| Economics
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| 1. | We conclude that the growth of China's trade will continue to have an enormous impact on the world economy, both by providing consumers with cheap goods and by presenting manufacturers with a serious challenge, although China's dependence on foreign direct investment could increase the potential for economic shocks. We further conclude that Chinese companies will strive to increase the technological content of their products and so the challenge for companies competing in this sector will be very likely to intensify. However, foreign investors and traders can profit greatly from these transformations, provided China adheres to its World Trade Organisation commitments. We recommend that the Government work both bilaterally and with its EU partners to engage its counterparts in Beijing to ensure that China works within the spirit, and not just the letter, of its World Trade Organisation obligations. (Paragraph 19)
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| 2. | We conclude that the world must take account of the economic changes occurring in China and cannot simply close the door on Chinese goods; any attempts at protectionism would damage attempts to bind Beijing effectively into the existing international order. We further conclude that the preservation of the global multi-lateral trading structures has become more important than ever with the emergence of the Chinese economy. We recommend that the United Kingdom maintain its championship of free trade between the European Union and China, by working with other advocates of free trade within the EU to support trade with China. We conclude that China must not resort to unfair trade practices such as dumping and must work within the existing rules in order to strengthen support for free and fair trade within the EU. (Paragraph 24)
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| 3. | We conclude that the Government must urge its counterparts in Washington and in the EU not to succumb to the temptations of protectionism, even in the face of growing trade frictions such as those over the value of the Chinese currency. We further conclude that the protection of intellectual property rights is essential for the effective functioning of a creative, innovative economy. Unless the Chinese government takes greater steps to establish secure intellectual property rights, tensions between China and its trading partners will grow and domestic innovation will suffer. We recommend that the Government work with the Chinese government to establish a legal framework in which intellectual property rights can be enforced, and we recommend that it set out in its response to this Report how it is doing so. (Paragraph 32)
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| 4. | We conclude that China's growing income inequality is a matter of concern. We commend the Chinese government's initiatives to close the income gap. We further conclude that China's appetite for economic reform provides a great opportunity for the United Kingdom to work with Chinese policymakers. We recommend that the Government set out in its response to this Report how the United Kingdom is engaging its Chinese counterparts on economic and social reforms and that it identify in which areas of British expertise, such as welfare provision, might best help the Chinese government to straddle the divide. (Paragraph 41)
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| 5. | We conclude that until the banking system undergoes successful reforms, its weakness could undermine China's economic progress. We further conclude that the United Kingdom has much to offer, in terms of expertise in corporate governance and transition issues. We recommend that the Government set out in its response to this Report how it is helping the Chinese authorities to tackle the problem of reforming China's banking system. (Paragraph 44)
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| 6. | We conclude that energy supplies present a constraint on China's economic growth, and that China's need for raw materials and imported energy sources has an impact on the interests of the United Kingdom by driving up demand for oil and other resources. We recommend that the Government explore measures to co-operate on a European level with the Chinese authorities to establish a common framework within which the development of renewable energy and energy efficiency technologies can take place at a greater pace and that it set out in its response to this Report what steps it is taking to do so. (Paragraph 52)
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| 7. | We conclude that environmental degradation is a major impediment to the sustainability of the growth of the Chinese economy, and that the United Kingdom has a strong interest in helping the Chinese overcome internal stresses since they easily translate into external stresses. We further conclude that the United Kingdom and its European partners have a large stake in encouraging the reduction of carbon emissions in China to counter global warming, since any reduction of emissions by the United Kingdom will have a negligible effect if China does not take similar steps. We recommend that the Government increase its support for environmental projects in China, particularly in areas such as water supplies and carbon emissions. We further recommend that the Government provide support to British companies with expertise in areas such as environmental management seeking opportunities in China. (Paragraph 61)
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| 8. | We conclude that the United Kingdom's market share in China is lagging behind its competitors, and that the Government must do more to support British business in China. (Paragraph 68)
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| 9. | We conclude that Expo 2010 presents a key opportunity for the Government to support British business in China, and we recommend that the Government sign up to Expo 2010 forthwith. We further recommend that the Government undertake a review of Whitehall structures dealing with China to ensure that they operate together in an co-ordinated fashion, so as to avoid leaving the United Kingdom and its businesses at a disadvantage when dealing with China. (Paragraph 75)
