confused political trajectory.
In global strategic terms, the key relationship
over the next couple of decades is likely to be that between the
United States and China.
Although possibilities for conformation, and
even conflict, are real, the prevailing tendency on the part of
the US is now one of constructive engagement, where the Americans,
whilst reserving the right to "play hardball" when they
think the situation demands it, hope to secure their objectives
largely by encouraging the Chinese to tie themselves into the
rule-based international system in a way that will serve to decisively
open the Chinese economy whilst aiming to ensure that China does
not adopt too challenging a posture to the USA's global strategy
and position.
Whilst the UK and the EU will have ample opportunities
to push their own particular considerations within this overall
framework, it is the issues that go to the heart of the Sino-US
relationship, such as Taiwan, missile defence systems, etc that
will be the most problematic, and will ultimately determine much
of the context in which our own relations will develop.
The British policy and interest with regard
to China cannot exist in a vacuum. Devising the right policy,
and assessing future trends, does not only require expertise with
regard to China's line of march, but also a sound and perceptive
grasp of the dynamics of international relations and trends as
a whole.
Despite having been one of the very first western
powers to open relations with the new China, we were relatively
unprepared for the strategic change heralded by President Nixon's
China visit of February 1972.
We must equally ask how well we understood the
American position after the tragic events in and around Tienanmen
Square in 1989. It seems to me that there is at least a degree
of prima facie evidence that our China/Hong Kong policy was overly
swayed by such ultimately secondary considerations as election
campaign rhetoric (Bill Clinton's attack on George Bush for supposedly
"coddling dictators from Baghdad to Beijing", etc) to
the extent that we lost sight of the real dynamics, commercial
and strategic driving Sino-US relations.
The handover of Hong Kong and the election of
a new government in Britain were convenient foils for turning
a new page in our relations.
Drawing lessons for the future, we need to become
more adept at identifying the real world trends that impact on
China. This means we must refocus our national research effort,
under the direction of something like a "committee of experts",
drawing existing resources from Chatham House, the Institute for
International Strategic Studies, the research division in the
FCO, etc, along with other relevant expertise from business, academia
and elsewhere. Such a body would need to be adequately resourced,
but without such an approach it is difficult to see how we can
make the qualitative leap necessary in our ability to understand
and interpret a constantly changing China.
Britain is no longer a superpower. Even if we
wished to, we cannot approach or deal with China in the same way
as the Americans. What we can do is ensure we use our strengths
and skills to best advantage. That, I believe, and as I will attempt
to illustrate below, lies essentially in our ability to give a
constructive lead, based on our unique Euro-Atlantic position
in the global community.
HUMAN RIGHTS
The issue of human rights is certainly one of
the most problematic and complex in our relations with China.
It is one where there is ample potential on both sides for confrontation.
This is not solely because of the fundamental differences in our
economic and political systems. It is also because of cultural
factors developed over the course of China's unique history and
development of several thousand years and especially the last
little over century-and-a-half of engagement with the West and
Japan. These impact on the relative importance accorded to the
individual, family, community and society, perceptions of national
sovereignty, and so on. This is not meant as a justification for
the Chinese position or Chinese actions, but it is meant to underline
the absolute importance of understanding the Chinese way of thinking
as a prerequisite to the adoption of appropriate and effective
policies and approaches.
The broad category of human rights embraces
numerous issues. They include the question of national minorities,
especially in Tibet and Xinjiang, political democracy and rights
to freedom of organisation and association, women's reproductive
rights, freedom of religious belief, the death penalty, treatment
and conditions of prisoners, labour and employment rights, and
so on. Moreover, they are closely connected with our continued
concern for the well-being of Hong Kong and her people, the peaceful
resolution of the dispute over Taiwan, and prospects for regional
peace and stability generally.
The very scope and scale of the issue underlines
its potential to inform and complicate our relations as well as
the fact that it arouses strong concerns and feelings right across
our political spectrum.
This is all the more reason, whilst acknowledging
the justifiable strength of feeling aroused by many of these issues,
to view the whole question with care. This means to take account
of the realities of a developing situation, safeguard our national
interests, and develop a strategic approach whereby one area of
policy will serve to complement rather than be in contention with
others.
We have to find the best possible ways and mechanisms
to put our concerns with regard to human rights to the Chinese,
in a way that keeps the door for dialogue open and therefore retains
the possibility of progress.
