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Westminster Hall

Thursday 1 February 2007

[Mr. Joe Benton in the Chair]

East Asia

[Relevant documents: Seventh Report from the Foreign Affairs Committee, Session 2005-06, HC 860, and the Government’s response thereto, Cm 6944.]

Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Cawsey.]

2.30 pm

Mike Gapes (Ilford, South) (Lab/Co-op): I am pleased that we have secured this debate. The Foreign Affairs Committee report was published in August last year, and the Government’s response in October, but clearly the issues that we raised remain topical. Indeed, they will remain important for the rest of the century.

The report is entitled “East Asia” and it deals with the region as a whole, but it focuses on the People’s Republic of China and its internal developments and neighbourhood. We tried to cover political, economic and military developments. Indeed, the growing importance of China presents the world with opportunities and challenges. The rise of China has been seen by some as a threat and by others as a chance to bring China into the world as an actor that can work alongside others to solve some important global problems.

Our Committee visited the region in May last year. I remember that visit well because I had to miss the cup final—I am a West Ham fan, enough said—but I saw the match at the British Bulldog pub in Shanghai at 10 o’clock at night. As has become customary with our Committee, which has 14 members, we split into two groups for part of the visit. The group as a whole went to Beijing, then one group went on to Shanghai and rejoined the rest in Hong Kong before going on to Taiwan. Meanwhile, the second group left Beijing a little early and went, under the leadership of my Committee colleague the right hon. Member for Tonbridge and Malling (Sir John Stanley), to visit Tibet. That clearly covered an interesting and diverse range of the parts of China and the region.

We had some problems with the Chinese authorities and political figures when they discovered that we were going to Taiwan. We were told that there would be serious consequences. However, as far as I can assess, the serious consequences were that members of the Culture, Media and Sport Committee had some difficulty getting their visas a few weeks later. We found the fact that we went to Taiwan important for our overall perspective on the cross-straits issues and the role of the region as a whole in investment and political development.

I am conscious of the fact that a number of hon. Members wish to speak, so I want to concentrate on the aspects of our report that concern the People’s Republic of China. Perhaps my colleagues will be able to supplement
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that. With 50 conclusions and recommendations, as well as a Government response to those, it is not possible for me to go through them all. China’s economy has been growing for many years at rates that would be regarded in Europe as phenomenal, with an annual growth rate of 10 per cent. and a massive growth in exports. Our Committee concluded, and the Government agreed, that the growth of China’s trade will continue to have significant impact on the world economy by providing consumers with cheap goods and by competing strongly with manufacturers in other countries.

We all know the anecdotes about the fact that one can go into a toy shop anywhere in the world and find that the toys are made in China. The fact is that China and its economic rise pose a challenge. Will China play by the international rules or will it by various measures work to undermine the manufacturing industries of other countries and their export potential? We recommended that our Government should work both bilaterally and with our European Union partners to ensure that China works within the spirit, not just the letter, of its obligations to the World Trade Organisation.

The Government told us in their response that they want

It is of course important that China comply with its obligations and refrain from anti-competitive practices or dumping in western markets, but it is also important that the rest of the world resist the temptation to go towards protectionist measures that, although they are superficially attractive to some industries and some workers, will be self-defeating in terms of their wider consequences for the economy of the country concerned and the world as a whole.

Various international forums involve the Chinese with regard to trade issues, including the bilateral annual UK-China summits, the EU-China dialogue and, of course, the WTO. I would be grateful if the Minister updated us on the position on those issues and whether we are satisfied that the Chinese are complying and working to the spirit, as well as the letter, of their obligations.

We expressed concerns, too, about China and intellectual property rights. The Government say in their response that they believe

We were also told that the UK and China are co-operating on enforcement of that framework. Have any results come from that?

According to the Foreign and Commonwealth Office, the UK is the fourth largest EU exporter of goods to China and the largest cumulative EU investor in China, but the Committee remains concerned that official support for British business in China is unco-ordinated and insufficient. The Government response stressed the importance of investment rather than trade, but also noted

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in the period up to 2008. Since the report was published, we have taken evidence from the head of UK Trade & Investment, Andrew Cahn, who told us last December that he was satisfied with the support given to UKTI by Ministers—he praised the Minister by name—and that British companies were getting support in general from the Government.

The Minister for Trade (Mr. Ian McCartney): I gave him an instruction to do that.

Mike Gapes: It is good to see that we have political control over UKTI.

Mr. McCartney: That was a joke.

Mike Gapes: I want to raise, too, an issue on which we had some doubts. One of the matters raised with us when we went to Shanghai was the fact that the Government had not at that time made a decision about participation in Expo 2010. We thought it vital that they should do so and called for that in our report. We are pleased that the Government response accepted that recommendation. However, a written answer was produced last week to a question from the hon. Member for Cotswold (Mr. Clifton-Brown), who is in the Chamber today. It stated that, as well as the FCO, UKTI and the Department for International Development,

in Expo 2010. Will the Minister assure us that they will do so in a co-ordinated fashion, rather than a haphazard one, so that the image of the UK collectively will be presented in the strongest possible light? The expo is extremely important.

