The
Committee consisted of the following
Members:
Chairman:
Mr.
Mike
Hancock
†
Brady,
Mr. Graham
(Altrincham and Sale, West)
(Con)
†
Burns,
Mr. Simon
(West Chelmsford)
(Con)
†
Cunningham,
Tony
(Workington)
(Lab)
†
Fisher,
Mark
(Stoke-on-Trent, Central)
(Lab)
†
Havard,
Mr. Dai
(Merthyr Tydfil and Rhymney)
(Lab)
Hunter,
Mark
(Cheadle)
(LD)
†
McCartney,
Mr. Ian
(Minister for
Trade)
†
Mullin,
Mr. Chris
(Sunderland, South)
(Lab)
†
Rennie,
Willie
(Dunfermline and West Fife)
(LD)
†
Smith,
John
(Vale of Glamorgan)
(Lab)
†
Turner,
Mr. Neil
(Wigan)
(Lab)
†
Walker,
Mr. Charles
(Broxbourne)
(Con)
†
Wallace,
Mr. Ben
(Lancaster and Wyre)
(Con)
Glenn
McKee, Committee
Clerk
†
attended the Committee
European
Standing
Committee
Wednesday 31
January
2007
[Mr.
Mike Hancock
in the
Chair]
EU-China Relationship
2.30
pm
The
Minister for Trade (Mr. Ian McCartney):
Hopefully, by the end of the sitting we will have brought some
enlightenment to four quite complex and not totally interrelated
documents, although they do, of course, relate in one form or another
to the relationship between the European Union and China and, alongside
that, to our bilateral arrangements.
As I always say on these
occasions, if there are any issues about which I could give a fuller
answer to Opposition Members and others following our discussions, I
will write to hon. Members and place a copy of the letter in the
Library. I will be happy to take and respond to questions after the
event, should they have issues that they feel they should have raised
or would like to raise in future. Given the nature of the country and
the region with which we are dealing, it is in all of our interests to
pull together for Britain’s long-term interests.
It is an
unenviable challenge to do justice to the four documents. They
represent a genuine and significant examination of the
Community’s developing relationship with China, and the
potential challenges and benefits of that. I shall summarise briefly
the key themes of each paper and set them in the context of the
Government’s ongoing work to engage with China, both bilaterally
and through the EU.
The first and
main document, “EU-China: Closer partners, growing
responsibilities’, examines the issues arising from
China’s re-emergence as a key global player, and suggests how
our relationship must evolve and strengthen to manage the challenges
and realise the opportunities presented by the rise of China. The
document emphasises the intrinsic link between the closer ties between,
and increased responsibility of, both sides. It also highlights the
need for a strong and effective multilateral system, and increased
transparency and openness in our economic and political relations. A
supporting document, “EU-China trade and investment: Competition
and Partnership”, cogently sets out the benefits to China and
the Union of an open and equitable trade relationship and the
challenges presented by achieving that. The two documents were broadly
endorsed by the Council of the European Union in December
2006.
China is now
the world’s fourth largest economy and the European Union is its
largest trading partner. To maintain the levels of growth that has led
to that situation, both China and the EU need to maintain open markets
and promote fair competition. Some European companies will have to
adjust and refocus their efforts, particularly in sectors in which
direct competition from China is fiercest. The European globalisation
adjustment fund, which is the subject of
the third document, is designed to assist them. We particularly welcome
the focus on equipping workers to re-enter the labour market as quickly
as possible using active measures and targeted assistance.
The thoughts and strategies
laid out in the documents mirror our key objectives, which are to
foster China’s emergence as a responsible global player, promote
sustainable development, modernisation and internal reform in China,
and to get the best out of the rise of China for the UK.
Trade apart, China is
increasingly influential in deciding the shape of the world through
multilateral forums, such as the United Nations, and through its
bilateral relations. Agreements with China, such as those promoting
stability in the middle east and the Security Council resolutions on
countries such as North Korea, have already brought benefits. Together
with the EU, we will work for closer co-operation and better
understanding on matters such as engagement with Africa. The shared
commitment of the EU and China in September 2006 to a structured
dialogue on Africa was particularly welcome. It is fitting that the
Vice-Chairman of China’s Foreign Affairs Committee, Ji Peiding,
whom I had the pleasure of meeting last year, was a commissioner for
the Commission for Africa, whose report served as an important
contribution to the themes and outcomes of the Gleneagles 2005 G8
summit.
Of course, the
process of change is not external to China’s borders. Rapid
development in China presents domestic opportunities and challenges for
the Chinese Government, which brings me to the second of our
objectives: the promotion of sustainable development, modernisation and
internal reform within China. Those are critical to the practical
success of the proposals in the main document. China faces domestic
challenges arising from growing social inequality; the move from rural
to urban areas; the emergence of an articulate middle class; the
development and use of the internet; and the inability of the Chinese
Government to control completely what people say and do, or to exercise
control in a way that would traditionally be seen as a reasonable
response. Other domestic challenges include the increasing
environmental impact of energy consumption and the difficult transition
to a path of sustainable development. As I outlined, our interests are
bound up more than ever with China’s continued success. That
success requires political stability and a stable and sustainable
growth.
The best way
to secure those conditions is through progressive legal and political
reform with freedom of expression and a certainty that the rule of law
will provide. We do not shrink from engaging China on difficult issues
such as human rights through a variety of bilateral and multilateral
forums. Co-operation in some of those areas is already welcomed by
China, such as the joint project on the near-zero emissions coal power
plant, which I negotiated in my last visit to the country and on which
we have been pushing for a more ambitious timetable for its deployment
and for co-operation with ourselves and the European Union. In other
cases, my comments were less welcome.
Consideration of the first two
of the UK’s key objectives in the context of the Commission
papers brings me, naturally enough, to the third area: to get the best
for the UK from China’s rise. It is clear that
this objective is directly related to the first two because we stand to
gain if China plays her part as a responsible global player and if her
internal policies enable her to do that with confidence.
Additionally, the United
Kingdom, with an open and flexible economy—qualities that will
develop as the years go by—is well-placed to benefit through
trade. For example, last year, in a deal worth £425 million, Air
China became the first Chinese carrier to select Rolls-Royce Trent 1000
engines to power its fleet of 15 Boeing 787 Dreamliners.
Looking towards 2008, global
design and engineering firm Arup is currently designing some of the
highest profile projects for the Olympic games in Beijing, including
the Olympic stadium. It will work alongside a Chinese design institute
to design the terminal building for Yunnan Kunming International
airport, which is set to become the fourth largest airport hub in
China.
I am also
pleased that the UK will participate in the Shanghai World Expo in
2010, and I am co-ordinating our efforts in preparation for that and
what we hope will be a successful year of events called “Better
city, better life.” Since the Prime Minister announced that in
August, we have been laying the foundations of the project and building
a core group of stakeholders across government and the private sector
who will work with us to make this a success. I hope that I will soon
be able to tell the House about the design competition in the spring
and how it will operate, and I will offer the opportunity to meet the
people who are involved in that and those who are carrying out the
project. It is important that all parties know that the process is
transparent, and I would welcome their involvement at an appropriate
stage. I shall write to hon. Members about that over the next few
weeks.
Finally, the
fourth paper looks at the possibilities for co-operation with Hong Kong
and Macao. This has been identified as relevant to the debate. Our
views are set out in the accompanying explanatory memorandum in which,
among other things, we repeat our belief that Hong Kong should advance
to a system of universal suffrage as soon as possible. In that regard,
I understand that the Westminster Foundation for Democracy, with which
all political parties are engaged, has begun to consider practical ways
in which it may be able to work with Hong Kong’s political
parties to support this development. I understand that the Hong Kong
sub-committee of the all-party group on China visited Hong Kong in
September to have discussions not just with the Hong Kong Government,
but with civil society there.