This may be less dramatic, and less satisfying,
than megaphone diplomacy or the protest politics of the grand
gesture. But if we are agreed that we wish to promote the cause
of human rights in China, both because it is in our national interest
to do so, and also simply because it is the right thing to do,
then we have a responsibility to proceed with care and on the
basis of facts.
Whatever China's shortcomings or transgressions
in the field of human rights, and whatever remains to be done,
it is a fact that the vast majority of Chinese people enjoy far
greater human rights today than at any point in their long history.
There are many reasons for this, but it is inseparable from the
impact of 20 plus years of "reform and opening up",
which have transformed a once almost hermetically sealed society
to one on the very verge of WTO membership.
It may very well be the case that, in the urge
to promote commercial ties with China, or previously the desire
to forge a strategic counter-weight to the former Soviet Union,
there have been mistakes made or instances of an unacceptably
blasé attitude to principled questions of human rights.
But such instances cannot obscure the essential
fact that a policy of constructive engagement with China has been
the foundation, the sine qua non, for the very definite
improvements in the human rights situation of most Chinese, and
even in the forging of effective mechanisms and levers for those
occasions when a more robust approach has been deemed necessary
or useful.
Can anyone seriously suggest that a Chinese
leadership that had no stake in good relations with the West would
be more amenable or receptive to representatives on the question
of human rights? Can anyone seriously suggest that a Chinese people
deprived of their myriad of existing points of contact and interaction
with Western society would be better placed to advance their democratic
space or personal freedoms?
Without closing our eyes to the egregious abuses
of human rights where they occur, it is important to understand
that the Chinese leadership have, in their eyes, a perfectly sophisticated
approach to the overall problem. One that draws at least as much
from Confucianism as it does from Marxism-Leninism.
According to the Chinese leadership, the development
of political rights can only follow the development of rights
in other areas, summarised by them most fundamentally as the right
to subsistence and the right to development, which includes the
spread of education and culture, and the overcoming of such deep-seated
problems as mass illiteracy and superstition.
In a word, as with everything else, the Chinese
see human rights as subordinate to the question of economic development.
The Chinese leadership points to the chaos, confusion and cruelty
of the Cultural Revolution as an example of what can happen if
these priorities are reversed and there should be no doubting
the fact that many millions of Chinese agree with them.
The Chinese also assert that our own societies
in the West developed in broadly this fashion. That before the
industrial revolution there was no question of universal suffrage.
And usually more quietly, they will opine that the Western strategy
of seeking to impose their conceptions of human rights on developing
countries conceals a secret agenda of limiting their ability to
protect themselves from foreign exploitation, in other words recolonisation.
We know from the build up to the handover of
Hong Kong just how much sensitivity and bitterness remains from
what the Chinese see as 150 years of national humiliation and
shame and how easily this can be brought to the surface.
It is also not hard to see how such Chinese
sensitivities can strike the wrong chord here.
In the UK, we have a long history of standing
up to dictatorship in Europe. We have been a haven for successive
waves of refugees, many of whom have gone on to make significant
contributions to our nation. Our belief in liberal democracy,
with electabilty and accountability of national and local leaders,
is such that it inclines us to the view that it is the only basis
on which human beings can fulfil themselves and the only acceptable
way in which to order society.
Likewise, our traditions of religious tolerance
impart a powerful edge to our concerns over the rights of national
minorities in Tibet and elsewhere.
Our approach may lack the proselytising zeal
and certainty of an America whose deep religious traditions mesh
with its present global status as the sole superpower, but nevertheless
our history and culture do impart a concern and feeling for the
rights of others elsewhere in the world that cannot simply be
subsumed beneath vague phrases regarding "non-interference
in the internal affairs of others".
Perhaps the greatest challenge to the Westphalian
paradigm lies in the fact that in societies such as ours broad
sections of the public no longer regard international relations
as a matter reserved for government alone.
Against this background, we can identify the
challenge to the UK. It is to achieve real progress in helping
China become a successful, responsible and respected world citizen
in the 21st century.
Achieving this will require a delicate balancing
act. Whilst sensitivity to public opinion is obviously not only
necessary, but laudable, we will not advance very far if we allow
our agenda to be overly dictated or influenced by the present
level and tone of media coverage. With a few exceptions, media
coverage of China is poor and ill-informed. There are very few
real China experts active in this field and where they do exist,
even their perspectives and writings are often partial and one-sided.
