Examination of Witnesses (Questions 40-59)
DR CHRISTOPHER
HUGHES AND
PROFESSOR DAVID
WALL
1 FEBRUARY 2006
Q40 Mr Hamilton: Is there any possibility
that the warm relationship between the leaderships could ever
translate into any kind of trust between the peoples?
Professor Wall: I do not think
so.
Q41 Chairman: Can I ask you about
Kazakhstan specifically? Kazakhstan is clearly exporting a lot
of energy now to China, or planning to do so. Has that affected
the Russians' attitude to Kazakhstan?
Professor Wall: Yes, there are
more Russians in Kazakhstan than in any of the other 'Stans, and
Russia is still the official language. Russia is trying to get
all of its old colonies to take Russian as the official language.
They are trying to move to become less dependent on Kazakhstan
because they say they are shakier. So they announced in the last
few days they are going to move or reconstruct missile-launching
places outside of Kazakhstan. At the moment some of the missile-defence
and missile-launching places are in Kazakhstan and they want to
replace those within Russia. It is a bit flakier, as an ally,
than they felt a few months ago.
Q42 Chairman: Is that the former
nuclear test site—Semipalatinsk I think it was called—where
they used to launch the missiles?
Professor Wall: This is a military
site, so it is not putting the satellites up. That, I think, has
plans to stay there.
The Committee suspended from 4.01 pm to
4.19 pm for a division in the House
Q43 Mr Illsley: A couple of questions
on the Association of South East Asian Nations, if I could. It
would appear that there are a number of different forms of regional
integration emerging in East Asia—ASEAN Plus One, ASEAN
Plus Three and the East Asian Summit. I wonder if you could give
the Committee your views on which one of these China would be
most comfortable with. Is it likely to be the ASEAN Plus Three
format?
Dr Hughes: It is comfortable with
both, I think. It does not really face big problems in South East
Asia, so the choices are much more flexible, in a sense. The only
real issue of friction is over the South China Sea disputes, which
seem to have been shelved for now, and certainly not resolved.
Aside from that, there is a sort of win-win situation. I think
China does not want its action in South East Asia to be seen as
hegemonic, so therefore it has encouraged ASEAN Plus Three and
encouraged Japan and also India to become more engaged with ASEAN
and to mirror, in a sense, much of what China is doing because
it does not want this to be seen as a balance of power gain that
is going on. I do not think it is, from China's point of view.
It wants to keep South East Asia as a region of good neighbourliness,
as they describe it, with very little friction, where it can develop
its economic interests and maintain diplomatic support on other
issues without antagonising Japan or India—or the Koreans
for that matter. The big question is whether ASEAN Plus Three
can become a sort of regional architecture, in some form, bridging
North East and South East Asia. We saw the Asian Summit recently
where there were great hopes, but I think it is very early days
to think that any of the big states concerned are thinking in
that sense of a real, multilateral security architecture. At the
moment it is very much ASEAN Plus One and encouraging the others
to mirror China's actions in South East Asia without making the
region another area of tension like the East China Sea obviously
is, and perhaps parts of the North East and North West have the
potential to become.
Professor Wall: I would agree
that ASEAN is, hopefully, the one which they are taking more seriously
as the way of carrying out their East Asia policy, but with one
qualification: they do not support in the same way the ASEAN Regional
Forum—the ARF. The reason why is because the ARF includes
the United States and other, non-East Asian countries. They are
looking for an institutional form for the links with the South
East Asian countries, and ASEAN Plus One provides that. They do
not particularly want the ASEAN Plus Three to develop into a regional
entity in its own right and they are blocking that, and they have
kicked it into the long grass, if you want. As the Chinese would
put it, into the think tanks for annual discussions—ASEAN
Plus Three—and it makes no progress whatsoever. They had
wanted to move into the East Asian community to replace the ARF.
