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When visiting China with the delegation, I was impressed to see that other educational institutions, such as Liverpool university and Nottingham, have a presence there with my university. I spoke to two young students from Liverpool university about their experience, which was reminiscent of mine 26 or 27 years ago, when I had a placement in Germany. The two students from Liverpool were studying in China and now see the world from a different perspective, in which China is becoming a major player.

To draw a parallel with my experience, I trained as an engineer 27 years ago in Germany. I had learnt the language and a great deal about the history of Germany and its people at a time when the Common Market was developing into the European Community and what we have now with the Berlin wall down—a European Union of 27 member states. What we have now in China, partly through the engagement with Singapore and the Government of Lee Kwan Yew at the time, is an opening up over the past 20 years, with huge technological advancement, huge technological investment and huge educational investment. Much of the value that we export to China is education, not only from my local university, but from other universities that I have mentioned.

To put into perspective what my hon. Friend the Member for Sittingbourne and Sheppey (Derek Wyatt) said, China has as many people studying for PhDs—not just bachelor’s degrees—as we have in the population of this country. One realises why, as my hon. Friend said, in the next 80 or 90 years, China will play a role in the world that America played during the last century and Britain played during the century before that. There are great challenges ahead and great opportunities.

My newly ennobled Friend Baron Mandelson of Hartlepool and Foy and the Minister have a big responsibility on their shoulders to ensure that Britain can work with our European partners to create the sort of market and economy that can compete with the challenges facing us from China. There are many opportunities, and British business could benefit from working with our Chinese friends and partners.

I have referred to the scale of the development at Suzhou, which is breathtaking. We are doing a little in this country to improve matters, and I had the pleasure last week of visiting Daresbury laboratory in Cheshire, which has become a science and innovation centre in the north-west. I spent six years working there as an electronics design engineer before coming into full-time politics. That institution should have had the Diamond project, but I shall not re-enact old battles. Nevertheless, it is developing leading-edge research facilities and the innovation that will drive many of the products and services that this country needs to compete with countries such as China, but that is happening on a much smaller scale than what we witnessed during our visit.

We need more investment in education, and science and technology. We have the expertise, the drive and the institutions, but we obviously do not have the population to provide the number of engineers and scientists to bring about that major competition. We can achieve that only through greater co-operation and, I dare say, integration with the European Union. Apart from competition, we can work together with China. We can co-operate through business and the technological links that we are developing. We can work together culturally through education and institutions such as the Confucius
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institute in my constituency and others throughout the country. We can work together politically through visits such as that organised by the IPT, and Government-to-Government relations, which are also important.

10.26 am

Mr. Graham Allen (Nottingham, North) (Lab): I have only one or two brief points to make, because my colleagues have made their points eloquently about the importance of the visit.

I shall not compliment IPT more than to say that the trip was the hardest-working one that I have ever been on, and the most fun, because, as my hon. Friend the Member for Sittingbourne and Sheppey (Derek Wyatt) said, we were properly prepared. That is not always the case with such visits. I thank all those who were involved in making the trip work by doing so much advance work with us, so that we understood what we were seeing when we got out there.

One of the great benefits of the visit was that Labour Members did not have to be present to hear the result of the Crewe and Nantwich by-election, although it came through with great speed. Conservative Members made no bones about relishing the majority that was secured for the time being in that by-election.

I was interested in the question of information technology and its liberalising or restrictive effect. We continue to need to work with the Chinese in that area, or they might go as far as insisting that everyone with a television requires a licence from the Government to watch it. We would not want to go in that direction, would we, Mr. Illsley?

My final and more serious point is that we were asked by our hosts whether we would like to see an industrial park. I was up for that because I have an industrial park in my constituency that provides around 1,000 jobs, so I am very proud of it and we work hard to keep it. The industrial park in China had 6 million people living inside it. When we visited the university, I said that it was good to have a university inside the park, and my host said that it was one of 10.

I went home to my constituency in Nottingham, where we have 31,000 people on incapacity and related benefits. The experience of being in China and seeing the pace at which things are moving, and comparing that with what was happening in my constituency, before the financial crisis, was sobering. I am not necessarily pessimistic, but all of us and particularly those of us who are in Government or who aspire to Government must learn certain lessons. We need to learn about long-term financial stability and long-term planning and about not looking at the next quarter’s results, but the next decade’s results. We need to invest for the future. It might be that we do that in a different way, but some of the fundamental lessons are to be learnt from China and we ignore them at our peril. There are tremendous advantages to looking at the long term, and part of that means looking for long-term partnerships with the Chinese Government, so that we can all benefit from a different regime and a different global economy.

I thank my colleagues for their tremendous fellowship on the journey and all those responsible for making it such a success. I am certainly one of those whose eyes were opened. I relished visiting a beautiful country and meeting some marvellous people.