Such media shortcomings are paralleled and reinforced by the paucity
of real China scholarship in our universities and other academic
institutions, both qualitatively and quantitatively, an area where
are not only far behind the United States but increasingly Europe
and other regions as well.
There is an urgent need for new thinking. How
loudly can we shout about Tibet when, at least until very recently,
we have singularly failed to find an effective Irish policy, capable
of ensuring peace and equality and the allegiance of all sections
of the community?
One could pose many questions of this kind.
But centrally they revolve around the question of whether or not
we can convince the Chinese that we have experiences, expertise
and institutions that can be of value to them and how we can best
pursue such an approach whilst retaining the ability to engage
more robustly when confronted with those things we truly find
unacceptable.
I am not advocating a policy of appeasement.
When the Chinese finally said that they would listen to the advice
and criticism of their friends on sensitive issues, thereby opening
the door to human rights dialogue, it is clear that this was in
response to the world reaction to the tragic events in Tiananmen
Square, characterised by universal protest and repugnance.
However, it would be foolish to suggest that
such measures are appropriate or effective on a permanent basis
or in all circumstances. Appropriate measures are needed for each
set of circumstances and to secure a particular objective.
A sharp approach, as seen in the aftermath of
Tiananmen, if it is to be effective, can only be used sparingly
in the case of China. She is not a small Third World country that
can be made to change by means of attack and blockade.
Although the consequences for her development
would certainly have been negative, China would have been strong
enough to ride out even prolonged sanctions had she so wished.
Indeed, she did so through long years of the Cold War. Moreover,
there are always those who will choose another approach and so
give a country the size of China a range of options. In the recent
period, that role was filled by overseas Chinese, south-east Asian
and South Korean capital, which responded with alacrity to the
opportunities presented by Deng Xiaoping's call to give further
impetus to the reform process at the beginning of 1992. US business
and government saw and acted on the pronounced success of this
Chinese tactic in an astute and timely way. This proved a decisive
factor in their own switch back to engagement mode. The French
and Germans took up essentially the same stance as the Americans,
meaning that Britain was heading down a road of confrontation
with China over Hong Kong at the very time that our key allies
were headed in the opposite direction.
So, to an extent, the measures taken following
the events of 1989 were effective because powerful forces in China
wished them to be effective. There was a sufficient community
of interests between China and the West, manifested in the search
by China's leaders for appropriate ways to reform their government
and society to complement and further promote their economic development.
There is no doubt that China's rapid development—one
of the defining features of the global economy in the last period—has
been the main factor impelling change. This process will not only
continue, but will intensify and accelerate, not least as a result
of such factors as WTO membership, globalisation, the internet,
the quantitative and qualitative developments in telecommunications,
and the challenge of the emerging knowledge-based economy.
Economic factors are clearly crucial in forcing
change in China's legal sector. Such change is most immediate
and apparent in the field of commercial law, but there is a steadily
mounting appreciation of the fact that commercial law cannot develop
in a vacuum separate from criminal and common law and the overall
legal system. Jiang Zemin's frequent statements on the need to
build a society governed by law are illustrative of this. And
the work carried out by the Lord Chancellor's Department with
its Chinese counterparts is a good example of the kind of constructive
engagement that can produce results.
If, on the basis of the evidence of at least
20 years, we recognise that the Chinese leaders are among the
brightest in the world, irrespective of what we might think about
their beliefs or some of their actions, then we should recognise
that they are not merely receptive, but are actively looking for
anything that can assist their national development while retaining
their independence.
In a number of areas, many of them vital to
our own interests, we are pushing at an open door. These include
the fight against corruption, reform of the legal system, combating
drug addiction and trafficking, the HIV/AIDS pandemic, environmental
protection and sustainability, and the activities of criminal
gangs (Triads and "snakeheads"), not least in such areas
as the international trafficking of human beings and illegal immigration.
Two events at the very time of writing this
submission, both on Monday, 19 June 2000, serve to confirm this.
The first is the signing of the first agreement
between law enforcement agencies of China and the United States
to co-operate and share intelligence in drug-related crime as
a result of the China visit of US "drug tsar" Barry
McCaffrey.
The second the tragic deaths of 58 young people,
understood to be from southern China's Fujian province and discovered
in a lorry at Dover. In the wake of this dreadful tragedy, it
was the Chinese government that stated: "In the face of the
rampant illegal immigration throughout the world, all countries
have a responsibility to jointly crack down on such activity".
The development of co-operation between the
Metropolitan police and their Chinese counterparts has led to
a number of important successes in the fight against organised
and serious crime in recent years.