In this case the Japanese have put through a spoiler and invited
Australia and New Zealand, which meant that the Chinese, for now,
are not quite sure what to do. So at the East Asian Summit, which
they brought Russia into—because the leadership of China
now count Russia as an East Asian country, and they wanted Russia
in the East Asian Summit—this spoiling tactic of Japan has
put that one on hold, so it is not clear to see where it will
go. So, at the moment, the one institutional form of the link
with East Asia which they are using and supporting mostly is the
ASEAN Plus One.
Q44 Mr Illsley: Just on the exclusion
of the USA from the East Asian Summit (and you touched on this
as well), is this of some significance, or is it that China wants
to develop that regional infrastructure without the USA? Is that
a particular intention—that they would be happier with a
structure that excluded the USA?
Professor Wall: I think so. I
think they are making it clear they want an East Asian institution
of East Asian nations. Anybody who comes in spoils that. They
say they do not want to be the hegemony in the region but they
do want to be the leader and they make it very obvious that they
want an institutional arrangement in which they can be the leader
and not balanced by outsiders to the region. Japan wants them
to be balanced with outsiders. At that last meeting of the ARF,
the ASEAN meeting in July, the Chinese foreign minister was there
for the meeting of ASEAN Plus One and ASEAN Plus Three (he made
the bilateral meetings) but the moment the ASEAN meeting turned
into the ARF he left. Not only did he leave because that was the
time at which the Americans came in at deputy secretary of state
level—because it was the first time the Secretary of State
for America did not come—but he went to Burma immediately
to console the Burmese who had been pressurised by the Americans
to give up the chairmanship of that session of the ARF. So he
made his position very clear and they made the statements at the
East Asian Summit in December saying that Australia had no role,
being as it is not an East Asian state.
Q45 Mr Illsley: Does that regional
integration as a group, that development of an East Asian community
group, have any impact on EU/UK trading relationships or trading
issues? Or is it not really relevant to that, as a trading body?
Dr Hughes: I do not think so because
it would include Japan and the Republic of Korea, and their interests
in maintaining solid relations with the EU are very high. Even
China, I think, as I have said earlier, wants to have good relations
with the EU. Given the nature of the exporting economies of the
region, the EU is still the main market, along with the US. So
I do not think so. There is a sort of feeling, and there has been
for a long time in the region, that there is a need for an East
Asian community and it is stronger in some places than others.
It is not just China; Malaysia has this feeling very much. Even
in South Korea there is increasing concern over the US. APEC,
of course, has been seen as pretty ineffective, largely because
the US has such a big role in it; it has more or less sabotaged
the original idea for an Asian community that was floated by Malaysia.
So this is not a new thing; it has resurfaced after a period of
being submerged by APEC, but the members of it are so diverse
that I do not think— unless it was to shrink to China, Malaysia
and Myanmar and a few others—it would have any impact on
EU relations. Singapore, again, is so closely tied to this country.
Q46 Sandra Osborne: In relation to
another organisation, can I ask you about APEC and how it fits
into all of these other regional groupings that have been set
up?
Professor Wall: I do not think
anyone takes APEC seriously any more; it is, effectively, dead,
it is just a talking shop and I do not know anybody who takes
it seriously but the Australians.
Sandra Osborne: That is straightforward
enough.
Q47 Mr Purchase: Can I follow that
point? I find that last remark quite interesting. What do you
think, in that connection of groupings—the position of China
in the region or, indeed, in the world—are the prospects
in the medium and longer term for China being entirely self-supporting
with all the natural resources it needs at its fingertips? Given
the last century, if you like, of cultural indoctrination, what
is the possibility of China simply standing alone?
Professor Wall: Zero. They know
that the quality of their life depends on engaging in trade. Deng
Xiaoping looked around and saw that the country's political complexion
did better if they were more open than closed. He began that opening
up process and nobody has ever had any doubts on that. There are
qualifications as to how exactly certain relationships will be
developed and maintained but they know that if the communist party
is to survive, as a leadership, they have to provide goodies to
the people, and the way they do that is by opening up.
Q48 Mr Purchase: You say "zero".
Professor Wall: They are zero,
yes. They are talking now of trying to become, just as the Americans
and the Europeans are becoming, more energy independent, and they
have got the biggest coal deposits in the world.