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| 10. | We conclude that the Government must seek to ensure that lines of responsibility between UK Trade and Investment, the China-Britain Business Council, the British Chambers of Commerce and Regional Development Agencies are clear and that there is no duplication of work, so that smaller businesses seeking to 'take the China challenge' do not face duplication of costs and services provided by the range of organisations. We recommend that the Government increase the number of high level ministerial visits to China in support of British business. (Paragraph 81)
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| 11. | We conclude that the United Kingdom must attain greater proficiency in East Asian languages and cultures or face a diminution of influence in a very dynamic region. We recommend that the Government redouble its efforts to support the teaching of Chinese and other East Asian languages in schools and universities in the United Kingdom. (Paragraph 85)
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| China's Rise and its Impact on Foreign Policy and Security
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| 12. | We conclude that China's policy towards resources threatens the market-based mechanisms on which Western states rely for supply, and that Beijing's attitude to business with states which the international community has condemned for their behaviour damages efforts to uphold international standards in human rights and good governance. We recommend that the Government increase its efforts to persuade the Chinese authorities that they have a strong interest in the maintenance of international standards and that working with or supporting outcast regimes will damage China's reputation and could set Beijing on a course in opposition to other major members of the international community. (Paragraph 95)
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| 13. | We conclude that Beijing's support for regimes in Africa which flout existing norms, such as Sudan and Zimbabwe, damages both the interests of Western states like the United Kingdom, and also China's own long term interests, since corrupt, brutal and incompetent regimes make unreliable partners. We recommend that the Government urge the Chinese to support the referral of the Darfur and Zimbabwe situations to the UN Security Council. We further recommend that the Government increase the resources of the Foreign and Commonwealth Office dedicated to monitoring Chinese activity in Africa. (Paragraph 99)
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| 14. | We recommend that the Government urge its counterparts in Beijing to use their influence in regions such as the Middle East and Latin America to work in concert with the international community to settle controversial issues in an equitable manner and to play a positive role in the resolution of the Iran crisis. (Paragraph 103)
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| 15. | We recommend that the Government maintain its support for China's growing prominence at the United Nations and encourage the Chinese authorities to view their permanent membership of the Security Council as a means to influence the international community, rather than simply as a useful tool with which to defend narrow national interests. (Paragraph 109)
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| 16. | We conclude that the USA continues to play a huge role in the maintenance of stability in East Asia. We further conclude that the maintenance of peace and security in East Asia is profoundly in the United Kingdom's interests. We recommend that the Government draw on the UK's involvement with and knowledge of NATO and of regional organisations in Europe, such as the Council of Europe, the Organisation for Security and Co-operation in Europe and the European Union, to encourage debate about the institutionalisation of security issues in East Asia. These organisations provide useful models for any indigenous security structures which might broaden the security system from one based on alliances into one of mutual interdependence. (Paragraph 120)
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| 17. | We recommend that the Government continue to work with its EU partners to expand the resources dedicated to strategic issues in East Asia, so that policy makers take a range of other matters into account in addition to economic relations. We conclude that the new Partnership and Co-operation Agreement might be an effective venue for tackling strategic issues, as well as other important concerns such as human rights and the environment. (Paragraph 125)
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| 18. | We recommend that the Government work within the EU to maintain the arms embargo on the People's Republic of China. We further recommend that the Government stay in close contact with its US counterparts on this issue and explain US sensitivities to its EU partners, as part of its broader efforts to strengthen transatlantic ties and to ensure the embargo stays effective. (Paragraph 134)
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| 19. | We conclude that an effective and constructive Sino-American relationship is a fundamental condition for the maintenance of peace and security in East Asia. The growing strength of the relationship is therefore welcome. We recommend that the United Kingdom support both the USA and China in their efforts to entrench a process of 'managed interdependence' in Sino-US ties, perhaps by drawing on British expertise in working within frameworks such as the Organisation of Security and Co-operation in Europe (OSCE). We also recommend that the Government work to support the US vision of China as a global stakeholder and to assuage any misgivings in Beijing about US motives. (Paragraph 144)