The horrific events at Dover not only underline
how vital such co-operation is, the development of understanding
that must accompany it is equally important if our Chinese community
and citizens are to enjoy the policing service to which they are
entitled.
Where possible the best approach to China is
to share our experiences, both good and bad, especially as the
many Chinese who now visit the West experience both first hand
and form their own judgements accordingly. On those issues which
the Chinese find most sensitive, human rights and especially the
treatment of minorities, this is by far the most effective way
of securing engagement on the part of those actually able to promote
and ensure a process of positive change.
At the end of the day, we must recognise that
our efforts, however, focused and effective, can only be secondary.
As stated, China is not a small nation. It is a quarter of the
world's population. It is the Chinese people who will determine
the level and nature of their political rights and the way in
which they will live.
A NEW APPROACH
TO CO-ORDINATING
OUR NATIONAL
CHINA EFFORT
However, there are a large number of practical
and cost effective steps that can be taken to constructively promote
change beneficial both to China and our national interest.
— The China visits this year by both
the All-Party Group and, more recently, the Foreign Affairs Committee
itself, underline the potential for parliamentary exchanges. As
I have previously suggested to Ben Chapman, Chair of the All-Party
Group, visits by Members could be enhanced by exchanges on the
level of researchers and other parliamentary officials.
— Exchanges on regional development,
closely involving the RDAs and other relevant bodies, will assist
the Chinese in their strategic objective of developing their vast
Western region, will benefit British industry, and will also help
promote viable local democracy and accountability for people of
all nationalities in the regions concerned.
— The high profile launch of the UK-China
Forum, in the presence of Tony Blair and Jiang Zemin, underlines
the very important and valuable role it could potentially play.
If it is to do so, it urgently needs restructuring and repositioning
into a body that can provide UK support and expertise for key
Chinese objectives if the British interest is to be served and
promoted therein. Only if it does so can we hope for the Chinese
to take it seriously, which is presumably a significant part of
its purpose. Real and effective British expertise has to centre
on Chinese priorities and not on a subjective or peripheral "wish
list" authored in London. The Forum should already have the
Western Initiative as its Number One priority. Likewise, in developing
its programme and plans it should seek to capitalise on Britain's
premier world experience in privatisation (commercialisation in
the Chinese context) and regional development, both of which are
of extremely great interest to the Chinese side. In a word, a
dynamic UK-China Forum could be one of the most effective mechanisms
we could bring to bear in our relations with China.
— Complementary to both a business-led
approach in trade and commercial matters, and the enhanced role
of civil society, we need strategies and structures that can ensure
that policy formulation and implementation are able to properly
draw on the full range of available expertise and enjoy the input
of all those with a stake in our relations with China. At present,
the key officials with responsibility for China in both the FCO
and DTI are, by and large, inadequately trained, for what is a
highly specialised area, and almost certainly inadequately resourced.
This again relates to the poor state of China scholarship in British
academia. The FCO has proved itself very skilled at securing our
high-level relationship. It needs to bring the same skill and
professionalism to bear in formulating an approach for intermediate,
supportive and lower levels of the relationship. At present, the
China Co-ordinating Committee has essentially been reduced to
a talking shop, instead of the very sharp, focused organisation
that some, at least, of us originally envisaged. Consequently,
it makes no serious input to the work of the UK-China Forum. Like
the Forum, this body, too, needs restructuring if they are to
be effective in formulating and implementing policies and initiatives
at a strategic level.
— In summary, the plethora of organisations
and bodies presently tasked and trying to deal with China need
to be streamlined. I suggest the following, broad, three-layered
approach be adopted:
— A strategic steering or advisory
committee bringing together civil servants and different areas
of expertise.
— A co-ordinating or planning body
that can give effect to the direction identified and ideas generated.
— A dynamic, restructured Forum,
which can draw on wider levels of expertise and take the frontline
position in dealings with the Chinese.
The above is intended to be more illustrative
than definitive. Also, where appropriate, some of these points
will be developed in the section on business and trade relations.
Taking a lead in the international community's
engagement with China is one area where we can deploy our post-imperial
position in the world to full advantage. As I have already indicated,
as a Permanent Member of the United Nations Security Council,
which is both at the heart of Europe while enjoying a special
relationship with the United States, as well as substantial influence
and goodwill through the Commonwealth and other bodies, we are
the best placed of all the major powers to assist China in its
long march towards full global citizenship.