Mr. Geoffrey Clifton-Brown (Cotswold) (Con): I am grateful to the hon. Gentleman for quoting that answer. Will he also confirm that the expo will attract 20 million people—more than will attend the Olympics—yet our Government were one of the last Governments in the western world to sign up to it?

Mike Gapes: Yes, I can certainly confirm that. It was the basis of our concern last year. A number of European Governments signed up early on, and were probably going to get some of the prime, plum sites. We wanted to ensure that our participation was sufficient and that it began as early as possible. I hope that that matter has now been resolved and that we will have strong representation at the expo—20 million is, of course, a small proportion of China’s population, but a very large number of people none the less. The Government are considering how the lines of responsibility between UKTI and the China-Britain Business Council could be delineated further. I would be grateful for an update on that as well.

China’s economic rise has led to a huge energy requirement, and the increase in manufacturing industry, commercial road and air traffic, private car ownership and the number of domestic electrical goods has sucked in oil imports. China is now the world’s second largest
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net importer of oil, and only this week a report by Chinese scientists admitted that it has failed in the last few years to make any progress on environmental protection. The Committee, therefore, welcomed the appointment of John Ashton to lead the Foreign Office’s work on climate change. Mr Ashton, who gave evidence to the Committee last year, told us about his ideas for EU-China co-operation on energy-saving technology. Now that he is no longer an outsider, but in the FCO, we hope that those ideas will come to rapid fruition and become reality as soon as possible.

We called on the Government to work with the Chinese authorities on the development of renewable energy and energy efficiency technologies. The FCO’s reply concentrated on its various talks and meetings with the Chinese on that issue, but did not say much about specific projects. I would be grateful for more information on that.

British companies have a huge opportunity in China, as they are world leaders in environmental and energy-saving technology. China needs to save energy and to modernise its industries in many respects. We need to get in there, rather than allow our European competitors to beat us to it, and do the work that presents such an opportunity for our economy.

China has an interesting position on global climate change. At the Davos conference, the Prime Minister stressed the need for a successor to the Kyoto treaty, which cannot be brought about effectively unless India and China are part of it. It will succeed only if those two countries—as well as the US, EU and other countries—are signed up. What are the Government doing to achieve that? How optimistic are we that the Chinese will be at the forefront of that new agreement?

China has 16 of the 20 most polluted cities in the world. Even in Beijing we could feel the acrid air, which is unpleasant to breathe, and Beijing is not a major industrial city compared with others in China. It also has large Government buildings.

Our report noted that 70 per cent. of China suffers from water pollution, that crop returns across the country are decreasing and growing desertification, including the encroachment of desert towards Beijing. China emits about 12 per cent. of global carbon emissions, which is expected to rise to 18 per cent. by 2025. To put that in context, the USA emits about 5.5 tonnes of carbon per capita, whereas China emits only 0.6. However, as China industrialises and living standards rise, there will be a massive increase in carbon emissions from China unless there are significant changes in technology.

Water use, which represents a big problem in China, is increasing significantly. That problem is made worse because large parts of the country are not easily habitable. Those trends have a global impact, and our Committee has recommended that the Government increase their support for environmental projects in China. Perhaps we could have an update on that as well.

Some of those trends have an economic impact, as well as an environmental one. China is heavily reliant on fossil fuel imports, and much of its economic development has been based not on its indigenous growth, but on foreign direct investment and cheap labour. The contrast with India is strong. Much of India’s industrial development has been indigenous
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whereas China has produced goods for foreign companies and export markets around the world. However, China’s population is ageing. It has a large work force, but many families have only one child. The baby boom generation that followed the great famine in the early ’60s, which led to surplus labour for the next 20 years, has gone. The one-child policy means that the Chinese face many years of an ageing population and fewer workers. China’s birth rate is already well below the replacement rate.

Tony Baldry (Banbury) (Con): The hon. Gentleman is making an excellent speech. Returning to his point about oil, is there not another dimension to this? Many of us are concerned about the fact that China purchases so much of Sudan’s oil output. Those of us who have had the misfortune to visit Darfur have come away concluding that the Sudanese Government feel that they can do pretty much whatever they want in Darfur, knowing that the Chinese Government will veto any UN resolution in the Security Council condemning the Sudanese Government.

Mike Gapes: The hon. Gentleman is absolutely right. In fact, a third of China’s oil now comes from Africa. It is interesting that Hu Jintao is visiting Sudan, mirroring a journey made by Cho En Lai 43 years ago. Sudan supplies China with 350,000 barrels of oil a day—two thirds of its exports—which means that China has considerable leverage over Sudan.

Mr. John Horam (Orpington) (Con): Following on from that point, there is great concern about the impact of China’s policies in Africa—not just in Sudan, but right across west and south Africa. Indeed, this is not just a question of the problems in Darfur and human rights. In many instances, China is behaving illegally, such as in Gabon, where the Chinese state oil company was found prospecting in the Luangwa national park, which represents 11 per cent. of Gabon’s land area. As a result of local pressure, it was finally forced to pull out. Will the Minister consider whether it is important for the Government to take a strong stand on that and to exert pressure on China to behave properly in Africa?

