CORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 529-i

HOUSE OF COMMONS

ORAL EVIDENCE

TAKEN BEFORE THE

FOREIGN AFFAIRS COMMITTEE

GOVERNMENT POLICY TOWARDS CHINA

TUESDAY 2 JULY 2013

PROFESSOR BRESLIN and PROFESSOR TSANG

MR INKSTER

USE OF THE TRANSCRIPT

1. This is a corrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.

2. The transcript is an approved formal record of these proceedings. It will be printed in due course.

Oral Evidence

Taken before the Foreign Affairs Committee

on Tuesday 2 July 2013

Members present:

Richard Ottaway (Chair)

Mr John Baron

Ann Clwyd

Mike Gapes

Sandra Osborne

Andrew Rosindell

Mr Frank Roy

Sir John Stanley

Rory Stewart

Examination of Witnesses

Witnesses: Professor Shaun Breslin, Department of Politics and International Studies, University of Warwick, and Associate Fellow, Asia Programme, Chatham House, and Professor Steve Tsang, Director of the China Policy Institute, University of Nottingham, gave evidence.

Q1 Chair: May I welcome members of the public to this sitting of the Foreign Affairs Committee? This is a one-off topical evidence session on UK policy towards China, to explore progress in the Government’s effort to deepen UK-China ties and the implications for the UK of the new Chinese leadership.

We are taking evidence from three witnesses today. I am pleased to welcome, for our first session, Professor Shaun Breslin, Department of Politics and International Studies at the University of Warwick and Associate Fellow of the Asia Programme at Chatham House, where he briefed the Committee a few months ago on a similar subject. I also welcome Professor Steve Tsang, Director of the China Policy Institute at the University of Nottingham. May I give a warm welcome to you both? It is very much appreciated that you have taken the time to come to speak to us today.

I gather that you are both happy to go straight into questions. May I just ask a general question to start with? How does China see Britain? Are we a bit of a minnow, or do we have value as a member of the EU? Would they rather be talking to the EU than to Britain?

Professor Breslin: I think the UK occupies a bit of an odd situation, often, in Chinese thinking, in that it is a key power in the European Union and it is also seen as a key bilateral power. But at times I think it really depends on how the UK lines up with or against the United States when it comes to major strategic considerations, for example over humanitarian intervention in Libya. Of course, there is the particular situation of Security Council permanent membership.

I think the UK occupies two or three different roles in Chinese thinking. It almost depends on the issue-economics is perhaps different from big questions of security when it comes to the Security Council. It also depends on how Britain is perceived by the Chinese to be operating in or with the United States, or perhaps taking a more separate, independent line.

Professor Tsang: I would say that the Chinese still have an element of historical baggage about the UK. That is fading very much after the Hong Kong handover, but there is still that legacy of the history, which is not totally irrelevant. I think there is an element of trying to put the UK more, if you like, in its place, rather than being seen as the leading member of the EU.

I think they would like to put Germany much higher in terms of the pecking order in the EU as a major partner and of a relationship that they want to cultivate. But they also see that the UK is far more open than the other EU members, and therefore we offer opportunities that others may not be quite so open to offer.

Q2 Chair: Does our visa regime pose a problem to UK-Chinese relations? Has that come across either of your desks?

Professor Tsang: Yes. The visa issue is certainly a problem in terms of the number of Chinese visitors coming to the UK. If we were, for example, part of Schengen, there would be a much higher number of Chinese visitors to this country. The fact that they have to apply for a separate visa to come to the UK is a bit of a deterrent. For a lot of Chinese tourists, they take a utilitarian view-they have one Schengen visa and they can go to many European countries in one tour, whereas the UK is the UK.

Professor Breslin: Yes. I think there is a bit of a feeling that China has been singled out for things that have happened in the past. On a very personal level, it makes it problematic if you bring in Chinese visitors and want to take them to Brussels: often, the timing of it is really quite difficult and we have had to cancel some people coming to conferences, because they have not been able to get things in time. That is purely on a personal level, rather than as a UK policy issue.

Q3 Sir John Stanley: The section on China in Amnesty International’s 2013 report, The State of the World’s Human Rights, begins-I just offer the opening sentence; I could offer a great deal more-"The authorities maintained a stranglehold on political activists, human rights defenders and online activists, subjecting many to harassment, intimidation, arbitrary detention and enforced disappearance."

I made my first visit to China 35 years ago, and I have to say from where I am that in that 35-year period I have not seen any material diminution of what Amnesty describes as the "stranglehold" on political activists. Do you consider, therefore, that the British Government’s attempts over that period to reduce that stranglehold have been a failure? Do you have any alternative policies that the British Government might follow to achieve a greater measure of success?

Professor Tsang: If I may, my understanding of British Government policy is not to do that, in fact, but to improve the conditions of human rights in China. If we are looking at the situation of human rights in China, I would say that it probably has in fact improved. I am not contradicting anything that you have said from the report. What has been said in the report is accurate, but on a day-to-day basis, most abuses of human rights happened in China because of the failure of the criminal justice system, rather than because of the specific prosecutions of political dissidents and opposition people.

There is just no way that the Chinese Government, under the Communist Party, is going to relent in terms of control over dissidents. They are not going to do that whatever we may try to say or whatever we may try to do to engage with them. But in terms of the overall human rights situation, there is scope for things to be improved. We have seen some of that being improved simply by helping the Chinese with improving the quality of justice being delivered. As far as that went, the British Government’s record has not really been as bad as might have been implied.

Professor Breslin: I would start by saying that, while I think it is true in terms of political activists, there is a greater political space now for people to discuss and debate some things in China, bearing in mind that that space can open and shrink. There have been a number of high-profile cases where officials have been brought to book, effectively, by online campaigns, newspapers seeking justice and so on.

That might not be political activism as Amnesty International defines it, but there is greater space at times for popular engagement within politics and perhaps for debating political ideas. This is a country where at the moment there is almost unprecedented debate taking place over what China’s global role should be, for example. That is not really what Amnesty International means by political activism, but we should not think that that is the same thing as closing down all political thought: at times, it can be quite plural.

I am not sure what more could have been achieved if the United Kingdom had taken a different line over China-for example, if it had perhaps emphasised human rights more and economic relations less. I am a believer in changes in China emerging because of changes that take place and evolve within Chinese political and social life itself.

I agree entirely with Steve that the best thing the UK can do, and does quietly, is to help in those technical areas-training judges, training the legal system-and to encourage China to do what it promises to do under the law at the moment. I am not sure whether another policy would have necessarily generated anything different. I think the changes will come from within rather than necessarily from without.

Q4 Mr Roy: What ramifications will the changes in the leadership have for the relationship between the UK and China?

Professor Breslin: I wrote a paper a few years ago called, "Do leaders matter?" in China. I suppose the answer should have been, "No, they don’t", but of course the answer was, to put it accurately, "Yes, of course they do, but perhaps not quite as much as they did in the past and perhaps in different ways."

When Deng Xiaoping came to power, it was effectively a coup; it overthrew the leadership and you moved entirely in a new direction. That is not the way leadership change takes place in China anymore. The new leaders are a reflection of the balance of power and different interests in the Chinese political system. They got to be where they are because of those power constellations. When they come to power, they cannot immediately just go like that and act, ignoring those constellations of power; they are a reflection of that political system. So I think it is going to take perhaps another year or so before we really begin to see them implanting their own agendas internationally and, I think most clearly, domestically.