If we are to effectively address such questions
as human rights and national minorities, we can only do so "from
the inside", as respected friends of China.
Whatever direction its development takes, China's
development will be crucial for the future of the world. The policy
objective I have suggested above would be manifestly good for
both the British interest and the Chinese people, as well as her
neighbours and global security and development. I believe that
such an objective and approach is the most likely one to promote
a desirable outcome. But we must all recognise that there is no
strategy that can offer absolute guarantees. A poor and weak China
would certainly be a danger to the world. To take just one example,
it would make the present issues of human trafficking and illegal
immigration look quite trivial. Hundreds of millions of people
could be on the move. But equally, a strong and powerful China,
under a malign and hostile leadership, unconstrained by the international
system, and engaged in expansionist behaviour, for example as
part of an aggressive quest for energy and resources, would also
constitute a nightmare scenario. Frankly, the fact that these
possibilities are real—although hopefully not likely—should
serve to underline just how important our relationship with China
is and how important it is that we get it right. But whilst doing
our best to promote a full and active policy of constructive engagement,
we need also to protect our traditional regional alliances in
the Asia-Pacific region and not compromise an adequate defence
and security posture.
However, what will surely serve no useful purpose
is promoting or imitating those who continue to lamely and unrealistically
rail against supposed "senile, corrupt old men", assert,
against all the evidence, that the Chinese Communist Party is
on the verge of collapse, and who, with smug arrogance, refuse
to acknowledge any difference between Asian and European conceptions
of society. But a truly dynamic UK-China Forum could prove one
of our most valuable instruments.
BUSINESS AND
TRADE RELATIONS
The British trade effort with China, and our
economic relations generally, have many strengths and achievements.
But a study of this kind needs to focus more on the areas of problems,
shortcomings, and unfulfilled potential, not out of any desire
to be negative, but so that we can do an even better job.
The overlap between the FCO and the DTI is becoming
increasingly opaque for all concerned and needs to be re-assessed.
Considering the responsibility and remit that
the China-Britain Business Council (CBBC) has been given by government,
its reform must be central to any serious review of policy and
implementation in this area.
Despite the fact that it does much good work,
and has excellent and dedicated staff, at present, the CBBC is
not reaching its full potential in both of what should be its
key priorities, which we would broadly identify as follows—the
regions and the manufacturing sector; and the major UK companies,
the City, invisibles and services, and new economic areas. Sadly
this is reflected in a falling membership.
This is in spite of both its relatively generous
resource allocation and the commitment and skills of many of its
personnel. To further improve its work, the question of strategic
direction needs to be addressed.
Since his appointment as President of the CBBC,
Lord Powell has spearheaded an excellent drive in terms of governmental
relations, ensuring that business concerns are reflected in government
deliberations, and admirably complementing and supporting the
government's own policy and its determined drive to place our
relations with China on a new footing.
To complement this, the CBBC needs to adopt
a "two centre" approach to its work. Devolution notwithstanding,
London will obviously remain the main centre for government relations,
as well as for relations with major companies, the City and its
areas of specialisation, and many of our "invisible"
exports in consultancy, financial services, and so on. And clearly
these are of central importance to our commercial effort, with
a still untapped potential.
But if it is to also better service our small
and medium-sized enterprises (SMEs), which collectively still
account for the majority of UK employment, meet regional priorities
in both the UK and China, and give much-needed support to our
manufacturing sector, at a time of major opportunities, not least
as a result of the Chinese Western Initiative, the CBBC cannot
simply remain an overwhelmingly London-based organisation. It
needs a proper presence in the main centres of industrial output,
in the northwest, northeast, Yorkshire and the Midlands. It must
also co-operate with the relevant bodies to ensure an adequate
presence in Scotland, Wales and Northern Ireland.
The fact that China is also presently becoming
a more regionalised country should add impetus to the corresponding
regionalisation of our own structures, with policies and approaches
tailored accordingly.
At present, the CBBC is not really organised
to meet these demands. Last year, a "China/Hong Kong Showcase",
held in Sunderland for the northeast by CBBC with British Trade
International, attracted just 40 companies. Considering the economic
plight of the region and the potential of the China market this
is a damning indictment.
The solution is not to attach another, regional
layer of civil servants to the CBBC. It lies in connecting the
structures to the people who need them, making the CBBC in the
regions the property of regional business, integrated within,
but not subordinate, to the RDAs.