Mike Gapes: I am grateful for that intervention as it saves me from making the same point. I agree entirely—there are big concerns on that issue. Human Rights Watch alleges that Chinese arms sold to the Government of Sudan have been used by the Janjaweed militia when suppressing the people of Darfur. On the Security Council, China has opposed sanctions against Sudanese leaders and insisted that the Sudanese Government be given power of veto over the deployment of a UN force in Darfur, which was needed because the African Union was unable to deal with the situation.

Clearly, it is not just in Africa that we have that problem. China and Russia recently vetoed a UN Security Council proposal on Burma, which is also known as Myanmar. In Africa and elsewhere, China has played a role that, frankly, undermines the concept of good governance. China’s actions are contrary to what our own Government managed to achieve through the G8 and to the commitments made in the Commission for Africa.

The German EU presidency now wishes to reactivate and take forward those commitments following the interregnum of the Russian G8 presidency. China has a
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growing role in Africa and, a few months ago, held a meeting attended by 40 African leaders. That shows the growing influence that China has throughout the African continent. I would be grateful if the Minister responded to those points.

Mr. Clifton-Brown: To reinforce what the hon. Gentleman has said, does he agree that that applies not just to Africa? For example, China’s oil trade with Iran is almost three times that with Sudan, and its oil trade with President Chavez of Venezuela is huge. If China really wants to come into the international community and play a full part, is it not time for it fully to contribute to multilateral organisations such as the WTO and the UN, and to become a modern international nation?

Mike Gapes: The response from the Chinese on those matters is interesting. They say that they are behaving as other countries did in the 19th century during the scramble for Africa. That raises big concerns for us because, clearly, the world has moved on. In the 20th century, we had an international human rights and good governance agenda that has been developed in the 21st. The Chinese seem to have the view that they will not ask questions or criticise internal governance or human rights issues; they will simply suck in the raw materials and resources whenever they wish from wherever across the world. That raises serious concerns for all who believe in raising the standard of human rights and good governance worldwide.

Before concluding, I turn to the internal Chinese situation. Frankly, China has a poor human rights record and the way it treats its citizens is deplorable in many ways. The difficulty is, how does the rest of the world, which is so dependent on Chinese manufactured goods and obviously interested in having China as a partner, deal with those internal human rights issues? Our Committee raised a number of concerns: the lack of freedom of the media, censorship of the internet and the lack of effectiveness of the various human rights dialogues, including that of the EU, with the Chinese Government.

More recently, on 10 September, Xinhua—the Chinese state news agency—announced new regulations under which all news originating from foreign agencies must be cleared and distributed. Ministers received assurances from the Chinese Government that those regulations would not obstruct foreign media agencies working in China. I would be grateful to know whether that commitment has been honoured.

On internet censorship, the Committee took companies such as Google to task for voluntarily censoring its web portals in China. It is interesting to note that Google’s co-founder, Sergey Brin, was reported this week as having told people at the Davos economic forum that bowing to Chinese demands for a censored version of its search engine was a mistake—presumably because of the unfavourable reaction from the rest of the world, including our Committee. Brin apparently expressed regret that his company had entered the Chinese market under the terms imposed by the authorities and told The Guardian:

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I am pleased to hear that because it is important that the rest of the world raise concerns about unethical behaviour by companies or about collaboration with censorship. I would be grateful for an update from the Minister on the role of western companies and the internet in China.

On the wider issue of the EU human rights dialogue, our Committee called on the Government to achieve improvements in that dialogue. We understand that they have recently raised that matter with their EU partners, but I do not know whether there has been any success in encouraging a more robust approach—either from our EU partners or, more importantly, from the Chinese. Will the Minister ensure that that issue is raised and resolved at the next meeting of the EU working group, which I understand is this month?

Finally, on human rights, the EU has a long-standing arms embargo on China. Our Committee and the Quadripartite Committee, which is comprised of four Select Committees, have called for that embargo to be maintained. I am pleased that last month the EU reasserted its support for that embargo. In Beijing two weeks ago, Commissioner Ferrero-Waldner laid down three conditions for lifting it: ratification of the UN international covenant on civil and political rights, release of those imprisoned for their involvement in the 1989 crackdown after Tiananmen square and the abolition of what the Chinese call re-education through labour—a system of imprisonment without trial. Do those conditions represent the position of our Government, as well as a collective EU position? I would be grateful for clarification.

On the resources that the FCO diverts to China, there is clearly a long tradition of our Government producing experts, known as Mandarins. It is important that people who go to China learn the local language, and we have excellent people out there. I praise the support that we received from William Ehrman and his colleagues in Beijing and elsewhere throughout our visit.

I hope that there will be an increased UK footprint in China as it grows as a country. The FCO told the Committee that it will

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