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10.30 am

Mr. Jeremy Browne (Taunton) (LD): I congratulate the hon. Member for Nuneaton (Mr. Olner) on securing the debate and the hon. Member for Wirral, South (Ben Chapman) on his joint leadership of the delegation, of which I was a part. I thank the Industry and Parliament Trust and the many British companies including Virgin, PricewaterhouseCoopers, BP, GKN, Arup and others who helped to make the trip so informative and such a success.

I should like to echo many of the themes discussed by the hon. Member for Nottingham, North (Mr. Allen). My motivation for going on the trip was that I had never been to China before. I am a reasonably well-travelled person and felt ignorant that I did not have any first-hand experience of a country that is becoming increasingly important both across the world and for Britain. I was interested in what the development of China meant for the British economy and people, and I was blown away by what I saw. My experience was so serious and dramatic that it had a profound impact on me and has influenced my thinking about politics and the future of the world.

I went with everyone else to Shanghai and one evening we were having a nice dinner in a building that was about five or six storeys high and was originally a British mercantile building. We were on the top floor of a restaurant overlooking the river and during the meal, I sat next to a British person who had been living in Shanghai for many years. He asked me what I thought of the view. It was night and the view was lit up, so that there was an Asian version of a Manhattan skyline on the other side of the river. It was an impressive backdrop and I told the person I was sat next to that I thought the view was fantastic and he said that 11, 12 or 13 years ago the area was all fields. That demonstrates the pace of change.

The hon. Member for Hertford and Stortford (Mr. Prisk) made the point that China has 1.3 billion people. There is an east-west divide, rather than a north-south divide, and on the eastern side—for the ease of mathematical breakdown—there are perhaps 300 million people who are part of the new economy. Within that area, perhaps 50 million to 70 million people—roughly the population of Britain—are consumers in the western sense. That shows China’s potential.

The hon. Member for Sittingbourne and Sheppey (Derek Wyatt) made the point that there is a reserve pool of labour of about 1 billion people. We, in this country, think of China as a great exporter; indeed, it is a great exporter, and that is an important part of the world economy. However, the domestic market in China will lead to huge changes for British business and is a big opportunity. It does not take a huge leap of imagination to realise that as more and more Chinese people increase their wealth and prosperity and become consumers themselves, the Chinese economy will be fuelled by the need to satisfy domestic consumption, not just international consumption.

Other contributors to this debate have mentioned the increasing quality of the Chinese work force. Too often in this country we think that all the Chinese do is make cheap clothes for western consumers to buy, and that that keeps down our headline rate of inflation. China does that extremely well, but Shanghai has about 400,000 university students. As the hon. Member for Nottingham,
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North said, we went to Shuzhou and looked around a university that was a joint enterprise with the university of Liverpool. We commented on what a successful university had been put together. There were 10 universities on one street and the students there were studying engineering, information technology and science. They were motivated and focused on what their studies meant for their country economically and their own life prospects.

China will overtake the United States. I agree with the point made about the 19th century being the British century and the 20th century being the American century. American still has a huge role to play in the world—not just economically, but militarily, culturally, politically and in other ways—but China is growing and growing in influence and I entirely endorse what has been said about how the British Government must respond to that. I welcome the new Secretary of State for Business, Enterprise and Regulatory Reform. It is important to have a politician of his stature and international reach in that role and I hope that he can bring his influence and political skills to bear to the advantage of our country.

Mr. Prisk: The hon. Gentleman rightly mentioned the growth in levels of consumption in China. Considering the global turndown, does he agree that in production terms, ironically, it is even more important now for Chinese consumers to take up some of the slack in terms of the goods that the rest of the world is no longer seeking from its factories and other industrial outlets?

Mr. Browne: That is important. China is growing at a rate of 10 or 12 per cent. a year and will perhaps itself experience a dip, but the fundamentals in terms of medium and longer-term growth prospects for the Chinese economy are extremely good. It is an occasionally foolish or brave politician who makes critical observations about his or her own country, but I worry that, by contrast, we in Britain are sometimes gripped by a sense of national fatalism—whether in relation to the millennium dome, terminal 5 at Heathrow, Wembley stadium or the 2012 Olympics.

In China I was struck by the sense of opportunity and the pace of change. We have to be able to respond to that. However, we need to consider the crumbling infrastructure and the unsatisfactory levels of educational attainment in the British system. The hon. Member for Sittingbourne and Sheppey made a point about our inability to deliver infrastructure projects on time and on budget. We cannot afford to allow that indulgence to continue.

We allow ourselves to believe that there is some sort of settled world order. For example, when the G8 summit is held, the eight leaders stand on the stairs and, with the exception of the Japanese Prime Minister, they are all western faces—I was going to say men, but that is not the case with the German Chancellor. We think that that represents the global hierarchy; and it has done for a long time. I am not saying that America, Britain, Germany, France, Italy, or even Canada will not have a role to play in the future—of course they will. However, the order is changing and we have to reflect that changing order—whether through our Foreign Office, our national mindset or in the way in which our companies do business.