CBBC, too, needs to function according to market
principles. The system of receiving annual grants without targets
should be replaced with one involving three-year contracts with
defined targets, and embodying an element of bidding and contract
compliance.
China has now embarked on a major programme
to develop its western regions, which until now have remained,
in the main, the poorest and most backward parts of the country.
This is a strategic decision by the top leadership, which envisages
focusing on this task for at least some 30 years. I know that
this has met with quite a sceptical response from a number of
so-called "China experts". I would advise caution in
the face of such expertise, because such cynical and dismissive
reflexes have been the standard response to the news of each successive
stage of China's reforms, be it the development of the Shenzhen
Special Economic Zone or of Shanghai/Pudong. The main losers have
been British business, who sometimes fall into the trap of thinking
that "experts" know best. The major beneficiaries have
been our competitors, who are better served and advised, as shown
in the current visit to Beijing by a large group of Hong Kong's
top businessmen to discuss the Western Initiative with Jiang Zemin.
The Western Initiative, which is likely to succeed
in the long run, not least because it is absolutely in China's
interests that it do so, provides enormous scope and opportunities
for British business, especially through marrying British expertise
with Chinese need to mutual benefit, for example in civil engineering,
infrastructural development (road, bridge, railway and airport
construction, etc.), mining equipment, environmental and biotechnology,
oil, gas and energy pipelines, drilling, exploration and extraction,
etc. Logistical factors will also ensure huge opportunities for
mobile telephony and other cutting edge IT.
With sponsorship from appropriate interested
companies, including banks, accountancy and financial services,
and those who have already committed to this market, such as BP/Amoco
and the London-listed Billiton, for example, each RDA and appropriate
devolved body, should be encouraged to "twin" with an
appropriate province or region in China, with a view to promoting
trade, two way investment consultancy services.
Alongside the need to give greater attention
and priority to work in the regions, the CBBC must also be enabled
to give an enhanced level of service to major companies. With
this kind of combination as its axis, it will then be able to
better and more effectively co-ordinate the nation's trade and
business effort.
The CBBC needs to forge partnerships with Chatham
House and other relevant bodies to assess and promote the work
of risk analysis, strategic forecasting and the sharing of relevant
experience. In this way, the experience and expertise of major
companies, while respecting commercial needs and client confidentiality,
can be pooled and reissued in a way that benefits British industry
and commerce as a whole.
Outside of the private efforts of some of our
biggest companies, nobody in the UK is presently undertaking this
work, meaning that our competitors in Europe, the United States,
Japan, etc., are much better serviced when they come to such crucial
business decisions as those concerning the relative merits of
holding companies and joint ventures, and when they need to consider
such questions as the relative cost of labour or the actual role
of the party, including within enterprises.
In both of these identified priorities, a certain
adjustment is needed to reflect the post-Hong Kong handover situation.
The "hongs", such as Jardines, Swires, etc., have played
a major, indispensable role in the development of Hong Kong, something
of inestimable importance to both the UK and China. However, it
is something of an anachronism in the post-1997 period that their
influence over the UK effort and structures should actually have
been enhanced, inevitably at the relative expense of those with
a more direct bearing on the UK balance of payments and employment
statistics.
In summary, the CBBC has to be made relevant,
dynamic and effective, that is, in essence, market-led, driven
and responsive. We must finally get away from the old way of thinking
in which form is too often allowed to prevail over essence.
Despite the relaunch of CBBC from the CBTG,
and a series of other bureaucratic measures, we are still confronted
by a confusing morass of fragmented initiatives and structures,
spread over many of the same often ill-defined areas of responsibility
and competence, with loose integration, no unified structure,
and, in certain instances, inadequate or unsuitable leadership
and direction.
The confusion and overlap between CBBC, British
Trade International, Trade Partners UK, Business Links, London
First, RDAs, devolved administrations, and so on almost ad
infinitum, when it comes to our China effort, does not do
justice to a government bent on modernisation and professionalism,
and a pragmatic determination to pursue the best, most efficient
way of getting the job done.
In the present case, there needs to be a stock
take of all the components of our China business relationship.
Among them, we can identify the following broad areas:
— Our overall relationship and strategy,
including the visibility and image of our national brand "UK
plc";
— The sectoral focus, which is the
main area in which the major companies and corporations can be
encouraged to assist SMEs;
— Regional dynamics and particularities,
in both the UK and China;
— Meeting the needs of SMEs;
— Enhancing opportunities for the major
companies, with strategic significance for our trade figures and
the health of the national economy;
— The research and briefing needs of
companies and industry with regard to economic and political trends
and developments in the marketplace;
— The respective roles of government
and business, including financing and access to support and services.
