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House of Commons
Session 2006 - 07
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General Committee Debates
European Standing Committee Debates

EU-China Relationship



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.
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?
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.
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.
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.
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.
Mr. Burns: And the DVDs.
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.
 
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