The Government share the EU
policy of constructive engagement with China. The Prime
Minister’s dialogue with Premier Wen is at the apex of this
strategic partnership, and they are mutually re-enforcing the
EU’s policy of constructive engagement. I would be delighted to
share with the Committee in more detail my thoughts on the papers and
the work that the Government have been doing. I look forward to a
constructive dialogue and hope that we answer questions in an effective
way. I welcome comments and any ideas for improving how we engage in
the relationship, and I shall be happy to address any issues colleagues
want to raise regarding human rights
or other matters. I remind the Committee—this is a bit of a
plug—that tomorrow the Select Committee on Foreign Affairs has a
two-and-a-half, if not three, hour debate on this very subject, so hon.
Members will have two bites of the
cherry.
The
Chairman:
Thank you, Minister, for giving a clear and
helpful statement, as always, and for the offers that you made to
members of the Committee.
We have until 3.30 pm for
questions. The plan is that I will move from Member to Member, across
the room, rather than call one to ask a number of questions in
succession. That will be better both for how the Committee operates and
for the Minister in responding.
Mr.
Graham Brady (Altrincham and Sale, West) (Con): I welcome
you to the Chair, Mr. Hancock, and join you in welcoming the
Minister’s courteous and constructive remarks. He will be aware
that Lord Grenfell from the European Union Committee in the other place
wrote to the Minister for Europe with his assessment that the
Commission has shown “timidity” in criticising the
Chinese Government over human rights issues. Does the Minister believe
that the Commission is more or less robust than the UK Government in
that
regard?
Mr.
McCartney:
The hon. Gentleman asks a controversial
question in an adroit way. I shall answer it in a certain way because,
as he knows, I am a diplomat of many years’ standing on the
political stage.
In many
respects, we have a co-operative approach. We have multilateral
relationships within the EU-China relationship, and we support
wholeheartedly the programme of activities that the EU is engaged in. I
will talk about that in a moment and about the problems of the work
that we are doing.
The truth of the matter is that
human rights issues must be sustained over a long period. Sometimes
people will want a dialogue on that and sometimes they will not. A
practical way must be found to discuss those things on which they are
prepared to have a dialogue and to ensure that a programme of practical
activities is put in place to achieve an outcome. In that respect, the
rule of law, the freedom of speech, religious association, the right to
a fair trial, the protection of minorities in Tibet and other areas, an
international covenant in civil and political rights, and a human
rights dialogue are at the core of our activities with China. A great
deal of human and financial resources may be involved in some of that
work. I will share more detail on that with the hon. Gentlemen on
another occasion.
It
is critical that we support the EU and that it supports us in return.
On 5 February, the next part of the human rights dialogue between us
and China will commence. In addition, we must agree with China and the
EU about the next stage of the next programme—both the extent
and depth of it and the issues that need to be raised. Rest assured
that we are working together. There is slow progress in some areas and
quicker progress in others.
Mr.
Brady:
I am grateful for the opportunity to pursue the
matter a little further. I absolutely endorse and understand the
Minister’s approach. It is not a simple issue. Given that it is
necessary to balance the development of deeper
relationships—particularly the commercial relationships between
the UK and China and the EU and China—it is also important that
our EU partners should not take a less robust or serious position on
human rights than the United Kingdom. I hope that his response was an
assurance that that is not the
case.
Mr.
McCartney:
Let me be absolutely clear that it is an
assurance. To be fair, it is also true to say that China is a different
place from what it was four, five or 10 years ago. For example, it is
being very constructive on the Human Rights Council. It is critical
that we work alongside China at international forums. We are proactive
in our relationship with China, engaging in dialogues not just on human
rights but on civil society, freedom of the press, freedom of religious
expression, fair trial and the rights of public defenders to operate
effectively on behalf of those who have been charged. In all those
areas there has been significant progress, and we have agreed practical
programmes of work with the Chinese.
Who would have thought even two
years ago that China would be the sponsor of party talks on North
Korea? Who would have thought that it would vote in the way that we
wanted when the UN Security Council condemned Burma and that it would
also criticise it for its lack of reform, or that it would take a
leading role in the debate on Iran and the region? China has been a
proactive partner in that. Yes, we have differences over some issues,
but that will be the case for some time. To be clear, we are moving a
long way in many areas. Even in those things on which there is
difficulty, persuasion works, but it takes a lot of time and effort; we
have to be in it for the long haul. In that regard, we and others in
Europe are working proactively, as is the Chinese ambassador. I must
give him credit for the time and effort that he has been prepared to
put in with me and my officials on this issue.
Mr.
Chris Mullin (Sunderland, South) (Lab): What dialogue has
there been between either the EU or this country and China about China
in Africa? As the Minister will know, the Chinese President is touring
Africa, where it appears that the agenda on improving good governance
is different from that in much of the rest of the world. If we are not
careful, that could undermine all the efforts that have been
made—with some success—to resolve some of the conflicts
and difficulties in Africa. I think particularly of Darfur, where the
Chinese play a crucial role in relation to the Sudanese Government, and
of the loans that they are agreeing with countries such as
Angola—and possibly Zimbabwe, too—on terms that are
rather more generous and rather less onerous than those countries could
ever expect from international agencies or western countries.
Mr.
McCartney:
Again, that is a fair question. Both the UK and
the EU recognise China’s growing involvement in Africa and
welcome it. Its investment in
infrastructure and willingness to invest in trade is welcome, as is the
fact that it played an active role in the Commission. However, in order
to be a responsible international player it is not enough to make trade
agreements or loan agreements to suit the short to medium-term view of
China; it is necessary to work co-operatively to stabilise countries,
to prevent or end conflict and to achieve security and, with it,
sustainability. For anybody who trades and invests in Africa, long-term
sustainability is an absolute requirement, as are the ending of
corruption and good governance. China recognises that and is in active
discussions with us.
Last November, the Chinese
invited 40 African countries to Beijing and all of them turned up. We
welcome that. However, any work that has been done by China should be
governed by the Gleneagles agreement, whether it is investing in good
governance or putting resources and investment into areas of conflict.
To be fair, China is making moves to engage actively in assisting with
international efforts to end conflict. It could do more in places such
as Zimbabwe, where we would like even greater co-operation. However, we
are seeing co-operation—we would like to see more—and
there is a genuine willingness by China to engage in that area. Like
the EU, it realises that unless Africa is sustainable in the long run,
both as individual nations and in regions, short-term gains will soon
evaporate.
Willie
Rennie (Dunfermline and West Fife) (LD): On Africa, does
the Minister detect a shift in Chinese policy? The previous Deputy
Foreign Minister, Zhou Wenzhong, said:
“Business is business.
We try to separate politics from
business...You”—
the
west—
“have tried
to impose a market economy and multiparty democracy on these countries
which were not ready for it.”
Has there been a shift in position since
those comments were
made?
Mr.
McCartney:
In September, the Chinese agreed with the
European Union to have active dialogue, discussion and debate about
co-operation in relation to assisting with investment in infrastructure
in Africa; tackling the issues of global poverty, education and health;
and, tentatively, conflict resolution. There is no doubt that China
will want to secure resources for the development of its economy.
However, those resources should be secured in a way that does not lead
to another round of debt and soft debt, leading to difficult problems,
when we have done so much work as a country and as a community to
resolve those issues. There needs to be a sense of an international
obligation to assist international agreements and to work in dialogue
to end conflict and to have the right
resources.
There must
be transparency to ensure that bilateral trade agreements are reached
within the context of World Trade Organisation rules. China is now a
member of the WTO. There is nothing wrong with bilateral trade
agreements as long as they do not undermine the multilateral system or
its effectiveness in enabling the least developed country to make the
development gains that it requires and to engage in
solving issues such as corruption and poor governance, and to move
states to a system that builds up their capacity in governance.
Difficult as those issues are, China is now prepared to have that
dialogue within the structures that have been in place since autumn
last
year.
Mr.