Obviously we need to pay attention to who the new leaders are. This new generation of leaders are primarily social scientists rather than the technicians of the past. We obviously need to pay attention to them, but we need to recognise that China has become an increasingly complex and diverse polity, with more interests affecting policy, not just at the central level, but also in local government. We should not expect leadership changes at the top to have big, dramatic shifts in policy. I think it is going to be pretty much more of the same for the time being.

Q5 Mr Roy: In the same vein, the UK wants to deepen its work in relation to the international work that China does, and to economic and commercial links. How should the UK Government interpret the changeover?

Professor Tsang: May I deal with both questions? In terms of the leadership change, it would matter because the new leadership is much more confident and inclined to be assertive. The change in the rhetoric from Hu Jintao talking about a harmonious world, which is an extension of the domestic policy of promoting a harmonious society, to Xi Jinping’s promotion of a China dream is important. The China dream is, as the Foreign Office paper says, all about national rejuvenation or revival. What does that mean? That has not been clearly spelled out, but the reality is that China is already a veto-holding permanent member of the Security Council. No state in the world, post-Second World War, can enjoy a more distinguished status than that. What more can there be, apart from something that is inclined to be assertive in a way of reviving the old glory of the old imperial period?

That, again, brings us back the history: the UK was the first country to challenge that in the 19th century. That may, in a sense, bring back a bit of the history there. There is also the issue of how things are unfolding in Hong Kong. If things do not go as well as everyone would like them to be in Hong Kong, we are likely to be blamed in some way. We have to bear it in mind that there potentially will be ramifications some time down the line.

Of course, on the one hand, a more assertive China is welcome. I think we would like China to play a more proactive role as a member of the Security Council and as a responsible great power. On the other hand, if there is a lot of going back to what the history was, then we have reasons not to be completely comfortable.

In terms of how we should focus on the economic and trade relationship, we really should focus exactly on economic and trade relations and try to insulate the politics from those as far as possible. I think that comes through as basically what the Foreign Office is trying to push. I don’t think there is an alternative to that. We have to bear in mind where the Chinese are coming from, but if we start off with a policy that assumes the Chinese are going to be doing anything more than just engaging with us economically and in trade relationships-then we are going to encourage them to do that. The only way we can do it is to focus on economic and trade relationships.

We have a remarkably open economy, not only in terms of trade but in welcoming foreign investment. We should continue to do that with the Chinese unless they cross the line. If they don’t cross the line, I don’t see any particular problem. If they are going to invest, for example, in High Speed 2 and deliver a first-class product at a substantially more competitive price with the standards we require and expect, I don’t have a problem with that. We just have to make sure those standards are not compromised in any way for political, diplomatic or other considerations.

Professor Breslin: One of the things the UK has done well over the years is recognised that there is more to China than Beijing and Hong Kong; some of its provinces are bigger than any of the European countries. Having a diverse set of relationships that deals with the provinces and looks at the different centres of power and economic growth in China as potential partners is a very good strategy. That is something the UK has done. We have offices across the country, but I think we can do a bit more about it.

If I can come back to the last point you made, there is a lot of money in China that is waiting to come out. It is seeking access to markets, but it is also seeking technology and know-how. We need to have a debate about whether we are happy to be totally open to investment, of whatever sort. Maybe that debate needs to take place with people elsewhere. I know that in Washington, for example, there is considerable concern that Europe and perhaps Britain will be more open to trade and investment from China in areas that the United States is not very keen on. We have to trilateralise, if you like, our thinking on this.

Q6 Ann Clwyd: You said that change will come from within China. What effect did the Prime Minister’s visit with the Dalai Lama last year have in China? Were there any repercussions?

Professor Breslin: The answer to that is yes, there clearly were. There is a website-I wish I could remember its name-that documents the number of times the feelings of the Chinese people have been hurt by foreign dignitaries. It is almost always to do with interference in what are considered to be issues of China’s domestic national sovereignty, which foreigners have not only no right to discuss but no right to get involved in at all. Tibet is often one of those issues.

It was quite clear that there was concern within China not only that the meeting took place; certain people whom I spoke to were wondering what the ulterior motives were behind it. They did not just see it as a meeting, but as a part of a greater attempt by the Government to do something to China. They couldn’t quite work out what, but they saw it as being that. They saw it as a deliberate political step, which needed to be responded to. It is something that has happened time and time again, not just to the UK but to other countries, with Nobel Peace Prizes and things like that. It is a fact of life in dealing with China today.

Professor Tsang: I do not disagree with Professor Breslin about how the Chinese see this, but my opinion about how we should deal with it is slightly different. Who the Prime Minister of this country sees is a matter for the Prime Minister and the electorate of this country. It is not the business of any other country. In any event, when the Prime Minister saw the Dalai Lama, he made it very clear that he saw him as a religious leader in a religious establishment. That is not something for us to be uncomfortable or apologetic about.

If the European Union were to act as one on this matter, I think the Chinese Government would respond in a different way. In terms of the United States, the American President would meet with the Dalai Lama and the Chinese would have business-more or less-as usual with the Americans. European countries can be divided and ruled. Therefore, we are being treated in a different way, until eventually one after the other a European Prime Minister or President will use a form of language that the Chinese Government will approve of before they will let that relationship be restored.

If we want China to be engaged rightfully as a major, leading force in the world, we have to engage it in the way that it should be done, which is that we would not want in any way to attempt to dictate terms to China about how it should behave, nor would we accept China dictating terms on how we should behave.

Professor Breslin: I do not disagree with that at all, but if the question is, "Did it create problems for Britain in China?", the answer is yes. You might be right that it should not have, but it did.

Q7 Ann Clwyd: Is there any point then in the EU human rights dialogue, or the UK human rights dialogue, with China? Is it best that those dialogues do not take place?

Professor Tsang: We have to have the dialogue with China. It is important, even though the reality is that, in terms of the substance, it might not amount to all that much, but symbolism does matter, as does how it would be seen by a huge number of people in China and whether we really stand by what we believe in. Here what we are trying to do is not necessarily to preach democracy to China; the Chinese will choose what political systems they want to have. However, when they do so, they want to know how democracies behave. They want to know whether democracies actually stand by the principles that democracies say they stand by. And we do stand by human rights, and if we are being seen as not standing by human rights we are discrediting the idea of democracy.

While changes can only happen in China, the opening up in the relationship between China and the outside world has had a huge impact on how everything has developed in China in the last 30 years or so. Thinking in China has changed; people’s perspectives have changed. Ideas that previously were impossible for people to contemplate exploring as experiments or ideas that might perhaps be applicable to China have become applicable, because of the huge interchange in everyday contact, in Western ideas being available in China and in Chinese being able to travel outside China and see for themselves, go to our universities, have debates with our students and professors, and they develop their own ideas. We should continue to do that.

Q8 Ann Clwyd: Of course, critics in this country always feel that the Government should be more robust in their exchanges on human rights, and that they are not robust enough.