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| 20. | We conclude that Taiwan's exclusion from bodies addressing concerns in areas including health and environment is unsatisfactory, particularly with the spread of avian influenza. We recommend that the Government set out in its response to this Report what measures it is taking to ensure that Taiwan takes a fuller part in organisations tackling such matters, and its attitude towards full membership of the World Health Organisation (WHO) for Taiwan. (Paragraph 156)
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| 21. | We conclude that the Chinese military build-up across the Taiwan Straits threatens peace and stability in East Asia. We recommend that the Government support US efforts to preserve peace and stability in the Taiwan Straits. We further conclude that the growth and development of democracy in Taiwan is of the greatest importance, both for the island itself and for the population of greater China, since it demonstrates incontrovertibly that Chinese people can develop democratic institutions and thrive under them. We further recommend that the Government and its partners in the EU make clear to the Taiwanese government that it should not provoke a crisis by acting in an impetuous manner and continue to urge all parties in the Taiwan dispute to seek a peaceful resolution of the problem. (Paragraph 173)
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| 22. | We recommend that the Government should increase contacts with Taiwan at a political level, especially between elected representatives of Taiwan's vibrant, young democracy and of elected members of the United Kingdom's democratic system. It should be made clear, however, that such contacts do not constitute recognition of Taiwan as a state and that the policy of the Government is not to recognise Taiwan as a state. We further recommend that the Government increase the number of informal ministerial visits to Taiwan so as to strengthen economic links between Taiwan and the United Kingdom in a manner commensurate with the size of its economy. (Paragraph 179)
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| 23. | We conclude that the launch by North Korea of a series of missiles on 4 July 2006 was calculatedly provocative and unacceptable. We recommend that the Government and the UN continue to urge North Korea to return to the Six Party Talks forthwith, and to call on the DPRK to adhere to its commitment to a moratorium on missile testing. (Paragraph 193)
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| 24. | We conclude that, lack of verification notwithstanding, it would be irresponsible for the Government to assume that North Korea had not developed a nuclear weapon or weapons. We further conclude that the risk of a nuclear accident occurring in North Korea is significant, and recommend that the Government set out, in its response to this Report, its assessment of the likelihood of this scenario, possible effects, and the UK's strategic planning to react to such an event. (Paragraph 196)
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| 25. | We conclude that, although it is not possible to verify North Korea's possible stocks of biological and chemical weapons, the risk of an ongoing programme remains real. We therefore conclude that the Government is right to regard North Korea as a potential proliferation risk, and to act accordingly. We further conclude that North Korea's exports of missile technology pose a threat to peace and security. We recommend that the Government sets out in its response to this Report, what measures it believes can be taken to restrain or stop these sales. (Paragraph 202)
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| 26. | We conclude that it is not clear how the Six Party Talks will be carried forward, and that the US policy of increasing pressure on the North Korean regime may be entrenching the divisions between the parties. We recommend that the Government use its relationship with the US to suggest a more flexible and pragmatic approach, in the interests of reconvening the Six Party Talks as soon as possible. We further recommend that the UK maintain its strong relationship with the Republic of Korea. (Paragraph 228)
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| 27. | We conclude that productive links between China and Japan are essential for peace and stability in East Asia, and we regret the deterioration of those ties to the 'verge of dysfunctional'. We also conclude that the dispute over the Senkaku/Diaoyu Islands in the East China Sea is most worrying. We recommend that the Government set out in its response to this Report what it is doing to improve dialogue between Beijing and Tokyo. (Paragraph 246)
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| 28. | We welcome the development of institutions in East Asia which strengthen links between the regional states. However, we recommend that the Government monitor developments closely to ensure that a group does not develop which might discriminate against EU trade. (Paragraph 252)
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| 29. | We conclude that the growing links between Russia and China present a particular concern for the United Kingdom and other advocates of human rights as well as democratic and pluralistic values, since their new ties may signal the emergence of an authoritarian bloc opposed to democracy and Western values in Eurasia. We further conclude that the Shanghai Co-operation Organisation has the potential to evolve into an alliance of authoritarian powers opposed to the West, and may aid China's efforts to establish control over Central Asian energy reserves. We recommend that the Government set out in its response to this Report how it is expanding its presence in Central Asia, and how it is monitoring Chinese activity in the region, so as to nurture democracy and Western values in Central Asia. (Paragraph 261)
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| 30. | We conclude that the confidence-building measures which have taken place are playing a positive role in reducing tensions in the South China Sea and encouraging dialogue. However, we further conclude that the potential for conflict remains. We recommend that the Government set out in its response to this Report its assessment of this complex dispute. (Paragraph 266)