Ben Wallace (Lancaster and Wyre) (Con): The document
alludes to the continued impetus to lift the arms embargo between the
European Union and China. Can the Minister be absolutely clear that we
are not saying one thing in the European Council and another to the
United States? In December, Her Majesty’s Government, led by
Lord Drayson, signed a confidential and semi-confidential document, a
memorandum of understanding on defence technology transfer. Can the
Minister confirm that HM Government gave no commitment to the United
States Government that they would block lifting the arms embargo? It
would be awful if we said one thing to the Americans to achieve
technology transfer and, in an open EU document, agreed a different
course of
action.
Mr.
McCartney:
I thank the hon. Gentleman for that nice easy
question. The EU arms embargo review was announced by the European
Council three years ago. In December 2005, the Council reaffirmed its
willingness to carry forward work towards lifting the arms embargo on
the basis of conclusions reached at the December 2004 Council. There is
no consensus among EU partners on timing and no date has been set for a
decision.
The
European Council in December 2004 underlined that
“the result of any decision should
not be an increase of arms exports from EU Member States to China,
neither in quantitative nor in qualitative terms.”
We also noted the importance of the
criteria of the code of conduct on arms exports, in particular those
regarding human rights, stability and security in the region and the
national security of friendly and allied countries. We continue to work
with member states to ensure the strength of the code of conduct and
its implementation.
We fully implement the embargo,
which covers lethal weapons such as machine guns, large-calibre
weapons, bombs, torpedoes, rockets, missiles, specially designed
components of the above, ammunition, military aircraft, helicopters,
vessels of war, fighting vehicles, other such weapon platforms and any
equipment that might be used for internal
repression.
We would
not permit the export of goods if there were a clear risk that the
export could be used for internal repression, external aggression or to
introduce new capabilities in the region. The code of conduct on arms
exports, and not the embargo, is the key to controlling EU arms exports
to China. It is a more effective means of controlling arms to the
country, covering the high-tech defence equipment that the modern
Chinese military wants to acquire. That is what the hon. Gentleman may
have been alluding to. The code of conduct also has criteria regarding
human rights, stability and security in the region and the national
security of friendly and allied countries.
Since May 2004 the code of
conduct has had the status of binding statutory guidance in the United
Kingdom under the Export Control Act 2002. All export licences are
considered strictly on a case-by-case basis against those criteria and
Ministers are bound by
that.
Mr.
Wallace:
I am grateful to the Minister, whose answer
reaffirmed his commitment to ethical arms sales, certainly in the EU.
However, I asked him whether his Government gave assurances to the
United States that would contradict our position in the paper to the
European Council. Did Lord Drayson or HM Government give a reassurance
to the United States that the lifting would not happen? If that is the
case it is in direct contradiction of point 13 of the press release on
the Council document, which says that the Council
“reaffirms its willingness to
carry forward work towards lifting the
embargo”.
Mr.
McCartney:
The hon. Gentleman is trying to make too clever
a point here. The United States has a legitimate and understandable
interest both in the effectiveness of the EU’s system of arms
control and in the stability of the east Asian region as a whole. We
work closely with the United States to ensure that any concerns it has
are addressed. We also reassure it about the effectiveness of the code
of conduct. The EU will take all relevant factors into account. That
includes any concerns that the United States Government will have,
either bilaterally or multilaterally. I hope that that reassures the
hon.
Gentleman.
Mr.
Brady:
On the issue of the arms embargo, the documents
tell us that there is currently no consensus for an arms embargo lift
within the EU. I accept that the Government have rightly opposed the
lifting of that embargo. That has been the case for some time. Is
active pressure coming from other member states for the lifting of the
embargo?
Mr.
McCartney:
As I said in my statement, we think that the
code of conduct on arms exports will be more effective than the
embargo. Other countries obviously take a different view. As to whether
there is any active consideration of that at present, I do not know. I
will not waffle: I do not know. I am not privy to the discussions on
that area. Having said that, I will not use it as an excuse. I will
write to the hon. Gentleman and put a copy in the
Library.
Mr.
Charles Walker (Broxbourne) (Con): The third paragraph on
page 8 of our document bundle says, very
reasonably:
“Europe
needs to respond effectively to China’s renewed strength. To
tackle the key challenges facing Europe today—including climate
change, employment, migration and security—we need to leverage
the potential of a dynamic relationship with China based on our
values.”
What does that
mean?
Mr.
McCartney:
It means that we want intellectual consistency
about what our values are. We want a free, open trading regime where
China recognises the rules
in terms of the WTO. We want it to recognise the common international
agreements on sustainable development. We want it to recognise and to
work effectively in the WHO and all the other international forums such
as the Human Rights Council. We want to have a dialogue with China so
that, from its perspective, we can have a common partnership in areas
of common interest. There is no point in us having a strategy of
climate security and zero emissions if China builds a new power station
every five days which has a productive capacity for the next 40 years
or more. We need a common partnership to deal with the world’s
climate. That is what we mean about common
values.
There are
other areas such as human rights where we have common values and where
the Chinese may have a different perspective. But even with a different
perspective there is still common sense about the need to have debate
and discussion. We need unilateral and multilateral arrangements to do
that. That is what that paragraph means. I hope that that is a better
answer than the one the person who wrote it in the first place would
have
given.
Mr.
Walker:
Those are laudable aims because I am very
concerned about China’s record on human rights. What happens if
China does not want to play by our rules? What happens if China, quite
reasonably, wants to pick and choose the parts of our society that it
is willing to adopt and ignores the parts that it does not feel fit in
with its culture?
Mr.
McCartney:
The hon. Gentleman put that rather
pejoratively. There is an assumption behind that that there have been
no social, economic or political advances in China. In the last decade
or so China has managed to take nearly 300 million people who were
earning $1 a day out of the poverty bracket. It has a huge programme of
social investment in both rural and urban areas. It has a programme of
relaxation in terms of the independence of its legal system. It has
already agreed to work with us on a range of issues involving its legal
system. It has agreed to implement international agreements on removing
trade barriers and protecting international property rights and to
consider improving freedom of expression in journalism. On that topic,
an arrangement has been made and concluded internationally on access
and openness in China, and not just in the run-up to, during and after
the Beijing Olympics.
China is
opening up significantly in a range of areas. It is making changes in
its system of financial affairs to ensure that international capital
can flow in. It has made arrangements to protect international
developments. It now has the capacity for local elections equivalent to
county council elections. It is openly taking major action on
corruption in the system—not just naming and shaming but proper
action—and on international standards in food and agriculture,
production and capacity. Even now, it is examining issues relating to
core labour
standards.
China is
making major, effective changes in all those areas, but it must be
understood that a society such as China, in making such changes, must
be able to do so in the certainty that that society will not break down
and that the system can cope with the changes. I am not saying that as
an apologist—people know that I am not—but I give a
reality check when I go into discussions. Frank and honest as those
discussions are, I use them to make progress and not simply to
grandstand.
There are
areas of difference in political views. The hon. Gentleman and I have a
difference in political view, but I was rather shocked to find out that
he fought the last election as a Conservative. I never knew that. For
years and years he talked to me in the bar and I never knew that he was
a Tory. The point that I am making, in a rather silly way, is that we
can have major differences in opinion, but with a common agreement on
what we need to do, we can do it together. That is why I am proactive
and positive about our relationship with China, despite the fact that
it might get as exasperated with me as I sometimes get with
it.
John
Smith (Vale of Glamorgan) (Lab): To return to the subject
of the EU-China relationship and arms, does the Minister know whether
the Commission has any plans to review the nature of the relationship
in light of the use of an intercontinental ballistic missile to bring
down a weather satellite, which seems to imply that China is developing
a strategic, not tactical, nuclear threat and may be in breach of the
nuclear non-proliferation
treaty?
Mr.