Professor Tsang: It always depends on what one means by being "more robust". We have to understand the Chinese system for what it is. It is still fundamentally a Leninist system. I personally came up with the concept of "a consultative Leninism", which is different from the old-fashioned Marxist-Leninist system, but it is still fundamentally a Leninist system, which has clear red lines that it will not allow anybody to cross. When that happens, they will respond very strongly.

So, if it is a matter of outside powers trying to impose certain standards of human rights on China, it simply will not be acceptable to the Chinese Government; they will not respond to that in any positive way. But on the other hand, there are plenty of things that we can do that our Chinese friends will pick up and they will not necessarily find them as being threatening to the survival of the regime. Within that framework, they will make changes that will have a significant impact on how human rights are being respected on an everyday basis in China.

There is not a lot that we can do with political dissidents in China, but in general terms-about everyday human rights situations-we can. That is where I think we are delivering more results in those areas. I wouldn’t say that we are not being robust; just picking a fight, a verbal quarrel, with the Chinese will not necessarily get us the result, even though it may mean better soundbites for human rights organisations.

Q9 Chair: I am sorry to interrupt. Two of us have to leave for 15 minutes, so Ann Clwyd is going to take the Chair. Please forgive us, and do continue with your answer, Professor Breslin.

Professor Breslin: Going back to what I said before, if you look at human rights reports in terms of the number of people being arrested and so on, then yes, it does not seem to have resulted in any great benefits at all. However, there is an increase in dialogue; there is a space, and that space can open or close. At the moment, within Chinese universities, for example, I think it is tightening a little and the space for open debate and pushing for alternatives has closed a bit. But history suggests that it will go in waves. Just maintaining a dialogue may not seem very dramatic or make many news headlines, but it does slowly have results in exchanging ideas and opening societies.

(Ann Clwyd in the Chair)

Q10 Andrew Rosindell: If I could turn to the issue of Hong Kong, yesterday, we saw 400,000 protesters demonstrating on the streets, waving the former British colonial flag of the territory and demanding democratic reforms in that former British colony. Do you feel, 16 years after the handover of Hong Kong to the People’s Republic of China, that the UK has properly discharged its obligations to the citizens of Hong Kong, many of whom still consider themselves to be British and have huge loyalty and affection for the Queen and for the United Kingdom?

Professor Tsang: I should perhaps declare an interest: I was born in Hong Kong and lived my first 21 years there before I moved to this country to study. I then stayed on and lived here. Hong Kong is a very difficult issue for us. I totally understand why people in Hong Kong would be raising the colonial flag. The affection for this country is very genuine, as is the acceptance of the values that this country represents. However, raising the colonial flag, or a modified version of it, in Hong Kong, is as unwise as it could be in the situation in which Hong Kong finds itself. The Chinese Government are very sensitive, rightly or wrongly, about the British connection to Hong Kong. They are prone to conspiracy theories, and would be thinking that perhaps there is a British "black hand" somewhere behind that is stirring things up. That is not going to make the Chinese Government willing to allow Hong Kong a greater degree of freedom and a faster pace of democratisation at all.

The one thing about the Chinese Communist Party and democracy is that it is not opposed to democracy, it just wants to make sure that all the results are known and approved by it beforehand. But Hong Kong wants a version of democracy like ours, where the electoral result is uncertain by its very nature. That is not something that the Communist Party is willing to accept, but if they think that Hong Kong wants to have a degree of self-government and a higher degree of accountability of the Government to the local people, without in any way posing a challenge or threat to Chinese sovereignty in Hong Kong and the security of the Communist Party in all Chinese territories, then they would actually be more willing to accept that. To revive nostalgia about the colonial period simply is not going to set the Chinese Government at ease and therefore is not going to deliver the results that people in Hong Kong would like. I know that it is counterintuitive, but there you are.

Q11 Andrew Rosindell: Do you feel that maybe Beijing is misjudging this and that if they were to allow Hong Kong to strengthen its links with Britain and with the Commonwealth, that that would not only settle things in Hong Kong and make the people of Hong Kong feel happier, but give China a voice elsewhere? For instance, if Hong Kong were to be encouraged to join the Commonwealth, where it would feel very much at home-many of the traditions in Hong Kong emanate from Britain-it would feel part of the Commonwealth family. Do you not think that it is time to allow the people of Hong Kong that opportunity, which has been given to every other former British colony?

Professor Tsang: What you say, sir, makes perfectly good sense, it just will not be acceptable to the Chinese Government. I completely agree with you that if the Chinese Government would give Hong Kong a complete free hand, through autonomy, to develop its own political systems as people in Hong Kong would like it to do, people in Hong Kong would feel a stronger sense of Chinese patriotism. There is no real contradiction in Hong Kong developing a different political system from what is in place in China and still feel very proud of being Chinese and being able to help with the development of Mother China and all that. Stronger connections with the Commonwealth, in whichever form, will not necessarily be exclusive to that development. I have absolutely no difficulties agreeing with that, but for the Chinese Government to contemplate that, I think is just completely, with all due respect, unrealistic. They will not think that; they are not capable of thinking it in those terms.

Q12 Andrew Rosindell: In your view, is China being reasonable or acting like a bully?

Professor Breslin: Can I add something which perhaps comes back to your previous question? Beijing’s policy towards Hong Kong is not just about Hong Kong, it is about Taiwan as well. There is always a thought to sovereignty and making sure that Taiwan does not act like an independent sovereign state. Membership of organisations that are not organisations for states, such as the World Trade Organisation, which is for an economic territory, is one thing, so you can have Hong Kong and Taiwan under some obscure name also being members of the World Trade Organisation alongside China. When it comes to something that makes it look like a separate independent state, where Beijing does not have the ultimate monopoly of authority, it is simply not on the agenda as far as China is concerned.

Q13 Mr Roy: Over the last 10 years, there has been a huge change in the relationship between Taiwan and the mainland and an awful lot more people-to-people contact. Has the fact that there is now so much dialogue between people made a difference to the political attitude in China?

Professor Tsang: The easing of tension between China and Taiwan since 2008 has certainly had a major impact on how their relationship is being handled. Between 2000 to 2008, that relationship got very, very tense and the risk that force may have had to be used increased. I do not think it got to a point where it would have been used, but it was certainly increasing. After 2008, that tension reduced and the idea that force might actually need to be used was sort of parked to one side, rather than being taken more seriously, so that has changed. But the Chinese Government have also come to realise that the democratic politics in Taiwan mean that they cannot be sure that, after the next election in Taiwan, the new Government in Taiwan will necessarily be one run by the Kuomintang and therefore more willing to engage in dialogue with the mainland. The Chinese Government say that they are willing to engage in dialogue with the Democratic Progressive Party in Taiwan, but there is a precondition, which is that the DPP will have to accept a one China principle. When the Kuomintang is in power in Taiwan, the issue can easily be fudged, because the Kuomintang has its own version of the one China principle. It is just a different version of the one China principle being expounded by the PRC in Beijing. Because they talk a language where they can easily talk past each other, they do not have to challenge it and there is no need to deal with it. Because the DPP is not willing to buy into that dialogue explicitly-implicitly, in fact, the DPP does accept that, but it is not willing to accept that explicitly-the Chinese Communist Party has a problem with that, and there is a basic mistrust of a DPP Government. So things can change.