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| Politics |
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| 31. | We recommend that the Government continue to make the case to their Chinese counterparts that a vibrant civil society can offer benefits to both government and people, and should be encouraged, in the interests of involving more of the population in systems of governance and advocacy. We further recommend that British Council resources for projects in this area be enhanced. (Paragraph 291)
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| 32. | We conclude that the development of China's independent media is crucial to the evolution of a more pluralistic society in the PRC. We recommend that the Government continue to sponsor projects improving the skills of journalists in China. We further conclude that the Regulations Concerning Foreign Journalists and Permanent Offices of Foreign News Agencies are not acceptable in a modern state, particularly in a state that will be hosting the Olympic Games in 2008. We recommend that the Government ask the Chinese Government to revoke the Regulations before the Games take place. (Paragraph 297)
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| Human Rights |
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| 33. | We recommend that the Government set out, in its response to this Report, what progress has been made since it gave a pledge to our predecessor Committee, over five years ago, towards ratification by China of the International Covenant on Civil and Political Rights. (Paragraph 321)
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| 34. | We recommend that the Government encourage the Chinese government to introduce legislation prohibiting courts from accepting evidence procured through torture, and that it offer to advise the Chinese government on UK best practice in eliminating abuse in prisons and police facilities. (Paragraph 331)
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| 35. | We conclude that Re-education Through Labour is, in many cases, tantamount to torture, and recommend that the Government upgrade the urgency with which it addresses this issue with the Chinese government. (Paragraph 334)
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| 36. | We recommend that the Government consider funding a project through the Global Opportunities Fund to promote religious freedom in China. We further recommend that the Government communicate to the Chinese authorities the positive influence which religious groups can have on social stability, in the interests of encouraging progress to be made on this issue. (Paragraph 339)
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| 37. | We conclude that the collaboration of Western internet companies in the censorship and policing of the internet for political purposes is morally unacceptable. We further conclude, however, that it is in the interests of Chinese internet users that as much information be available for browsing as possible. We recommend that the Government put pressure on the Chinese government to relax its censorship of the internet and its requirement for foreign companies to restrict the political content of their pages. We further recommend that the Government represent to the Chinese authorities the damage which is done to economic growth by continued restriction of the free flow of information. (Paragraph 343)
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| 38. | We recommend that the Government continue to raise human rights at the highest levels with Chinese counterparts, and do not flinch from making public statements where appropriate. (Paragraph 349)
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| 39. | We recommend that the Government, which clearly believes that the UK-China Human Rights Dialogue achieves results, make greater efforts to ensure that this is obvious to others, such as ourselves and NGOs. We further recommend that NGOs be invited to have observer status at the dialogue. We recommend that, in its response to this Report, the Government set out what steps are taken to follow up issues raised in each round of the dialogue. We recommend that the Government publish a summary of objectives before, and outcomes after, each round. We further recommend that the Government seek the agreement of its EU partners to the adoption of these same procedures in relation to the EU-China Human Rights Dialogue discussed in paragraphs 357-359 below. We recommend that the Government set out, in its response to this Report, in what other meetings human rights are raised, at official level, with the Chinese authorities, apart from during the human rights dialogue. (Paragraph 352)
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| 40. | We recommend that the Government conducts a rigorous analysis of the long-term impact of each of its Global Opportunities Fund projects in China, and publish the results. (Paragraph 354)
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| 41. | We recommend that the Government set out, in its response to this Report, what can be done to improve the transparency of the Berne group process. (Paragraph 359)
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| 42. | We conclude that the Chinese assertion that the Dalai Lama advocates Tibetan independence flies in the face of public statements made by the Dalai Lama. We recommend that the Government continue to press the Chinese to allow the Dalai Lama to return to Tibet in his capacity as spiritual leader. (Paragraph 369)
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| 43. | We conclude that Beijing's insistence on controlling the appointment of the next Panchen Lama is a serious abuse of the right of freedom of religion. We recommend that the Government press for the recognition by the Chinese of the right of Tibetan religious leaders to choose the next Panchen Lama according to their religious beliefs and practices. (Paragraph 372)