McCartney:
That is a fair question that goes to the heart
of the debate. There has been major disagreement about the incident and
major disappointment that it happened. We have made public precisely
what we think of it. It is not just us; the condemnation has been
widespread. I am not sure whether there was total unanimity about it
within China itself, by the way. Progressives and those trying to
extend the kind of work that I mentioned were probably dismayed by
it.
My concern is to
ensure safety in the region itself, considering the potential threat
involving Iran and North Korea. It is important in that area and in
other areas to continue dialogue and engagement and, as we have been
doing, to encourage the Chinese to take leadership and responsibility.
It is important particularly in respect of the six-party talks, which
will recommence next week. They have been a major success, and I know
that the Chinese want to be effective in ensuring some outcome. That is
important to them, and it is important to the international community.
There is condemnation, but at the same time we must be proactive with
China. Without China’s co-operation, we will not resolve
satisfactorily all the other problems, whether nuclear or otherwise, in
that
region.
Mr.
Brady:
The Minister will be aware that alongside concerns
about the arms embargo is the concern that some non-weapons programmes
might lead to a transfer of technology that could have military
applications. Particular concerns have been raised about Chinese
involvement in the EU’s Galileo satellite programme. Has any
review of the wisdom of that involvement taken place in light of the
missile test against a satellite that the hon. Member for Vale of
Glamorgan mentioned?
Mr.
McCartney:
One of the major issues that inward investors
into China mention to me regularly is that of intellectual technology
protection, and the misapplication, misuse and infringement of
intellectual property. A legal framework is being put in place. I shall
return to the more specific point that has been made, but it is
important to add that as China develops its infrastructure over the
next few years it will be going upmarket in manufacturing, in R and D,
and through its educational institutions entering partnerships across
the globe—including with institutions here and in the European
Union, which we should encourage. There will be significant
co-operation, and that should include co-operation on technology and on
climate change and energy security. When that happens there should be
an appropriate framework, and it should happen transparently, by
agreement and for the benefit not just of narrow, sectional interests
but of the region and the nation as a whole, and of ourselves and the
European Union.
As I
understand it, the UK is supportive of China’s role in Galileo
and the navigation system project, and we shall encourage China to
continue to have a constructive involvement in the programme. China
signed an agreement and an undertaking to ensure the oversight of
Galileo’s development. That was superseded by a supervisory
authority, and there is an agreement to invest €200 million in
the programme. Discussions are currently under way on how change and
involvement in the programme will continue into the operational
stage.
I think
that that deals with the nub of what the hon. Gentleman wanted to know.
No doubt he will be happy about there being agreements and about the
transparency as to the R and D stage. However, he wants to know what
happens after the R and D stage. As I understand it, the discussions
will continue because the issues are complex, but that is the extent of
my knowledge. [Interruption.] The hon. Gentleman asks me to
write him a letter. I shall see whether I can, but it may be that that
really is the extent of my knowledge for the moment, given that the
discussion is continuing. With that caveat, I shall try to help the
hon. Gentleman.
Mr.
Mullin:
What progress has been made in persuading the
Chinese to accept responsibility for those of their citizens who have
illegally migrated to this country and whom we wish to return? I had
some responsibility for that area during my time at the Foreign Office,
and I recollect that there was some limited co-operation, but it was
limited indeed. There is scope for a great deal more progress, and I
wonder whether anything has
changed.
Mr.
McCartney:
There has been considerable progress since my
hon. Friend dealt with that matter, and there is proactive action in
returning people to China. When I was in China—I think it was in
July last year—we discussed how that could occur. In the end, we
agreed a memorandum of understanding, the details of which are
obviously quite complex. I shall write to my hon. Friend, but there has
been significant
progress.
Mr.
Mullin:
The best evidence of progress is not a memorandum
of understanding but the number of illegal immigrants who have been
returned to China and accepted back. Has there been any increase in
that?
Mr.
McCartney:
That is what I meant by progress. I put it in
the way that I did because I am unable to say whether five, 10, 100 or
200 people, for instance, have returned. There has been progress in
acceptance and in agreement that there needs to be a transparent
arrangement for returnees.
Willie
Rennie:
The Minister is aware that since 1997 there has
been a massive growth in the amount of recycled material exported to
China. Some 1.9 billion tonnes of plastic, paper, card and metals have
been exported in the past year. Will he give an update on how much is
exported from other European countries and on the role of the EU in
managing the
trade?
Mr.
McCartney:
I cannot give an update by way of figures. I
apologise for that but I shall write to the hon. Gentleman. I am
getting to write a lot of letters.
The
Chairman:
You did
promise.
Mr.
McCartney:
I am only joking. These Committees are supposed
to ensure that Members do not have to get letters. I am completely
unsighted in that regard. I do know that there has been some discussion
about that matter in the international press in the past few days. How
we get into new technologies and the better use of recycling materials
is an international issue, and also a national one for ourselves. It is
not simply about recycling by export. We must deal with the matter
effectively.
These
are areas in which we have new technologies and on which we can have
not just a dialogue but a partnership with China, as we can on zero
emissions. We have companies in the United Kingdom that are at the
forefront of that type of technology. We have the skills, knowledge and
capacity. China is taking exports in those ways, in the same way as we
take in nuclear material for reprocessing. There is still a need in
those circumstances to ensure that we achieve, as I said earlier, a
technology base and a sharing of research and development. That would
mean that we could get new industries up and running that could more
effectively use the materials that are being dumped and protect the
environment as a whole. It would also mean that we could provide new
forms of employment and better skilled employment at the same time as
improving
infrastructure.
Again,
as part of the Shanghai events, Britain is already at the forefront
because we have just won the contract for the designing of
China’s first all-green city on the banks of the Yangtze river,
which is going to be done by Arup. In addition, in respect of water
purification, there is the capacity for us to upgrade rivers and to
prevent pollution in the first place.
That is a big area of
development that is, in my view, untapped. There is a lot more that we
can and want to do and the Chinese are very keen to work with the UK on
that. They recognise the skill base that we have and that is why
companies such as Arup are at the forefront, ahead of international
competitors.
The hon.
Gentleman’s question is well placed and I will get the figures
to him. However, we need to address the wider issue in the way that I
have suggested and we have the ability to do
that.
Mr.
Wallace:
Given that the document itself talks about
building consensus effectively to lift the arms
embargo—conditions are laid down—perhaps the Minister
would allude to some of the conditions that the UK would go along with
as regards consensus in the EU. The Chinese Government, as he has said,
have been proactive. They sold $7 billion worth of arms to Iran in
2004-05, including missile guidance systems, and continue to help the
North Koreans in guidance technology and military assistance. If China
continues to assist those two states in the next four to five years,
would the UK continue to block any lift? It is not just about following
the correct method of selling arms to other countries, but about making
sure that our technologies do not end up with some potential threat to
global
security.
Mr.
McCartney:
I cannot add much more to what I said. I
thought that I gave a comprehensive reply about the intellectual case
and why we want to sustain that, about the way in which we think we
should proceed and the extent of the arrangements if there were any
change. Other non-military components, which include issues around
human rights, are critical. I think that the hon. Gentleman is alluding
to the fact that, if there is relaxation in a certain area, those
weapons or technologies could be used to continue to suppress citizens
in another country or across borders.
Let us be clear. The hon.
Gentleman is asking me to provide answers in advance of discussions
that have yet to take place. All I can suggest is that he read what I
said in the framework, which gives a pretty clear summation of where we
are coming from. We are not, either individually or collectively,
ratting on our international or European obligations in respect of that
matter.
Mr.
Brady:
May I turn the Minister’s attention to Hong
Kong? I am sure that he will agree that the UK has a particular role
and responsibility in relation to the SAR. He referred to that in his
opening remarks. What is being done actively to encourage democracy and
the move to universal suffrage? What is the likely or hoped-for
timetable?
Mr.