Q49 Mr Purchase: Zero? Fine. I am
minded to say to you that America is—I do not know—less
than a quarter of the size in landmass of China, it has about
a fifth of its population and yet the mid-western states of America
scarcely know the rest of the world exists. Zero for stand-alone,
do you think?
Professor Wall: Could they or
would they want to?
Q50 Mr Purchase: Could they.
Professor Wall: Well, if they
accepted a much lower standard of living, sure. But they are not
going to accept a lower standard of living.
Dr Hughes: China is becoming a
very globalised economy. I do not want to over-exaggerate that
but if it carries on like this then, in a sense, the government
in China will be managing one of the most globalised economies
in the world, with much of the ownership of the Chinese economy
being diversified outside China, and a lot of foreign investment,
and so on. So if you look at it another way round, it is becoming
far more integrated and the trick is how you balance that with
maintaining Chinese integrity and independence. I think that is
probably a more suitable way of looking at it.
Q51 Mr Purchase: So the prospect
is that the Chinese will work hard at developing appropriate regional
institutions?
Professor Wall: They will trade
off, as foreign ministers. Business is business. They will protect
countries like the Sudan in order to get access to their energy.
Where they can they are buying up raw material resources, so they
are signing long-term contracts with Australia, or buying into
raw material supplies in Australia; they are buying mines, they
are buying processing facilities; they are buying into Canada,
they are buying into the Athabasca oil sands—so they are
moving out. One of the strongest economic policies in China now
is to invest abroad and billions of dollars are pouring out of
China.
Q52 Mr Purchase: For 50 years the
relationship between India and China has been extremely difficult
on the border. Could you characterise the relationship for us
there?
Dr Hughes: Relatively good, at
the moment. The border issues are still there and there was an
incursion late last year from the Chinese side but it did not
get blown up into anything bigger. So these things are still going
on. I think it was not long ago, when the BJP were in power in
India, that the relationship was very bad and they were talking
about a nuclear arms race, and China being the number one enemy
of India, and with the change of government in India that has
died down. However, I think that sentiment still exists in India,
as with most of China's neighbours; there is still this concern
over what China's future intentions will be. At the moment they
are engaging in more economic co-operation. The consortium they
are setting up to bid for energy resources on world markets is
a new development which should be in both of their interests,
although they might not do world energy prices much good. So they
are beginning to see they have certain shared interests as rising
powers where they may be able to co-operate. That is still at
a very early stage and I think underneath it there are still these
tensions and the border issues are still there. There is also
the issue of Tibet which has a resonance in Indian politics and
is still a very emotional issue in India.
Professor Wall: There has been
a commission meeting now for more than a year on the question
of Chinese-occupied Kashmir. People forget there is a third bit
of Kashmir which the Chinese have occupied for sometime. They
have now integrated into their defence mechanism by building roads
from Lhasa to Aksai Chin. So with the opening of the railroad
now through from Sichuan into Lhasa, Chinese-occupied Kashmir
is an important part of what they see as the defence of their
borders. I do not see any solution coming out of that committee
which has been meeting. The Chinese proposed, at one point, that
this become an autonomous republic but the Indian side refused
to consider it.
Q53 Mr Purchase: Vajpayee was probably
a more willing partner for the Americans during his Premiership.
He has now gone, Congress is there but India continues to prosper
considerably. What role are the Americans now playing in that
relationship, if any, that you can discern?
Dr Hughes: I think the US attitude
to India is based more on these Central Asian issues and Pakistan
rather than on China. I think the focus is slightly different.
The US has now accepted India as a nuclear power and is even encouraging
it to develop civilian nuclear power and so on. So the relationship
is very good between Washington and New Delhi. Even the relationship
between India and Pakistan is relatively good at the moment, and
again there can be many reasons for this. I do not think any of
them are to do with China, though, in particular. I do not think
the US sees India as a sort of balance for China, or anything
like that. The only people who might see that might be Japan.
I think the Japanese have made various overtures towards India
recently and they seem to be discussing the possibility of a sort
of partnership.