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| 44. | We conclude that the economic development of Tibet is to be welcomed, if it brings improvements to the living standards of ordinary Tibetans, and if Tibetan people have ownership over the process. We recommend that the Government urge its Chinese counterparts to improve the degree of Tibetan involvement in development decisions and emphasise to the Chinese the beneficial effect of such involvement on social stability. (Paragraph 375)
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| 45. | We conclude that freedom of religious belief and worship in Tibet remains significantly restricted. We recommend that the Government continue to press this issue with its Chinese counterparts, emphasising the beneficial influence which religious freedom can have on social cohesion. (Paragraph 380)
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| 46. | We conclude that the Tibetan people have a right to conduct their economic and social lives in the Tibetan language; that Tibetan culture should be preserved; and that Tibetan secular and religious buildings of architectural, historic and religious significance should be protected. We recommend that the Government urge the government of the Peoples Republic of China to strengthen the use of Tibetan in the education system in the Tibetan Autonomous Region and other ethnic Tibetan areas. (Paragraph 386)
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| 47. | We conclude that repressive Chinese policies in Xinjiang are reprehensible. We recommend that the Government continue to monitor developments in Xinjiang closely. (Paragraph 391)
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| 48. | We conclude that the package of constitutional changes presented by the Chief Executive in December 2005 was a very limited measure which did not go far enough towards the introduction of representative democracy and universal suffrage. (Paragraph 400)
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| 49. | We recommend that the Government urge the Hong Kong Special Administrative Region to make significant, major steps towards representative democracy and to agree with Beijing a timetable by which direct election of the Chief Executive and LegCo by universal suffrage will be achieved. (Paragraph 402)
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| 50. | We conclude that, despite some concerns, overall Hong Kong remains a vibrant, dynamic, open and liberal society with a generally free press and an independent judiciary, subject to the rule of law. (Paragraph 404)
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| 51. | We recommend that the Government ensure that its strategy on China recognises the continuing economic importance of Hong Kong in its own right, and its role as a gateway to China. We recommend that the Government work with business organisations to identify priority sectors which could benefit from opportunities in Hong Kong, and to offer assistance in delivering market research and trade promotion. (Paragraph 413)
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| 52. | We recommend that the Government set out, in its response to this Report, what progress has been made on the issue of visa-free travel worldwide, by holders of British National (Overseas) passports resident in Hong Kong, and what efforts the Government has made to improve this position. We further recommend that the Government build support within the Council of Ministers for the European Commission proposal to allow visa-free travel to the Schengen area by British National (Overseas) passport holders, to ensure that the proposal is agreed by the Council as soon as possible. We further recommend that the Government set out, in its response to this Report, what potential obstacles, if any, there may to the successful adoption of the proposal. (Paragraph 418)
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| The UK in China |
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| 53. | We conclude that the Government's decision to increase the numbers of its personnel in China is welcome, but we recommend that the Government consider establishing smaller posts or nodes for diplomatic activity in other parts of China, owing to the size and variety of the country, as part of an overall review of the deployment of FCO resources. We further recommend that the Government increase the numbers of personnel in the FCO dedicated to strategic work in posts in China alongside its planned expansion of the economic, energy and environment sections. (Paragraph 423)
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| 54. | We conclude that the Government should continue to strengthen its East Asian expertise. We further conclude that all UK diplomatic duties should be concentrated under one roof in Beijing and recommend that the Government consider establishing a new Embassy with adequate space. (Paragraph 426)
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| 55. | We conclude that the work of the British Council plays a valuable role in efforts to broaden understanding of the United Kingdom in China, which could have a beneficial impact on British business links in China and also on the world class status of the United Kingdom's educational institutions. We recommend that the Government consider the British Council's school links programme in China as a model for school links with other countries. (Paragraph 429)
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| 56. | We conclude that ties between the United Kingdom and China's higher education institutions are welcome both because they strengthen ties and because of the business opportunities in China. We recommend that the Government continue to offer support for British universities seeking to engage with China. (Paragraph 432)
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| 57. | We conclude that strengthening understanding of China is most important and we recommend that the Government continue its support for the Great Britain China Centre. (Paragraph 435)
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| 58. | We conclude that the Government must continue to make strong representations on behalf of the BBC to the Chinese government about the continuance of jamming of BBC World Service broadcasting. (Paragraph 438)
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