McCartney:
When I was in Hong Kong last year, I was quite
disappointed, although not with the Hong Kong authorities or the
Chinese Government, because the bridge that Hong Kong has become works
well. The community in all its aspects—civil society, business,
organised and unorganised labour, education, research and development,
transport infrastructure, trade and investment—is working
effectively. The Minister responsible for it is very effective and is
open to discussion and debate. He has an intellectual and political
perspective, albeit a mainland perspective, on the way forward and on
the agreements that have been reached. I have no reason to believe that
the Chinese want to renege on those agreements, because things are
working well.
My
disappointment was that I could find nothing in my discussions to
indicate that the political parties in civil society had a clear set of
values. I am not talking about right or left; I am talking about values
as a sense of their own perspective in putting the case for universal
suffrage. I will give an example. When the
Chinese authorities were discussing the possibility of a minimum wage in
Hong Kong, the political parties were simply talking about
non-co-operation with the legislative programme because a date had not
been set. Think of that—while people were talking about the
bread-and-butter issues, the political parties were talking about their
own social and political elite. One can therefore surmise that I had a
discussion with them. They need to think co-operatively about having a
programme of engagement with the wider civil society and the citizens
of Hong Kong, to give them certainty that they have created political
parties that can sustain one-person, one-vote elections. That is
vital.
That is why I
thought that I would put in a few lines about the Westminster
Foundation, which works co-operatively in that regard among the
political parties. It is independently administered, as of course it
should be. I hope that we can create some impetus to help Hong Kong
develop a political programme of engagement with citizens to put more
sustainably the case for universal suffrage and the importance of
political parties and a multi-party political programme in that
process. That was my disappointment. I hope that it answers the hon.
Gentleman’s question. Rather than reading out a brief, I have
given the Committee an honest flavour of my
discussions.
Mr.
Walker:
This is an easy question, but one for which I
would be interested to have an answer. Given the huge economic
opportunities available in China, is the Minister comfortable that UK
plc is in a strong position to take advantage of them, both as a means
of creating wealth and opportunity here and to help China tackle some
of its challenges, such as reducing its reliance on fossil fuels? He
rightly focused on sectors in which the UK is at the forefront of
science. I am hopeful that those British companies are taking their
wares to China and helping it to implement
change.
Mr.
McCartney:
That is a fair question. I will answer all its
components if I can. From our perspective, focusing UK trade investment
is important. My first job involving UK trade investment was for the
Invest in Britain Bureau, which was established by Lord Heseltine when
he was at the Department of Trade and Industry. There has been a series
of developments, and responsibility for this issue now falls to United
Kingdom Trade and
Investment.
Trade in a
globalised world must be a core part of foreign affairs. It must be a
critical factor. It is not an add-on, an extra or something that we
might do if some visionary knocks at our door when we are desperate for
support and help. It has to be a core sustainable factor. With the
changes that globalisation is bringing, the stresses and strains and
the changes in our traditional marketplaces, the new economy has
shifted as is shown by what has happened with UKTI in the United
States. If we had stayed where we were, we would have lost the
opportunities for innovation.
The same is true for China. As
China progresses and continues to progress, we must build up our
infrastructure—both our physical infrastructure and our
intellectual knowledge and partnership base in China. Therefore UKTI
has set about reorganising itself in China and the reorganisation
programme is almost complete. That includes new intellect and skill
bases and complete integration of all our front-line staff whether they
come from trade and industry, the private sector or foreign affairs. We
now have a skill-integrated base of operation, working in partnership
with other UK and non-UK organisations within China itself. There is
the CBI, the British Council and some of the regional development
agencies from Scotland, Wales and parts of Northern Ireland. We are
putting all those resources together and using them effectively to seek
out new markets.
These new markets are not just
on the eastern seaboards. There are regions inside China with a
population the size of Germany’s in a landmass the size of
France. They have an intellectual and economic base and a GDP as large
as many of our European partners. Those areas are hungry for growth.
They are hungry for new technology and R and D tie-ups. They want to
work with British universities and colleges. They want us to help with
language training. They want inward investment in the form of financial
institutions and the service sectors. They also want partnership
working and partnership agreements. There is a huge potential there and
we are scraping the surface.
As the Chinese economy moves to
an increasingly service sector, we are the strongest country in the EU
in terms of service sector resources and company skills, knowledge and
product base. If we get this right, we will see a steady increase in
activities, not just on the eastern seaboard and in Beijing and
Shanghai, but throughout China. Alongside that, there will be the
potential for the new technology industries to help the Chinese with
their infrastructure and to help them to help us on the security of an
energy supply that is not a danger to the world climate. I know that
that is a long answer, but there is that potential. I will send the
hon. Gentleman a DVD. He might like to know that I star in
it.
Mr.
Simon Burns (West Chelmsford) (Con): Can we all have
one?
Mr.
McCartney:
Okay—if there are enough left. It is a
best seller. Everyone at the DTI has bought it, but I will send hon.
Members a copy. The DVD sets out the strategy for emerging economies
and the services we are providing. It gives a taster of what is
available for us to do if we get it
right.
Mr.
Walker:
How long does the Minister think our competitive
advantage will last over our European partners? What is our window of
opportunity? If he spoke to UK plc today, would he say we have three,
four or five years before our European partners catch up in these
areas? Or will it be even shorter than
that?
Mr.
McCartney:
Globalisation is a 24-hour business. One cannot
rest on one’s laurels for a second. One must have patience.
Business knows this, and I have to be careful not to teach business to
do business.
It is
not just a question of going over to China, making a few contacts,
getting some planning permission and a partnership bank, and going to
the local mayor and expecting everything to be hunky-dory. This is hard
graft. That is why UKTI is important. We have to provide services on
the ground
and build partnerships to create a successful business and it could take
a number of years to break through into the marketplace there. It is
not just big business; it is small and medium-sized enterprises. Some
businesses go in and do well and then the partnership breaks down. We
have to help them to recreate something. We are in there for the long
haul. Some of our European Union partners, because of the structure of
their economies, have a bigger share of parts of the Chinese economy,
but we are very much in the forefront of the changes that are taking
place. That is beginning to show through.
That is not to say that there
is a window of opportunity for the next three years. There will be a
constant growth area, and there will be constant activity and
involvement. That is why setting up the Deputy Prime Minister’s
task force, the agreement between the two Prime Ministers and all the
things that flow from that, including the engagement of British
business in China and back in this country, are all so critically
important. We start a project with an individual company, and we work
it through and build on it, and seek to be entrepreneurial.
What other sectors are coming
up? Shanghai is a typical example. An entrepreneurial idea was seen,
and we went in there and sold it to the Chinese and Arup, and there
will be other opportunities like that. Unless we are prepared to be
entrepreneurial and patient and to enter partnerships with other people
and engage with the Chinese, we could put in a lot of effort and still
not win anything. It is important to do things effectively.
SMEs are an area of tremendous
potential growth. To get the growth, we need to provide them with
services so that they can take advantage of economic growth in India
and China.
Mr.
Brady:
The Minister is optimistic about the future
opportunities for UK plc in China, but he alluded to the fact that our
EU partners have sometimes performed better in certain sectors than we
have to date. Will he be more specific and tell the Committee what
percentage of EU export growth to China has been from the UK, and how
that compares to our share of the EU economy as a whole? Will he also
tell us the figure for the flow of students into higher
education—going each way between the UK and China—as a
percentage of the total number for the
EU?
Mr.
McCartney:
Education is an area of significant potential
growth. That is true not just in the university but in the
non-university sector. Just over a decade ago, my own
college—Wigan and Leigh college—had lost most of its
customer base in heavy engineering, textiles and the mining industry,
and could have gone completely out of business. The college thought
about things, and I and others decided to consider China and other
markets. I think that my local college now has more than 30,000
students in China, and the number will grow exponentially next year,
providing services for a range of skilled jobs. Those skilled jobs, and
the training, are based on British educational and training standards.