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What are the potential risks for China? One risk is the enormous disparity in wealth. Shanghai is the only place in China I have ever been to, but it is like going to New York and thinking one has seen America; there is a lot of China beyond Shanghai. Some people still live in extremely straitened circumstances. It is difficult for any country—particularly one that claims to represent some sort of vaguely communist ideal—to sustain such disparities of wealth. As the hon. Member for Wirral, South said, the Chinese economy needs to grow rapidly in order to ensure that the gap does not grow to the extent that it causes greater social tension.

The depletion of natural resources is also an issue. If 400 million people move to cities in the space of a couple of decades, it has huge implications for raw building materials. We delude ourselves if we think that we are an advanced nation with a huge amount of environmental heightened awareness, and that the Chinese are not aware of such subjects. When we went to BP, I was struck by the fact that it had an American international director of global innovation—in BP terms, innovation means anything other than oil. I, or one of us, said to him, “You are an American, so why aren’t you in America or based in London?” He said, “Because if you’re interested in innovation and change, you have to be in the country where innovation and change is moving at the faster pace, and that is here in China.” BP is investing more in research in China than in its university partnerships in Britain and the United States.

The big question for China is whether it can let the economic liberalism genie out of the bottle but keep the political liberalism genie inside. We shall no doubt discover the answer in the months and years ahead, but if European Governments think that they can pull up the drawbridge and, with protectionism and restrictive labour laws, resist the changes that are happening in China, they are deluding themselves. The challenge for Britain is to show that we have the ambition, confidence, innovation, application, energy and education to compete and succeed. The task for the new Secretary of State, his ministerial team and officials and our country as a whole is to show that we can live up to that challenge.

10.40 am

Mr. Geoffrey Clifton-Brown (Cotswold) (Con): It is a great pleasure to serve under your chairmanship, Mr. Illsley. It is also a great pleasure to take part in a debate secured by my old friend the hon. Member for Nuneaton (Mr. Olner). I shall let hon. Members into a little secret. I did my Industry and Parliament Trust fellowship with British American Tobacco and I used to be given free cigarettes, which I gave to the hon. Gentleman. I hope that that has not contributed to the fact that he is retiring from the House at the next election. The House will miss him sorely when he does retire. It was great to hear from him this morning.

I congratulate the hon. Gentleman and the chairman of the all-party group on China, the hon. Member for Wirral, South (Ben Chapman), on jointly leading what was obviously a fantastic trip. I think that the Minister and I are feeling rather left out. We seem to be the only ones in the debate who were not on that trip, but I cannot really feel left out, because I have been to China twice and I am to go to Hong Kong and China again in November. What has been said today proves that we need to understand a great deal more about that rather
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strange country that many people in this country do not know enough about. By travelling and seeing with one’s own eyes what is going on there, one can get a snapshot of how the world is changing.

I echo the comments made by the hon. Member for Wirral, South. The world is changing, in his excellent phrase, from occidental to oriental. Having been to a number of other south-east Asian countries, I know that the world is moving eastwards. We need to use all our assets to try to get into that world with trade and everything else. Currently, not enough of those assets are used. The hon. Member for Sittingbourne and Sheppey (Derek Wyatt) mentioned the figures for the UK consuls. We need to use the Foreign Office, UK Trade and Investment, the China-Britain Business Council, the British Council, the BBC World Service and, indeed, our ancient contacts with Hong Kong to get into the Chinese market. We do not use those contacts enough.

Let me put the Chinese market in context. Whereas the gross domestic product per head in America is $45,000 and in the UK is $33,000, it is only $5,300 in China and $2,700 in India. The staggering facts are that, over the past seven years, whereas the US has grown by only about one third and, interestingly, the figure for the UK has doubled, the figures for China and India have gone up by three times. That gives an idea of the pace of relative change of the so-called western world and the eastern world. I take on board the fact that China’s economy is predicted to be larger than that of the US by 2040.

Several hon. Members have criticised the fact that our trade deficit with China is growing—a fact that we need to bear in mind. It has grown by 67 per cent. in the past six years alone. We are importing more goods from China, and yes, in many ways that is good for the economy. Contrary to what was said, I think that that is deflationary because we have been importing cheap rather than expensive goods. I think that we have had a deflationary effect from our trade with China, but ultimately we must try to ensure that the trade gap with China is closed.

There was a lot of criticism in the debate. I do not want to major on that, but my hon. Friend the Member for Hertford and Stortford (Mr. Prisk) put his finger on the issue. The fact that we have nine regional development agencies, all with offices around the world, many in the same city—for example, Shanghai—pitching for the same business, dilutes the UK brand. It was said that in the past 10 years France has doubled its trade with China and Germany has trebled its trade, yet Britain still lags behind. I spent a great deal of time with UKTI earlier this week, but with the best will in the world, Britain needs to do a better job. It simply is not doing a good enough job.

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