To spearhead what will inevitably be a major
reform process, centred not least on the restructuring of the
CBBC, a high-level taskforce needs to be established, charged
with the preparation of a strategic plan. In view not least of
the fluidity and dynamism of the situation, there also needs to
be scope to regularly review and update. To this end, an Advisory
Panel or Joint Steering Committee has to be established from the
taskforce to serve on a permanent basis.
This necessarily ongoing process simply cannot
be compressed into or replaced by a one-person review, no matter
how thorough or professional. Not least, this is because there
are many interests involved that need proper representation. The
interests of the northeast or Wales are not the same as the interests
of the City of London or the Hong Kong "hongs". Equally,
the interests of the engineering industry are not the same as
those concerned with financial services or dot.coms. They are
certainly not necessarily incompatible, but we will not develop
a policy that serves and accommodates them all unless we really
find a way to bring all those with a stake on board. The proposal
by Hugh Davies in his April 1988 FCO Review of China Trade Promotion,
for a CBBC (then CBTG) Supervisory Board, bringing together very
senior Chairmen and Executives for purposes of strategic orientation,
with hands-on committees of businessmen, broken down into sector
working parties, with the permanent staff and civil servants working
to them, has never been acted upon, but would go a long way to
addressing the problem.
Another key area is the promotion, organisation
and direction of the British presence and effort in China. In
my view, the CBBC office needs to be merged into a single body
with the British Chamber of Commerce in Beijing, and in other
Chinese cities where there is overlap, with a leading role given
to the chambers, which embody practical business experience. Besides
strengthening the necessary business leadership, the overall economies
of scale thus generated should allow the recruitment of a suitably
skilled and experienced businessperson to head up the effort,
with the aim of turning the new offices not only into efficient
and dynamic bodies, but actual profit generating centres in a
comparatively short period.
One of Britain's greatest assets in the China
market remains the name of the 48 Group, which dates back to the
famous "Icebreaker Mission" of 1953 and which is still
recalled on suitable occasions by top leaders including Jiang
Zemin and Zhu Rongji. Yet its promotion and use by the British
side in China is now almost non-existent, something that, to say
the least, makes no commercial sense at all.
We should continue to encourage the Chinese
to see Britain as their "Gateway to Europe" and promote
their inward investment to the UK. To this end, we need to establish
a Chinese Chamber of Commerce in the UK to provide Chinese businesses
with fast-track mechanisms to deal with their regulatory problems.
However, our business relations with China will
continue to be constrained and hampered, including in the increasingly
important area of inward investment to the UK, until such time
as our immigration procedures, consular and visa regime for Chinese
visitors are modified. The present system poses real barriers
and severely disadvantages the UK against both European and American
competitors. Whilst carefully ringfencing the real problem of
illegal immigration, this issue needs to be treated as an urgent
one, especially as tangible changes could be implemented relatively
speedily if the political will was present. The FCO Minister responsible
for Entry Clearance matters currently has a programme of visits
to posts with an apparent view to resolving specific problems
and promoting more efficient, best practice. If he has not already
done so, he should be strongly encouraged to include Beijing and
our other China posts in this programme as a matter of urgent
priority. The government's recent initiative to promote more flexible
work permit systems for key workers with much-needed high-tech
and IT skills bears on our visa regimes in India and China more
than any other countries.
Finally, I wish to address some remarks on the
particular question of what we might now term the "cultural
industries", or entertainment, sports and leisure (ESL).
Cultural exchange has always played an important
role in the overall development of Sino-British relations. It
is an area where the people concerned on both sides have consistently
worked imaginatively and with great credit.
When our two countries started to rebuild their
relations following the Cultural Revolution, such activities as
the exhibition of new archaeological finds, visits by acrobats,
wushu troupes, Peking Opera, and traditional musicians made a
real difference.
In the other direction, visits by football teams
such as West Bromwich Albion and by rock musicians like Elton
John and George Michael (as part of Wham!) were more daring then
than we might think now and they certainly helped alter the popular
perception of Britain among the Chinese people.
My company, London Export, is very proud to
have played a prominent part in sponsoring and promoting such
cultural exchanges in both directions during a previous turning
point in the history of Sino-British relations.