I am meeting next week the managing director of a company that has just
been established in India from a standing start, and thousands of
students
are being taught in a campus in India from a college in Wigan—in
the north-west of England. Over the next few years, there is huge
potential for campuses and two-way interaction.
We should think through the
sustainability of that potential, however. Many regions do not want
only a base for students to acquire skills for engineering or
architecture; they want a package alongside, which I can understand.
They want strategies for research and development, and action for R and
D in the UK that can be linked with Chinese inward
investment.
There is
a range of areas in which, during the next few years, we will have the
capacity and the ability to be very entrepreneurial and to increase our
capacity. Within a decade or so, our highest foreign earnings will
probably be from education. That is really important in the global
economy, not just because of access to business and skills in the
marketplace, but because of the relationship with Britain.
Official Chinese statistics
show that the UK is the EU’s fourth-largest exporter of goods to
China. In 2005, our exports grew more strongly than most of our
competitors. From January to October 2006, exports grew to £2.68
billion—an increase of 20 per cent. in that period. So we are in
a growth pattern, but frankly it is the tip of the iceberg. As the
service sector comes on board, and as barriers come down in terms of
access to the
marketplace—
The
Chairman:
Order. We have got to the end of the hour
for questions, but it is my intention under Standing Orders to extend
the time to allow the Minister to finish his answer and for the one
hon. Member who has an outstanding question to be given an opportunity
to speak, despite the best efforts of the Opposition Whip to dissuade
him from doing that.
Mr.
McCartney:
I apologise for giving long-winded
explanations.
A
further factor is that Britain is the largest cumulative investor in
China in the EU. That is important. The UK is the preferred route into
China for many companies. Sales made by companies such as Airbus, which
is 20 per cent. British owned, show that exports are sometimes
allocated out because a product has gone, for example, through
Rotterdam. That is not an excuse—it is a fact of life. As some
UK exports go through Rotterdam, it is the Dutch who have a huge
export-led boom with China. A lot of the goods are British, and have
been exported out. Again, that is not an excuse. The fact of the matter
is, as I have demonstrated, the potential is huge and it is up to us to
seek it out. That is what I meant when I said that the UKTI is very
important is helping British industry, commerce and services to take
advantage.
Mr.
Walker:
I think this is more an observation than a
question. A delegation of Chinese officials recently visited John
Warner secondary school in my constituency to look at the delivery of
secondary education. The school is one of the top 30 most improved
secondary schools in the country over the past 10 years, which is
probably why the delegation
went to have a look. We were pleased to welcome them, and I
hope we have more such exchanges in the
future.
Mr.
McCartney:
I am really pleased that, as the hon. Gentleman
said, Labour’s education investment is working in his
constituency. I may come to visit before the next election.
[
Interruption.] What is his majority?
Nottingham and Liverpool have
had joint venture operations in China since 2006. We have made links
with Chinese universities and there are more than 160 partnerships,
involving campuses and exchanges of students and academic staff. The
hon. Gentleman’s point that we are doing very well was well
made. If he has any other ideas for any other colleges in the
north-west, or if he knows others who are interested in the subject, my
door is open for business. I welcome any suggestions and ideas.
Seriously, if he wishes to pursue the issue, I will be happy to take it
up.
The
Chairman:
The Committee is very grateful for that offer,
and I think that it is extended to all hon.
Members.
Motion
made, and Question
proposed,
That the
Committee takes note of the European Union Documents Nos. 14381/06,
Commission Communication ‘EU-China: Closer partners, growing
responsibilities’, and 14823/06, Trade and Investment Policy
paper ‘Competition and partnership’; and supports the
Government’s key objectives: to foster China’s emergence
as a responsible global player; to promote sustainable development,
modernisation and internal reform in China; and to get the best for the
United Kingdom from China’s rise.—[Mr.
McCartney.]
3.33
pm
Mr.
Brady:
I, too, add my thanks to the Minister. I hope that
alongside all the great hopes for exporting educational opportunities
from British institutions to China and elsewhere in the world, he will
offer his services to educate other members of Her Majesty’s
Government on how to behave with courtesy and charm, and to be as
helpful as possible in Committee. His manner is most welcome, and I
congratulate him on it, but it is what one would expect from a
Greater Manchester Member of Parliament. That is particularly crucial
in a debate on subject that is of such importance for the United
Kingdom and our European partners.
China is a strange
contradiction in that it is still a very poor country in per capita
terms, but its vastness, its huge and industrious population, and the
staggering weight of its economic growth give it a growing
significance. Not so long ago, China overtook the UK as the fourth
largest economy in the world. In the next two years or so, it is likely
that China will overtake Germany as the third largest economy in the
world. In due course, if current rates continue, China will overtake
the whole of the European Union’s share of the world’s
economy in a relatively short period.
The fact that China’s
economic rise is in sharp contrast to the relative economic decline of
the European Union should be taken seriously. The Commission’s
figures show that in a few decades China will account for a quarter of
the world’s GDP. The United States, with its higher growth rates
than Europe, will still account for a quarter of the world’s
economy. Meanwhile, the European Union’s share will have halved
as a proportion of the world economy to about 12 per cent. That makes
China significant not only in herself, but because of the challenge
that she poses to the European economies. Our economic future and our
significance in the world both depend on how we as a nation, together
with our European partners, respond to those
challenges.
We could
take the old-fashioned route of looking within the European Union at a
process of continuing integration, harmonisation and excessive
regulation. That would lead to a continuing failure to achieve the
Lisbon agenda which, as the Minister knows, is now approaching three
quarters of the way through its 10-year period and has achieved little,
if anything, during that time towards reaching its goal of making
Europe the leading knowledge-based economy in the world. Instead, we
are seeing continuing relative economic decline, and with it goes a
continuing loss of influence.
Under that scenario, as we look
at the possible future arrangements for the European Union, such as the
attempts to bring back the failed EU constitution which are being made
by the German presidency, we can see that the European Union could
choose to have a Foreign Minister and a diplomatic service as proposed
in the constitution. However, the diminished wealth and status of the
European nations relative to others around the world would make that
irrelevant.
We could
take a different approach, and that was embodied in the optimistic tone
of the Minister’s remarks. We can relish the opportunity and
challenges that globalisation throws up. We can look at the growth of
the Chinese markets as a great new opportunity for British business, in
particular, and for engagement for all of the European economies. We
can do that by deregulating and by freeing our industries to compete
and by reducing barriers to trade. We will then see the continuing
growth of the world economy bringing benefits to developed and
developing nations alike.
One of the things that we have
not had the opportunity to touch on is the European global adjustment
fund. The creation of the fund is of itself a worrying sign that the
European Union is tending to take the wrong route. It is looking at the
patterns of growth and the rates of growth in China and India, in
particular, and is responding by panicking—by being worried
about what globalisation and shifts in the balance of the world economy
will mean for jobs and business. It ought to be embracing the change,
seeing it as a great opportunity and looking to bring barriers down
instead of creating barriers of protectionism, whether they be through
tariff barriers or through the attempts, like the global adjustment
fund, to stand in the way of what will happen as a result of changes in
the world market and in the economies of Europe.
In the spirit of harmony that
we have enjoyed, it is encouraging that the British Government have
been sceptical of the global adjustment fund. In fact, they were one of
the Governments who argued against that approach, seeing that it was
the wrong model. That gives some grounds for encouragement, but it is a
concern that the fund was created none the less and was, according to
the papers, due to become effective from 1 January.
I suspect that there has not
been time for the fund to be deployed yet, but it will be interesting
to note, given the competitive advantage that the UK still has relative
to most of our EU partners, to which my hon. Friend the Member for
Broxbourne referred, whether the moneys held by the fund are used
principally to benefit economies that are less competitive and flexible
than the UK’s. Given the UK’s status as one of the
largest net contributors to EU funds, a significant percentage of the
€500 million a year that is to be set aside for the fund could
easily be paid by British taxpayers to intervene in the economies of
more sclerotic EU countries. I hope that the Government will seek to
avoid that significant danger.