Q14 Mr Roy: So in 2016 you expect, if the DPP are elected, to see a change in attitude?

Professor Tsang: If there is going to be a change in Government in Taiwan, with the DPP in power in 2016, I think the Chinese Government will re-adopt the policy it had from 2000 to 2008, which was to watch the acts of the Government in Taiwan and listen to its words to see whether it was doing anything that could be seen as transgressing China’s bottom line. Some of the things that are being tolerated, for example, the current de facto diplomatic truce between Taiwan and China, might well be withdrawn. A few of Taiwan’s diplomatic allies probably would be quite willing to switch recognition if the Chinese Government says that it is time for them to do so.

Things can change and things can get rather more tense, but it does not necessarily mean that that relationship will immediately get into a crisis point. The economic relationship between the two is now very strong. It would be extremely expensive and painful, even for China, for that relationship to be upset. It would be fatal for Taiwan, but it would be extremely expensive for China.

Q15 Mr Roy: The United Kingdom has bilateral relations with China and with Taiwan. Does that cause a problem?

Professor Breslin: As long as everybody accepts the formal position of one China, you can push at the edges of that in the good times, like now, in terms of what you actually do. As long as you maintain the formal position that there is only one China, only one state and only one true representative of China, you can fudge around the edges. It is when you start suggesting, implying or even hinting that maybe there is one China and one Taiwan, or maybe there are two Chinas, that you change the nature of the game entirely.

Q16 Mr Roy: What are those changes? I remember during the Olympics last year that China complained straight away when the Taiwanese flag was put up in Regent Street. Is that the type of thing?

Professor Breslin: Exactly. In the Olympics, it is not Taiwan as a state that is taking part. In the World Trade Organisation, it is called the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei). As long as you play the diplomatic niceties, you can have the relationships without having the formal diplomatic relationship.

However, many years ago, in the International Studies Association, an academic body, there was a representative, I think, of the Taiwan Political Studies Association, and that caused problems. If it had been called the Chinese Political Studies Association (Taiwan), that would have been fine, but calling it the Taiwan Political Studies Association indicates that Taiwan is a separate entity, which is not okay. You have to create the formal diplomatic position, and then people are prepared to be a bit more flexible as long as you accept that formal situation.

Professor Tsang: I would just add that there is this objective dimension to it, which is the British policy, and there I think we are all on the same page-depoliticise it and do it as a practical matter, which HMG is already doing. Then there is the context of it, which depends on the relationship between China and Taiwan. In the post-2008 context, the UK offering visa-free entry to passport holders from Taiwan has not caused a problem, because it has been seen and accepted as a practical matter with no political connotations or implications. If that had happened before 2008, however, the chance that Beijing might have raised objection to it and might have seen this non-political act from a political angle would have been substantially higher. It is not entirely up to us, but we have to do the right things. Up to this point, the Foreign Office has got that right.

Q17 Sandra Osborne: You have talked about the influence of Chinese people going abroad and seeing what it is like in other countries. Have there been any repercussions for the Chinese Government from the uprisings related to the Arab Spring? I know that the new leader, for example, has put emphasis on anti-corruption policy, but 90% of the millionaires are related to higher-up members of the Communist Party. Could such issues lead to instability in the political system in China?

Professor Breslin: There are two things we need to separate out. One is the dissatisfaction that clearly exists within the Chinese political system and the other is the impact of the Arab Spring.

Dealing with the first one, if all you ever read that came out of China were things produced by the Communist Party’s own research done at the Central Party school, you could be forgiven for thinking that this was a country on the verge of revolution. The Central Party school’s job is to look out for the dissatisfaction and to try to analyse what is causing it and its political potential. If you go right back to Jiang Zemin, you will find leaders talking about how corruption can bury the Party and that it has created mistrust between the people and the party. There is a very clear awareness within the Party itself that the links between the people and the Party are being stretched very heavily by things such as corruption and land sales.

The single biggest source of income for local governments is selling the right to use land. In 2012, according to official reports, 22% of all mass demonstrations-it did not say how many-were because of land seizures and demolitions, as local governments kicked people off the land. There was an effective uprising in Wukan that overthrew the local government. There is a wide range of dissatisfaction and people are well aware of corruption, inequality, inequality of access and land seizures. If you have been to China recently, one of the interesting things is that environmental problems are getting closer to the top of the list. Quite frankly, Beijing is not a place where you would particularly want to spend a lot of time, although it is better than it was in February.

There is a whole range of issues. My friend John Kennedy refers to it as the TV and the window. You look at the TV and you see this great, rich, prosperous China with good leaders and growth and stability, but then you look out the window and see corruption, the local party cadre’s children behaving as if they are outwith the law, and environmental problems. At the moment, the blame is local, so there are all these dots of disaffection spread around the country. It is almost as if the regime’s job is to prevent the dots from joining up and becoming something else. That problem is there and there is recognition of it. Whether the much vaunted strategy of dealing with corruption will actually come up with any great concrete results, I have my doubts, because we have heard it so many times.

The Arab Spring is very interesting, because at first there was concern about it. There were clampdowns on the internet on discussions about it and there was a smallish demonstration in Beijing, although it was difficult to work out who were the demonstrators, who were the police and who were the journalists trying to take photographs of the demonstrators and the police. There was some concern that it would have a spill over, but I am not sure now that it has not necessarily acted in the opposite direction in that there was an editorial in the People’s Daily that said-I am paraphrasing-"Is that what you want? Is all the chaos that everybody went through in the Middle East worth it when you end up with this? You have death and economic collapse. You end up with no functioning Government. Is this really what you want?"

One of the things that the CCP has done quite successfully is establish a discourse of instability, if you like-that instability is just around the corner and what we need is a really strong stable party to maintain stability and to be able to govern the country and ensure that we don’t fall into chaos, and that we have the stable political system that you need where you can obtain your greater economic fortunes. While that dissatisfaction is still very much there and while a lot remains to be done, I think one of the key political reforms that needs to take place is to give people a voice. Many people within the CCP think that as well, not multi-party elections but for people to have a voice. I am not sure that the Arab Spring moved things in the direction that we might originally have thought; rather it has refocused attention on the dangers of chaos, disorder and collapse-the things that we are seeing at the moment.

Professor Tsang: In terms of corruption, the Party certainly takes it extremely seriously, which is exactly why the first thing that Xi Jinping said after he took power was that he would be anti-corruption. I share Shaun’s scepticism about how they would deal with it but I don’t think we should dismiss the efforts to deal with corruption as pretty irrelevant. You don’t have to have a campaign to eradicate corruption for it to be credible. What is being done in China is a campaign to contain corruption, to eliminate ostentatious display of corrupt acts and the benefits of ill-gotten gains. If people suffered from a relatively low level of corruption without that kind of ostentatious display then that discontent could be contained. That is basically what the Party is trying to do. The indications so far are that it is effective and having the desired effect-up to now.