The type of exchanges established from the first
half of the 1970s continue to be both popular and important, whether
it is the Gilded Dragons exhibition, opened at the British Museum
during Jiang Zemin's state visit last year, or the China visit
of the Royal Ballet, coinciding with the visit by the Culture
Secretary, Chris Smith.
However, the commercial aspect of these exchanges
has always been manifested largely in the need for sponsorship.
A new situation is emerging where such activities can be a major
business area in their own right.
There are very real possibilities for a major
expansion in the export of goods and services in culture, media,
sports, leisure and entertainment by UK companies to China, in
some instances with transactions in the hundreds of millions and
the prospect of tremendous profitability within a fairly short
timeframe.
We need to consider what type of organisation
or structures would best facilitate the promotion of British entertainment,
sports and leisure (ESL) exports to China, not to mention other
markets.
As part of this, without wishing to compromise
or interfere with the excellent work of the British Council, we
might consider some strategy for the fuller commercialisation
of those aspects of its work with a commercial aspect or potential.
This could take the form of a public/private partnership, with
a government option to retain a "golden share", drawing
on the experience of DfID's reform of the CDC.
With regard to market potential, China is now
in a position where it has to provide and facilitate a range of
acceptable entertainment and leisure activities to its youth and
its burgeoning middle class. And to curb the threat of deflation
and stimulate economic growth it must come up with new ways to
help persuade those with disposable income to dispose of some
of it.
ESL represents an area of tremendous growth
and opportunity in the next period in China. That this is really
big business is shown by the fact that Hollywood decisively exercised
its leverage to ensure that the US side made film imports one
of the key issues in the protracted Sino-US negotiations on the
WTO. The present UK government has given major backing to the
film industry here. They should see the importance of the Chinese
market. And whilst never underestimating the popularity of Hollywood
and American "blockbusters" to the Chinese masses (like
the masses everywhere!), it is also the case that the Chinese
authorities may well see many British productions as more culturally
suitable or desirable.
Likewise, mainstream Britain is only now waking
up to the potential of Bollywood. The Chinese middle class and
diaspora are no less numerous, prosperous and film mad than their
Indian counterparts.
Intellectual property rights will certainly
remain an issue of concern for some time. But WTO entry will provide
more satisfactory mechanisms for dealing with this problem. Moreover,
as China's own economy develops, there are the first signs that
the country's leadership is starting to see IPR protection not
merely as an invidious burden, but something that can also work
to their advantage too.
Sport, especially football, is an area of immense
British strength in China, as anyone who has exchanged a few halting
phrases of English with a hotel bellboy will know. If he speaks
about the Red Army, these days he is far more likely to have Manchester
United FC in mind than the PLA! Arranging China visits by Premier
League teams may be costly affairs, but for those big companies
with an eye on major contracts in the Chinese market, there is
probably no better targeted, PR-savvy type of sponsorship available.
But, in addition to any such high profile tours, there are a range
of other sound business possibilities, from the marketing of merchandise,
to assisting Chinese clubs with coaching, talent spotting, brand
recognition and commercialisation, and placing young Chinese players
with some of our clubs. The globalisation of football is only
a few years away and China will certainly be a key player in this,
not least as it will provide the best means of resolving the contradiction
between the sport's immense popularity and the modest level of
proficiency and attainment on the international field. If Britain
does not take advantage of this, then Italy, Brazil, or others
surely will. So far as I am aware, there is as yet no British
strategy or policy with regard to the globalisation of football
or any other sport. As with other ESL sectors, the realisation
of our football potential in China calls out for the development
of suitable strategies or mechanisms. Moreover, their role and
utility would certainly not be confined to this market alone.
Perhaps the Minister for Sports could initiate discussions with
leading members of the football authorities on the likely commercial
and other impacts of globalisation on British football, including
with regard to China.
Another key area is television, as shown by
the Chinese plan to create their own version of "Coronation
Street" in co-operation with Granada, Besides the very major
commercial possibilities, one should not underestimate the other
positive impacts of this kind of exchange, as with the work of
the British Council, the BBC World Service, student exchanges,
and so on. The Chinese interest in purchasing "The Bill",
following the success of British Law Week during the Prime Minister's
visit, and the subsequent visit of the Lord Chancellor, is an
excellent example of the virtuous combination of these factors.
I hope that these somewhat wide-ranging remarks
will be of some help to the Committee in its work. I would be
most happy to further assist the inquiry in any way and thank
you again for the invitation.
Stephen Perry
June 2000
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