Q54 Mr Purchase: You do not discern
evidence of American influence or interest in India/Chinese relationships,
particularly vis-a"-vis economic development?
Dr Hughes: Nothing in particular,
no.
Q55 Ms Stuart: On India, I want to
very briefly just invite you to comment on the snapshots of outsiders
looking at India and China. The assessment tends to be made that
there is China, which has huge problems with demography compared
to India, which has a much healthier demography, but as a market
India is more regulated, other than the service industry, and
therefore China is potentially much more entrepreneurial. Also,
very much different savings patterns. If I were to say to you
in ten years' time which one is going to be a stronger economy,
India or China, where would your money go?
Professor Wall: I do not know.
Q56 Chairman: We like your honest
answers, Professor!
Professor Wall: They both have
big problems. At the moment, the Government of India is doing
fairly well. Manmohan Singh is a Cambridge-trained liberal economist,
and he has been around for many years and knows how to play the
system (I worked with him on some liberalisation programmes some
30 years ago) but he cannot go on forever. He is already beginning
to run into resistance from the bureaucracy, which see their position
as threatened. We do have a meeting on that at Chatham House on
2 March.
Q57 Ms Stuart: I am afraid we are
in the United States on 2 March, so we cannot be there.
Professor Wall: We will record
it for you. They have the advantage that they speak English, which
helps in the service sector, although the ability to speak English
in China is growing rapidly. So that will not last forever.
Q58 Mr Hamilton: We talked earlier
about how China's economic needs, and especially its energy needs,
are determining its foreign policy, and particular aspects of
its foreign policy. I think the figures that I was quoted were
that China could be consuming the entire output of Saudi Arabian
oil production by 2015. What impact do you think China's close
relationship with Saudi Arabia (and I gather there was a visit
by President Hu on 23 January who met with King Abdullah—following
our lead because we met with him in November) will have on China's
view of the Middle East peace settlement that is so crucial to
getting stability? I am thinking, particularly, of Israel and
the Palestinians. I am not asking for a view on the election,
just simply whether China's dependence on Saudi Arabia is going
to, in some way, make it take a particular view of that conflict,
because of its economic and foreign policy needs.
Professor Wall: They are making
every effort to diversify their sources of energy so they are
not dependent on any single source. In the last few days they
have signed a major agreement with Australia for the supply of
gas from Australian fields and they are signing up long-term contracts
with Africa. They are competing with India in many contracts and
they are attempting to get strong commitments from Russia—which
Russia has not yet given, by the way. The Russians have only got
short-term agreements to supply oil by railroad for some years
to come. The Russians have still not committed the pipelines.
They are developing the Central Asian republics' oil and gas fields
and building the pipelines in and they have aspirations to turn
the Caspian pipelines round into China. So wherever they can they
are diversifying the sources so they do not become dependent.
They also, like the Americans, are beginning to give much more
attention to clean coal technology—and even dirty coal technology.
So they know the risks. Iran, also, is a major—
Q59 Mr Hamilton: We will come on
to Iran in a minute. Obviously, there has been some co-operation
since the 1980s on civil nuclear power there. Again, I wondered
whether either of you thought that the result of the close co-operation
between Iran and China—and I believe China supplied weapons
during the Iran/Iraq war to Iran—might mean they would not
be willing to vote for sanctions, if it came to that, after the
referral of the IAEA to the Security Council. If, indeed, that
happened.
Dr Hughes: I think, again, we
go on past record and I do not see any change. They are not in
a position to confront the United States on these issues—that
is the bottom line. The most they will do is abstain on these
issues. I do not think they will play a particularly positive
diplomatic role either, which is maybe disappointing. I just do
not think they feel that they are capable of that, and this is
the asymmetry in their diplomacy, if you like, that their global
interests are becoming very diverse and widespread but they do
not have the diplomatic or military aspects of their power to
deal with this. So there is no real sign of that changing, at
the moment. I think all they can do is advocate negotiation and
compromise, but if it comes to confronting the US in the Security
Council—
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