On the Arab Spring I would agree with what was said. Over time the opposite effect has been delivered. Perhaps that might be related to Chinese policy in the Middle East. Where I think we should draw a lesson from the Arab Spring was right in the heady days of the Arab Spring when things were going well, when the protests were being organised in Beijing, and how it was nipped in the bud when there were suggestions that those of us who shared the sentiments of Cairo and Tunisia should take a walk in the centre of Beijing. The Government immediately sent many times more police officers on to the streets than there were demonstrators, showing quite clearly that the means, the political will and the instruments to deal with this effectively right away and very powerfully are right there-"Don’t even think about it." Essentially it was a Dirty Harry moment-"Make my day". They did not make the Party’s day and that is something that we have to learn in terms of how they manage that kind of challenge if and when they see it emerging.

Professor Breslin: Do we need to move on? I would like to mention briefly two things that could spark trouble over the next year.

Q18 Chair: Yes, please do.

Professor Breslin: One is property bubbles bursting, and the connected issue of banks and investment trusts going bust. We could see some localised, but quite big, problems if investment trusts and connected property bubbles burst.

Q19 Rory Stewart: What is China’s view on the consensus of international foreign policy making? Since the 1990s the whole theory of international action is based on ideas of trying to avoid state fragility, failed states and rogue states and to invest in governance and the rule of law, eliminate poverty and so on. These are the kind of arguments that underlie any international appeal to China, whether we are talking about Afghanistan, Syria, Libya or sub-Saharan Africa. Does China accept those arguments and, if not, does China have a radically different view of the international system and what the obligation of international actors should be?

Professor Breslin: There has been a lot of debate within academic circles and in China about the global order and China’s place within it and what it should look like. Some of those debates include people talking more in Western conceptions of global order. What we saw over Libya was the high point of the manifestation of a growing move towards consensus. It was not just that China did not veto the no-fly zone, which was, I think UN Security Council resolution 1973; China voted in favour of referring Libya to the International Criminal Court, which I think was resolution 19711. In some ways, that was a high point of the movement towards this consensus, but what happened in Libya, someone told us, was that it killed the baby at birth.

There was no desire in China for regime change. They might have been prepared to bend and push and fudge the concept of sovereignty, but since then we have seen a move back and a bit of a backlash against those who were pushing the more liberal global world order line.

Q20 Rory Stewart: Who are the Chinese foreign policy thinkers who are thinking about what the global order should look like and where the world should be going, regardless of what role China plays in creating it?

Professor Breslin: There is a range of people thinking about that. The Ministry of Foreign Affairs in China has, I think it is fair to say, a not particularly high status in the hierarchy of the bureaucracy. The leading Chinese diplomat is the state councillor, but he is not in the Politburo, so he is not in the top 30. There are a whole load of research think-tanks, such as CICIR, which is associated with the Security Bureau, and the Chinese Academy of Social Sciences. There are also leading intellectuals at universities, such as Tsinghua University, who are perhaps individually connected, or have been individually connected, to specific leaders.

A lot of it is driven not by thinking about the global order, but by thinking about China. You cannot get away from that. It is a country where you do not think about the global order without thinking about China within the global order. As China’s own commercial interests expand across the world, it is forcing a rethink about absolute conceptions of non-interference and sovereignty, because it is no coincidence that China behaved in one way over Libya, where it had significant economic interests, and in another way over Sudan, where the oil companies were significant drivers of policy. China is now behaving in an entirely different way over Syria, where it does not have the same economic interests.

A lot of it is driven by a need to respond to the reality of the actualities of China’s international interactions these days, which are no longer simply diplomatic or at the United Nations. They are in terms of big companies and small independent traders expanding China’s economic contacts and reach across the world. It has left Chinese thinking, at times, struggling to catch up with reality.

Professor Tsang: The Chinese fundamentally do not accept humanitarian interventionism, which came forward at the end of the Cold War. Basically, they still see humanitarian interventionism as an instrument of the Americans. It is therefore American interventionism, so they simply do not accept it. That may or may not be an accurate analysis of the situation on the ground, but that is how they see it.

In terms of interventionism, they uphold the principle of non-interventionism, but the application is very selective. In many ways, it is going back to a pre-UN situation of how national interest is calculated and put forward. The rest of the world-I am referring to the leading great powers-have had a go and have been dominant, but the Chinese have not had that yet and they feel they should have a right to the same. You have a bit of a contradiction there.

Q21 Rory Stewart: Just to push this specifically, how would China, aside from the question of the United States, view Afghanistan or Syria? What would China think its interests were in that kind of country? What kind of state would they like to achieve? Are they interested in stability? Are they interested in regional stability or simply in being able to extract minerals? What would be the vision of a Chinese policy maker in relation to that?

Professor Tsang: It is context driven. In terms of Afghanistan, the Chinese were happy over the last 10 years when the Americans were completely tied down and sucked into it, with the American defence agenda completely distorted by the Afghanistan involvement. That was fine, but they will have to rethink once the Americans get out of Afghanistan, when the situation on the ground in Afghanistan will change; they will have to think about how much more involvement they have. At the moment, the Chinese benefit in terms of extraction of minerals and similar activities in Afghanistan more than any other leading power in the world, without actually having to pay much for it. That works, but the context is going to change.

They are not unhappy with how the situation is in Syria at the moment, particularly since the Russians are taking the lead and therefore carrying all the blame for what is going on in Syria; but fundamentally, Chinese policy is not different from that of the Russians.

Q22 Rory Stewart: To what extent does China see its own domestic economic and political system as a model that could be exported? Is it looking at other countries for people to run systems similar to the Chinese system?

Professor Breslin: The Chinese model, as I see it, is not the projection of a model, but the negation of a model, if that makes sense. I think the Chinese model is: "Don’t follow A, B, C, D, E, F, G"-what we did-probably because it is impossible to do that. "But what we have done is show that you do not have to do it how they are telling you to do it. We are not telling you to liberalise; we are not linking aid; we are not telling you to do this; we are not doing that. You do what works best for you." It is not the promotion of a specific alternative model that you can pick up off the shelf and put down and follow, but what it is very clearly saying is that the Western model, the Washington consensus, is delegitimised: "We have legitimised alternative ways of doing things. We are now saying that we will be a partner with you and we will not tell you what to do. So if you want to go and develop your own system, you can." It is not a model so much as almost a metaphor.

Q23 Mike Gapes: What you are saying is that the Chinese are not driven by an ideological position with regard to their foreign policy or investments abroad; it is much more commercially driven. Because of the pragmatic approach, they will basically not raise questions about human rights or other matters. They will simply get their commercial interests and enterprises into whichever country without any qualifications, and they do not have any hang-ups about that. Is that what you are saying?

Professor Breslin: Not without any qualifications; there are some qualifications. Increasingly, Chinese companies want to make sure that their investments do not go pear-shaped. They want guarantees and they are looking for legal structures that ensure their money is safe. Of course, Taiwan is an issue, although as China has recently engaged the Caribbean states in a much bigger way, a number of the countries that recognise Taiwan have been invited to investment meetings and so on.

(Richard Ottaway in the Chair)

Q24 Mike Gapes: So there is a strategic political issue as well?

Professor Breslin: There are two, maybe three, strategic dimensions. One is that you need to make sure the numbers count in the game of global governance, so if there are ever votes in the United Nations condemning China, you want people on your side. There is an element of that. Part of it is an element of-a feeling of-national pride or national image promotion. If that is national pride and image promotion sometimes at the expense of Western powers, that is not so bad. There is a real attempt in the way that China deals with other developing countries to promote a preferred national image of China as being very different from the West, as not a coloniser-not unequal asymmetric economic relationships, but a country that will deal with you as an equal, and is also a developing state that was colonised. There is an element of ideology, or you could call it national image promotion.