Another matter that we did not
have time to deal in questions is the proposed creation of a new Europe
centre in Beijing. I hope that the Minister will give us some
reassurance that the Europe centre will focus on trade, which is the
locus of the EU in dealing with China, rather than attempt to create a
putative EU embassy and a larger role for foreign affairs. Will he
reassure us that the British Government will have a sufficient grip on
the creation of the Europe centre, so that if it is to be an effective
tool in promoting EU trade, it will be at least as effective in
promoting British trade as German or French
trade?
As China grows,
it is right and proper that she should take a more prominent role in
world affairs. It is natural that her influence should grow in the
middle east now that more of its oil goes east than west, and that her
diplomatic reach should increase in Africa, from where so many of her
raw materials originate. It is also natural that she should expect to
engage with the developed nations of the world as an equal.
The challenge for the British
Government—the Minister did justice to this—and for the
EU, so far as its competence in relation to trade gives it a locus to
act, is to build the proper and necessary engagement with China in
certain areas. Crucial areas to address are the firm expectation that
progress on human rights issues continue and China’s acceptance
that urgent measures to curb the growth of emissions are not only in
the interests of her people, but a legitimate expectation from her
trading partners.
Britain’s historic
association with Hong Kong and our continuing commercial involvement
there give the Government both a particular responsibility to engage
with China to promote human rights and democracy and a particular
opportunity to develop commercial links. I hope that the Government
will continue, as far as possible, to exploit those advantages to our
benefit and to ensure the maximum progress for the people of Hong
Kong.
On trade, we
must use our influence in the European Union. I am sure that the
Minister is a close personal friend of Mr. Mandelson, the
Trade Commissioner. He can use that influence to help to steer the EU
towards open markets and free trade.
We should co-operate with our
EU partners on issues on which we have a genuine common cause, such as
the environment, to encourage progress in China. It is important to
foster China’s emergence as a responsible global player, and to
promote sustainable development, modernisation and internal reform in
China. However, alongside those important gestures, the Minister and
his colleague, the Minister for Europe,
were right to add to the explanatory memorandum the crucial objective of
getting the best for the UK from China’s rise. We wish the
Government well in that objective; they certainly have the support of
the
Opposition.
3.45
pm
Willie
Rennie:
I concur with the comments about the
Minister’s handling of the Committee. He has been open, charming
and extremely helpful. I am sure that his Scottish nature is part of
the reason for that. Having said that, I felt a little slighted when he
offered the DVD to a Conservative Member before anyone
else.
Mr.
McCartney:
I have another DVD on another issue. The hon.
Gentleman can have that
one.
The
Chairman:
We are obviously building a collection that will
be the envy of the
House.
Willie
Rennie:
I am afraid that it was too late for the Minister
to recover from offering the DVD to a Conservative Member
first.
On Saturday, I
was taking part in a local hill race over the Lomonds in Fife. When I
caught my breath between the stages of the race, I asked my fellow
team-mates from Carnegie Harriers what they thought about China. That
was not the question that they were expecting then. The responses
varied from the comedian’s response of “It’s very
far away” to concerns about human rights and economic power. One
team-mate said that his local employer imported a huge number of metal
parts from China. Another said that he understood that law enforcement
vans toured the country, meting out immediate and savage justice. They
all had something to say on China, which reinforces the fact that China
is becoming an increasing force throughout the world and especially in
this country. It impacts on the daily lives of ordinary people
throughout this country. China’s power, both economic and
diplomatic, is significant and growing. It is an important world player
and a fellow UN Security Council member. As we have heard, we have to
engage on this issue for many reasons, including climate change, our
economic prosperity and world security. The United Kingdom obviously
has a special interest, given our obligations in Hong
Kong.
The Liberal
Democrats support the European Union policy on China and the motion
today. I would like to cover briefly three issues that have come up in
this debate and to summarise some of our concerns. First, on human
rights, I would like the EU to maintain human rights at the top of its
agenda for China. So much needs to be done, and the EU should be at the
forefront of those
efforts.
Secondly, I
am concerned that Chinese investment in Africa comes with little
conditionality related to governance, fiscal probity or the other
concerns that now drive western donors. We have received some
reassurances this afternoon that progress is being made, but we must
ensure that the momentum is maintained in the coming years.
China’s principal
interest in that continent is access to natural resources, but that is
not its only interest; China’s economic interests are wider.
Chinese goods are flooding African markets, and there has been growing
concern in Africa about the effect on local industry. Exports of
Chinese textiles to Africa are undermining local African industry. We
have to maintain our scrutiny of
that.
Does China want
to be seen in Africa as a defender of rogue states and as an aggressive
seeker of Africa’s natural resources, without regard to
transparency, development and stability there, or will it be a
responsible player on the world stage? The EU will play a vital role in
encouraging China to adopt a more responsible approach to
Africa.
The third
issue relates to the environment, on which I asked a question earlier.
People on the doorsteps around Dunfermline are shocked that more and
more of the newspapers, cans and plastic bottles that they put out for
recycling end up in China. It is no good recycling more in Britain if
it simply ends up in landfill on the other side of the world. I look
forward to developments in that regard and I know that the Minister
will supply more information to
me.
What
does China mean to my country—to Scotland? A significant number
of Scottish companies and organisations already do business directly in
China. For example, financial giants, the Royal Bank of Scotland and
Standard Life, are in Shanghai and Tianjin respectively. The leading
distillers, the Edrington Group, opened an office in Shanghai in July
2003, taking its brands the famous Grouse, the Macallan and Highland
Park to an eager market in which the demand for malt has grown by 23
per cent. Other Scottish companies making inroads into China include
Scottish and Newcastle, Babtie, Clyde Blowers, Picsel Technologies and
the Weir Group.
Educational links between
Scotland and China are very strong and growing. A number of Scottish
schools have active exchange links with schools in China, encouraging a
two-way street and teacher alignment exchanges. The Scottish
Qualifications Authority delivers a number of Scottish qualifications
at Chinese universities. The most exciting area of development,
however, is the exporting of courses and the franchising of degrees in
China by Scottish universities. For example Napier university is
developing the first Scottish campus in a Chinese university.
The Chinese community, which
has grown by 50 per cent. in Scotland in the past 10 years is the
second largest non-white ethnic group in Scotland. Finally, the
relationship between China and the European Union is one that will grow
in the years ahead. However, we must effectively engage with China to
influence that growth in the most positive way that we
can.
3.51
pm
Mr.
Wallace:
I shall be brief, Mr.
Hancock.
The
Chairman:
Time is not an
issue.
Mr.
Wallace:
I have one slight disappointment about the
communication from the EU Council, and I am sorry to break the
consensus. It is a very sweet document. It is gloss and it is very
positive and does not do very much to give a bit of stick to the
Chinese, or to be a bit harsher about some of the failings that we
see in that country. Now is the time to put our marker down, criticising
some of its activities in the arms trade or human rights. It is no good
putting down the marker when it becomes the world’s biggest
superpower in four, five or 10 years’ time. Now is the time when
the EU and the United States have tremendous power, not because we
trade with China, but because of our direct investment into China.
Being the customer sometimes gives one as much power as being the
platform on which people do business.
We do not necessarily have to
rush headlong in to say that the relationship is all about money and
the trade without us making some points. There are areas in which China
effectively speaks with a forked tongue. It is important that we do not
forget that in the headlong rush. There is the human rights issue in
areas such as Tibet. This sweet-flavoured report talks about Tibetans
as minorities, but I was not aware that the Tibetans were a minority. I
thought that Tibet was a country that China had invaded. Tibetans are
not a minority of China. There is still a question mark over the human
rights of Tibetans, but the communication smoothly glosses over that.
It talks about a willingness to work towards finalising the arms
embargo.