Again and again, the evidence from talking to people, particularly within the political and foreign policy administration in Beijing, is how difficult they are actually finding it to control the economic activities that are increasingly taking place, either driven by the big state-owned enterprises, because they are big and powerful, or increasingly by a number of smaller economic actors who are outwith their control. At times, people complain that the image of China has been tarnished by economic actors they cannot control.

Professor Tsang: There may not be a specific ideology that the Chinese promote, but their approach is not completely non-ideological. There is an idea that they need to protect the right of non-democratic systems to be totally acceptable as a legitimate system of government in the world. The idea that the end of history is democracy as the system for all is something they fundamentally reject. That is a fairly ideological position to take, even though they are not actually advocating a particular ideology in terms of exporting the Chinese model to the West.

There are also elements of a definitional issue-that certain actions being taken by the Chinese Government are, by definition, not imperialist, not colonialist and not exploitative. Whatever those actions are on the ground, there may be situations in African countries when African people, in contrast to their Governments, might take the view that the Chinese are behaving like the European imperialists of the 19th century, but the Chinese will say that, because they are Chinese, by definition that simply cannot be true.

Professor Breslin: It is a non-normative, normative position. It is a normative position that says there should be no normative position, which by definition makes it a normative position.

Q25 Mike Gapes: In terms of the consequences for the relationship between the UK and China, we are both members of the Security Council. We have very close co-operation on lots of issues, but we have a completely different value system with regard to international institutions. The UK seeks to promote transparency, accountability and good governance, and the universal human rights agenda going back to 1948 is part of our foreign policy ethos, whether we uphold it not, whereas China has a completely different approach. Is that what you are saying?

Professor Breslin: Yes. Again, it might be different on the ground. Not only is it completely different, it is deliberately explicitly shaped and created against the Western concept; it is occidentalism. It is explicitly saying, "They do that, and we don’t."

Q26 Mike Gapes: That is a problem for the UK, particularly in Africa, but also in other parts of the world. The way we approach particular Governments or regions where there might be internal conflicts or human rights abuses would be completely different from the way the Chinese see it.

Professor Breslin: Yes, I think that is right. I come back to the point that it might not actually be like that on the ground where Chinese companies go, but the official foreign policy rhetoric/dialogue/approach creates a difficult situation. It is easy for us to ask what does China want from Africa, what does China want from the Caribbean. More often, we should be physically asking, "What do you want? What do Africans and people in the Caribbean want from China?", and turn it round the other way. We held a seminar in Beijing, and it was "no strings attached" investment.

Q27 Mr Baron: China and Russia often come to the same position on major foreign policy issues-Libya and Syria being two recent examples. They have an uneasy bilateral agreement. Can you explain how China gets to its position? What role, if any, does Russia play in its thinking? What does the UK have to do to tease China in its direction, when it comes to the UN and considerations relating to, say, Iran or Syria?

Professor Tsang: The relationship between China and Russia happens to coincide in terms of their calculations of interest at the time. I do not think that we shall be able to entice the Chinese away from the Russians. The Chinese would have taken the positions that they are taking over Syria anyway, and if they had thought the Russians would take a much more robust position over Libya, they might well have taken that position, too. The big difference between the Russians and the Chinese is that the Chinese Government would like China to be loved and admired. The Russian Government under Putin is more interested in asserting itself, showing that if we cannot get things done, at least we can obstruct things. Often, the Chinese would like to do the same thing, but they are not really quite as willing to pay the reputational price that the Russians are simply, happily paying, and therefore there is that partnership.

In terms of Iran and countries like North Korea-I think North Korea is a slightly different situation-the Chinese are not really going to be amenable to what we are trying to push for. Their interest there is primarily one of energy security and also making sure that a country like Iran is not being simply bullied by "the West" into a certain course of action, which would then be bad for countries like China, for that informal solidarity of non-democratic states. Realistically, I do not think there is a lot we can do to get the Chinese to be-

Q28 Mr Baron: Can I just press you? Then we must bring in Professor Breslin. Is it more or is it a combination? In which case, which has the upper hand? Is it a view, case by case, of the individual issues, or is it what you are perhaps suggesting-that it is an alliance facing the West, because of the powers they see on the other side of the equation?

Professor Tsang: For us, we have to deal with it on a case-by-case basis. There is no reason and no point in taking an ideological approach on something like this, because if we did we would be going back to what the Chinese often say: "That is the old Cold War mentality being resurrected". We do not have that. That is gone-finished-but they are still often trying to see things in that light. The only way we can try to engage with them is on a case-by-case basis and put the merit of the case forward, and make the most of the fact that they want to be accepted, embraced and respected. Therefore there is more scope, in that sense, to engage with them and persuade, than we have with the Russians, when their interest is in fact to show that they can obstruct. We just have to ensure that if you want the Chinese to be on board, they are part of that process-who will carry a lot of the credit for a good policy being delivered.

Professor Breslin: I do not have too much to add to that. I think China is actively seeking what we might call alliances of the dissatisfied, so that it does not stand out as being just dissatisfied on its own. The BRICs are an example of that, relations with Russia are another one. But I really think it comes down to the relationship, and how strong that relationship is depends on China’s material and strategic interests in each individual case. It has direct, specific energy-related strategic interests in Iran that it does not have in Syria, which means that perhaps there is more of an opportunity to explore those energy situations in the Iranian case than in Syria, where I think it is difficult, because-

Q29 Mr Baron: So moving this to the East and the South China Sea territorial disputes, you are suggesting that this is more a tilt at the US, perhaps, than it is to do with eastern Asian regional politics. What is the mix, as far as you can see it?

Professor Breslin: In the South China Sea?

Mr Baron: Yes.

Professor Breslin: Perhaps this is pushing things too far, but I think what happened after the financial crisis was that there was a renewed self-confidence. I slightly disagree about the new leadership. I think that new confidence was there in the Chinese leadership that emerged during that period, and a greater willingness, at that point, to assert what the Chinese call their core interests: that the time had come for China to start asserting its core interests, where the foreign powers-particularly, in this case, the United States, really had no right in saying, "This is our sphere of influence. This is our back yard. We are going to now try to be increasingly the power within this area." For a country like the UK, it is difficult to be an actor within that power constellation, because we do not seem to have the same strategic relationship.

Professor Tsang: For something like this, we have to remember that the Communist Party has a monopoly on the truth and a monopoly on history. It is the result of that monopoly which guides it in its particular actions.

If you take a map and look at the infamous nine-dash line, it is hard to see how that could be historic Chinese territory, but they believe in it because the history they have internalised makes them think that is really the case. That is how they can see that as genuine proto core interests. They did not say that this is core interests; they allow possible deniability. They allow people to assert that and, if all those statements are not challenged, they become accepted by the international community and then become core interests.

Hillary Clinton challenged that in Hanoi in 2010 and the Chinese Government backed off from that. But, having done so, they are still putting themselves in a situation where the nationalism narrative has become so important that the Government cannot back off from it. So they got into a situation where, from the regional perspective, they have the image of being a regional bully, which is not what the Chinese Government would like to project in terms of their image in that part of the world.