I know that
the Minister has hinted that Britain will stand firm on the matter, but
the communication sends a message to China as a whole that we are
willing to concede. I am sure the Chinese will think, “Well,
this is business as usual.” They can blow a satellite out of the
sky and introduce weapons into space in a way that no other country has
done. They can sell $7 billion of arms in one year to Iran, which
includes 20 missile guidance systems for long-range ballistic missiles.
They can assist the North Koreans on the one hand with their military
and technology transfer, while on the other be part of the talks. That
is not a message that the EU should allow China to get away with. We
need to be consistent and to put some markers down. If one asks why
Hezbollah can fire missiles at ships and why Iran can develop its new
technology to the level it can, the answer today is because of China. I
do not think that we should forget some of those things. Certainly,
this EU communication leans towards the feeling that those issues are
all in the background and what is important are the trade
opportunities. We forget the other issues at our
peril.
Before I became
a Member of Parliament, I was the overseas director for defence at
QinetiQ, which has had links with Government defence. I traded in all
sorts of countries—the United States, eastern Europe and
emerging markets—with a consortium of countries, mainly from the
EU or America, and I often would bid against Chinese companies. The
Chinese do not abide by what they say they abide by in negotiations. We
can say that we take note of what is happening, but I am afraid that on
the front line they do not abide by what they say.
The Minister will be aware that
Britain is extremely successful in the defence market. British
Aerospace, Raytheon and Thales—I know that the latter is an
American company—are very successful in what they do. People in
Washington think that one is either with China or the United States
when it comes to defence and that one cannot choose. The Americans will
not let us choose when it comes to the joint strike fighter, but I know
that it will bring thousands of jobs to the
north-west if we are a full partner in it. The Government need to be
aware that the arms issue is about more than just moving along the road
to lifting the embargo and to engaging in free and open competition
should China make some adjustments.
China’s actions to date
show that it spies on our technologies—they come to the
Farnborough air show. When I was working at QinetiQ, we all received a
montage showing the mass of Chinese espionage agents who came to our
stand. They still do that actively, and that is not in the spirit of
this document. Therefore, I would say to the Minister that China does
present great opportunities, but that there are other opportunities
elsewhere in the world.
The time to put down the
markers is when our co-operation is important for China as an
ingredient in its growth. It is no good trying to brush things under
the carpet because it is a big customer. We are a big customer. The EU
and the US are wealthy customers and I think that it is time that we
use our power to ensure that we all start off on the right route
together. This EU document should be a little
harsher.
3.57
pm
Mr.
McCartney:
I think we have had a full discussion and
debate and that there is not much more that I need to respond to.
However, I have one or two further points to make.
May I say that I am not the
first McCartney to be the Trade Minister for China. The first day I
went to the Foreign Office, I saw a very old gentleman standing rather
upright—I found out it was a statue. Lord McCartney was one of
our first Trade Ministers to China. Indeed, he was thrown out of China
by the Emperor at the time for trying to pinch what is now modern-day
Beijing for himself. I think that the hon. Member for Lancaster and
Wyre was trying to suggest that we are all rather shaking in our shoes
and a bit frightened of the Chinese. I must admit that I did not ask
them for Beijing back.
We have had a
debate about China’s revival. We have touched on issues around a
more open and pluralistic society, human rights, sustainable
development, competition, partnership, trading and economic relations,
strengthening bilateral co-operation, international and regional
co-operation, Hong Kong and the European global adjustment fund, to
which the hon. Member for Altrincham and Sale, West referred.
The concept and principle of
the fund are fine. However, we want to make sure that it does not cut
across the ability of Governments to implement their own labour market
strategies and policies and that it does not undermine or spend
resources where we are already spending on education, skills training
and getting people back into the labour market. Many of the changes
that have been put in place, which we welcome, were initiated by the UK
Government to ensure that the fund adds value and does not supersede
Governments’ work or operate in an ineffective way. The fund is
an important tool that we need if we are to engage not only in an
effective labour market, but in a buy-in with our citizens in Europe
about having a proactive and engaging relationship with China and other
emerging countries. It is important that people believe that we are on
their side as the changes take place.
Mr.
Brady:
Can the Minister say whether the Government
anticipates that the UK will be a beneficiary from the global
adjustment fund?
Mr.
McCartney:
That will depend on the rules on the types of
businesses that need to adjust and the size and scope of the
businesses. Rest assured that, if issues come up, where we can access
the fund, we will do so, as we have accessed objective 1 funds and all
the other funds. However, there will be rules, because that is what we
have argued for: rules to make it an added-value fund, rather than one
that interferes and cuts across active policies and funding
arrangements in the labour market.
I thank the hon. Member for
Dunfermline and West Fife for his kind remarks. I think that I have
responded to all of the points that he made. On universities and
schools, I assure him that some of the companies that he mentioned have
already been engaged in assisting such bodies to enter and to sustain
themselves in the market.
I can also assure the hon.
Gentleman that I have instituted a new engagement with non-governmental
organisations. Before I go to China or any other country, I sit down
with representatives of the NGOs and talk through with them, in
confidence, the objectives of the visit and key human rights issues.
The visit is not just about trade or foreign affairs; a core aspect of
all my trips is human rights. That is not an add-on or an extra. We
have discussions with the NGOs and prioritise the issues that they want
to raise. When I come back, I report on what has been discussed, and I
agree a work programme. For example, following my visit last July, I
have a work programme with colleagues in China, which we will follow up
when the dialogue starts on 5 February.
We have an open, transparent
arrangement. I do not talk a lot of hot air or nice words, as the hon.
Member for Lancaster and Wyre might say—I am sorry, the European
Union does that; he left me out of the European Union for the purposes
of his full-scale attack on our comrades in Europe.
I want to give the hon. Member
for Dunfermline and West Fife that assurance. He can rest assured also
that I will follow that up in writing, so that the NGOs can use the
information in their campaigns and responses. We do not just go to
places and talk off the top of our heads. We have a constructive work
programme, agreed objectives and priorities and a transparent method of
reporting back. The hon. Gentleman and I are in
agreement about what we want to do about the environment. I repeat my
commitment to get back to him on
that.
I cannot add a
single word to the pleas of the hon. Member for Lancaster and Wyre
about the arms issue. I see where he is coming from and he is well
intentioned. However, he does a disservice to the relationship, and
introduces negativity. He can rest assured that, with both the European
Union and this country, the Chinese welcome open, honest and
transparent dialogue, and will give the same back. They want dialogue;
they do not want people to be mealy-mouthed, or to say one thing and do
another. They want certainty about the relationship, and they are proud
of what they are doing.
On human rights, the Chinese
will say, “Your priority for China is this; ours is that we want
to get 500 million people out of poverty and earning more than $1 to $3
a day. By 2020 we will do that. We will have a socialist society in
China.” I threw that last bit in. On that point, I wish them
well.
I thank hon.
Members and hope that I have answered their points and that the
Committee will accept the documents.
The
Chairman:
Thank you, Minister. I should like, as would all
hon. Members, I am sure, to welcome the hon. Member for Stoke-on-Trent,
Central and his mobile phone, but to remind him to switch it off before
he comes in next time. I thank all hon. Members for the constructive
part that they have played in this afternoon’s proceedings,
particularly the Minister for the robust way in which, as ever, he
answered the questions and promised the letters. As always, I am sure
that they will be delivered very
quickly.
The
Chairman:
And the DVDs. Some hon. Members want more than
one. Mr. Rennie eagerly awaits the
two.
Question put
and agreed to.
Resolved,
That the Committee takes note of
European Union Documents Nos. 14381/06, Commission Communication
‘EU-China: Closer partners, growing responsibilities’,
and 14823/06, Trade and Investment Policy paper ‘Competition and
partnership’; and supports the Government’s key
objectives: to foster China’s emergence as a responsible global
player; to promote sustainable development, modernisation and internal
reform in China; and to get the best for the United Kingdom from
China’s
rise.
Committee
rose at four minutes past Four
o’clock.