What Xi Jinping has done in the last couple of months is to try to get it into a more nuanced way and adopt the principle of the united front in dealing with South-East Asia and ASEAN, which, essentially, is to highlight how important ASEAN’s relationship with China is, and how much China values its relationship with ASEAN. But there is only one member of ASEAN, namely the Philippines, which has been causing trouble in that relationship, which is over that little band of islands. But we have been very reasonable.

The fundamental principle of the united front is to identify friends from enemies. In the simplest form, the region is divided into three parts: you have me; you have, on the opposite, the principal contradiction; and the intermediates are in between. Once you can identify your principal enemy, you win over as many as possible in the intermediate zone, you destroy your enemy and you move on to your second enemy, who becomes the principal enemy, and you repeat that process until you have all friends and no enemies. That is what they are doing in the South China Sea.

Q30 Sir John Stanley: I wish to declare an interest. A fortnight ago, I attended the annual meeting of the UK-Korea Forum in South Korea. The visit was funded partly by the UK-Korea Forum and partly by the Korea Foundation.

Since the accession of Kim Jong-un to what I would describe as the family throne in Pyongyang, there has been a material toughening of the Chinese position towards North Korea, notably in the United Nations and in the PRC’s position on UN Security Council resolutions. I have two questions to put to you. First, how far do you believe that China is prepared to go, beyond where it is now, in increasing still further the pressure on the DPRK to ensure peace in the Korean peninsula and, in particular, to try to end the nuclear weapon capability of North Korea?

My second question is: do you consider that, whatever the degree of pressure exerted by the PRC, Kim Jong-un and his regime are, or are not, ultimately able to resist it, and will resist it in order to pursue their policies at whatever humanitarian cost to the people of North Korea?

Professor Tsang: Peace, definitely. The nuclearisation of North Korea is the publicly articulated policy, but they are not prepared to pay the price for it. Peace and stability in the Korean peninsula is clearly in China’s national interest. They clearly want that-there really is not much doubt about that. They would have preferred North Korea not to have developed nuclear capability, but to remove that is a very different issue and that is something that the North Korean Government and Kim Jong-un understand.

It is not so much a matter of Chinese national interest in the conventional sense. The crux of the matter is not North Korean refugees coming into China, should there be an implosion or something like that. The real crux of the matter is that there are only three other quasi-Leninist regimes left in the world, of which Cuba is a bit too far and not so relevant. Vietnam is not exactly a friend of China. North Korea is the only one there is. Therefore, the risk of that ending and the implications for the Communist Party’s rule in China is too much to contemplate.

That is what defines the limits of what the Chinese are willing to do. They will be very happy to restart a six-party talks process, whether it delivers the results or not. But to go that extra mile to secure the disarming of North Korea of its nuclear weapons requires something that I do not think the Chinese Government are prepared to do. With North Koreans understanding the limit, there is therefore a limit on the pressure the Chinese can have on North Korea. If the North Koreans believe the Chinese would go that extra mile, then I think the North Koreans will behave as the Chinese require them to. At the moment, I don’t think they will.

Professor Breslin: North Korea was a deal. The deal was that China would prevent the West and the United States from imposing extra hard sanctions on North Korea. In return, North Korea had to allow China to show that it was capable of guaranteeing peace and controlling North Korea. When North Korea has tested missiles it has let China down and it has almost been a failure of Chinese foreign policy. The deal was, "If we stop them doing this; then you don’t do that."

I think you are exactly right. It is a really nasty foreign policy situation for the PRC to be in. They don’t want the North Koreans to do what they have been doing, because that makes it look as though they are not able to guarantee peace or become the main arbiters of peace without the West intervening. At the same time, they cannot be seen to be backing the United States, because that would create huge problems for domestic politics and the Chinese world view about the hegemony of the Western powers.

The idea of disarming North Korea or North Korea collapsing or North Korea becoming occupied by the United States or South Korea is not very palatable either. It has left the Chinese in quite a difficult position. However, I understand that, although there were not many high-level talks after the assumption of the family throne, as you say, they have now stepped up a little bit. Perhaps the Chinese harder words have generated some response from Pyongyang.

Q31 Sir John Stanley: Is there not another key dimension to this in Beijing? If the DPRK continues with its nuclear weapon capability, in Beijing they must surely calculate that there could come a point where the Japanese decide to change their non-nuclear policy. Is that not becoming an ever-greater concern to the Chinese, particularly as, according to all the assessments in the public domain, the Japanese nuclear breakout could be achieved in quite short order?

Professor Breslin: It is a real concern in Beijing that it legitimises theatre missile defence being expanded in Japan; that it legitimises a rethink of the peace constitution; that it legitimises a move towards a stronger military presence-absolutely. It is a real headache for Beijing in those terms, as you have said.

Professor Tsang: I disagree with that. I think the Chinese have huge mistrust of the Japanese. They are always talking about Japanese re-militarisation and such things. However, they know that unless Article 9 in Japan is changed, that is not going to happen. They do know that the Americans are not going to allow Japan to acquire nuclear weapons, even though the Japanese can have that capability relatively quickly.

Professor Breslin: It does not have to be nuclear weapons to be a major threat.

Professor Tsang: Well, the Chinese know the Japanese rules of engagement very well. In the way that they are managing the East China Sea maritime disputes, the Chinese have totally used to their advantage the Japanese rules of engagement, in terms of what they can or cannot actually do. For example, the locking of radars on Japanese destroyers-they knew that the Japanese could not actually respond.

Professor Breslin: At the moment.

Professor Tsang: And they knew the Japanese could not reveal the information in terms of how they established that the Chinese had locked their radars on the Japanese.

Chair: I thank you both very much indeed. It has been a very helpful session to us and a lot of use. Thank you for your time; it is much appreciated.

Examination of Witness

Witness: Mr Nigel Inkster, Director, Transnational Threats and Political Risk, International Institute for Strategic Studies, gave evidence.

Q32 Chair: May I welcome Mr Nigel Inkster, Director of Transnational Threats and Political Risk at the International Institute for Strategic Studies? Thank you very much for coming. Is there anything that you wanted to say by way of an opening statement? I have a general first question if you would prefer it.

Mr Inkster: I am happy just to take questions.

Q33 Chair: From a foreign policy and security point of view, has Britain got its relationship with China right?

Mr Inkster: I am not entirely sure that we could be doing things very differently from the way that we are. I read with interest the report produced by the Foreign Office for your Committee, which I thought was a very workmanlike document, but failed perhaps to make the point that whereas the United Kingdom sees the relationship with China as one of its key bilateral relationships, the converse does not necessarily apply to the same degree. As Professor Breslin said, the way China looks at a country such as the United Kingdom is very context-dependent; there is no single perception and no single relationship.

In the past, together with other European countries, our collective attitude towards China-particularly during the 1990s when they were keeping their heads down and effectively eschewing a foreign policy or even a defence policy-probably did not do us too many favours. We sometimes adopted a rather patronising approach in areas such as human rights; we perhaps made that too salient a factor in our overall approach.

The reality is that when one looks at what we want from China, we come across increasingly as the demandeur here. China has other options; we do not have any other option but to deal with China and to make a variety of accommodations. I sense that there is a greater element of realism coming into our approach-a necessarily more pragmatic approach to dealing with China that I think simply reflects the relative balance of power between the two countries.

Q34 Chair: The Prime Minister famously met with the Dalai Lama last year. How serious a problem is that? Is it a storm in a teacup?

Mr Inkster: It was perhaps less of a storm in a teacup than it has been in the past. We were pretty much put in the deep freeze for about 18 months, with an almost total ban on top-level contact. That said, quite a lot of business was being done on a day-to-day level that did not get affected by that decision, but we were a long time in the deep freeze-longer than we have ever been-and that perhaps should give us some pause for thought. I agree with Professor Tsang that, at the end of the day, the United Kingdom must maintain the right to talk to who it wants to talk to, but-as with all these things to do with China-there are ways of dealing with these situations.

Q35 Chair: Turning to cyber-security, there is widely perceived to be some sort of threat to the United Kingdom from Chinese behaviour in this field. Is that a fair comment?

Mr Inkster: Yes, to a degree, but we need to bear in mind the Chinese perspective; they see themselves as very much under threat in this regard. This is one of those areas where, of course, all of a sudden we become, so to speak, handmaidens of the United States-or rather partners of the United States-in a situation of global cyber-domination. The impression of that has simply been reinforced by all the revelations made by Edward Snowden in recent days.

The Chinese themselves have a considerable sense of vulnerability here. The way the world is wired is very much dictated by the USA, and, to a surprising degree, by the UK. The software and much of the engineering design for the internet is Western, although increasingly the manufacture is taking place in China. I think the Chinese feel at a significant disadvantage. There are still elements of the Chinese leadership who appear to be convinced that the United States has a kill switch, and can basically cut off the internet and deprive them of access. So all those factors need to be taken into account when one looks at this.

The other side of the coin is that the internet has given the Chinese state an unprecedented opportunity to engage in a kind of bulk collection of intelligence, which was beyond their wildest imaginings even a decade ago. It is becoming increasingly clear that if Chinese leaders ever went naked into the conference chamber at international meetings or negotiations, that is manifestly no longer the case. They go into the conference chamber very well informed indeed.

It is also clear that we are seeing a significant, industrial-scale, state-sponsored collection of industrial secrets, intellectual property, negotiating positions and so on. For China, that is imperative for two reasons: military modernisation and economic modernisation. In particular, it is imperative that they avoid the risk of a middle income trap, which they will face if they are not able to quickly develop world-class industrial corporations.

Q36 Mike Gapes: Can I ask you about the change of leadership in China? How should our Government interpret that change, and what are the implications for our policy and relations with China?

Mr Inkster: There may not be too much to be read in the new line-up of the leadership. As was said in the previous session, we have transitioned away from a situation in China where one supreme leader was able to change the direction of overall policy. Deng Xiaoping had the authority that came from having been on the long march and from being one of the founders of the new China, and Jiang Zemin was visibly Deng Xiaoping’s protégé.

The most recent iterations of leadership no longer have that capacity; they are the product of a collective leadership. They get to where they are, first, by demonstrating technical and administrative competence, and, secondly, by not rocking the boat. That is exactly the mistake that Bo Xilai made: he rocked the boat. He behaved in a way that was not in conformity with the expectations of collective leadership, and therefore he had to be brought down.

The last generation of leaders, as was said before, were engineers. They were people who had come through the ranks. In many cases, they had done long years of service in some of the more remote parts of China. The new generation of leadership is more driven2. It is the product of a kind of Communist aristocracy. It is a leadership whose intellectual and career experiences are more diverse than those of previous generations. It is more cosmopolitan and more outward-looking, but still Leninist. That is the key thing that we need to bear in mind.

As to how one deals with this new generation of leadership, I think that more than anything what they want, increasingly demand and are in a position to demand, is respect. They want recognition that China is transitioning from being a rule taker to a country that wants to be a rule maker, that does not just want to accept the international dispensation that we have bequeathed, but wants to put its own stamp on this process in a way that reflects its own interests. A recognition of that, hard-headed but with a willingness, obviously, always to defend our own national interest, is the way to do it.

Q37 Mike Gapes: Would you expect this new leadership and President Xi to hand the system on in 10 years’ time to their successor essentially unchanged, or will that transition mean that it will be a different system?

Mr Inkster: The honest answer is that I don’t know. As you clearly want an answer to your question I would suggest that on balance Xi Jinping plans to hand on a succession in much the same way as his was done.

Q38 Mike Gapes: What about the implications of the new media-you have already touched on the rise of the internet-and the social media for the way that China is governed and the ability to have stability?

Mr Inkster: China vigorously embraced the internet because of the obvious potential that it had for economic developments. At the same time they were aware of the potential for instability that this new phenomenon might have. They have worked very hard, and to date arguably quite successfully, to ensure that they can keep this within bounds. A young American researcher, Rebecca MacKinnon, has coined the term "networked authoritarianism" to describe the process that has been going on in China. Essentially the Chinese Government now recognise that with the internet you have to allow more free exchange of opinions than was ever acceptable prior to the arrival of the internet, and to a significant degree they have made a virtue of this necessity.

China’s wang min-the netizens-in many ways substitute for the civil society that the Communist Party has never been willing to allow formally to become established. They find it very useful. The Chinese top tiers of leadership take it for granted that they will be lied to by subordinate tiers of the bureaucracy. They find it difficult to get the real picture of what is going on in the country and monitoring what is being said on the internet is a very useful way for them to get this. It is a very useful reality check. It is also a way in which, when popular indignation with official excesses boils over, the Communist Party can take credit for being responsive to the concerns of the citizens. They have become very adept at engaging in this online debate. They have their own people, the ‘50 cent party’ as they are called, who supposedly are paid 50 cents for every intervention that they make in blogs and so on, on behalf of the Government. They can ride the wave to monitor and shape the discussions that are taking place on the web, but also very quickly close them down if something is happening that they don’t like the look of. A single blog that they don’t like the look of can be closed down very quickly.

Q39 Mike Gapes: Would you agree with the assessment from the previous session that the Arab Spring and the implications of that for China are quite minor, in the sense that the party will not face the fate that Mubarak had or some other countries might be going through?

Mr Inkster: The Communist Party, as Professor Breslin said, obsess ad nauseam about their vulnerability and the threats arising from instability. But it remains the case for China that this fear of the kind of instability and chaos that was experienced during the Sino-Japanese war, during the Cultural Revolution and so on-this total anarchy that prevailed-is something that everyone is anxious to avoid. Most middle-class urban Chinese have never had it so good, and the last thing they want to do is forfeit the lifestyle they have come to acquire. The argument that the instability to which Arab Spring-type events could lead is inherently undesirable and to be avoided has quite a lot of resonance in the country.

Q40 Mike Gapes: And not just in the Party, but among the population as a whole?

Mr Inkster: I think so, yes.

Q41 Sandra Osborne: What about corruption? If people are better off, but they are still seeing corruption-the new President sees it as enough of a problem to give it priority-could that cause instability?

Mr Inkster: It causes periodic popular anger, but, in the main, what we see in China is a relatively efficient form of corruption; it is not like the corruption one sees in a country like, let us say, the Democratic Republic of Congo. The fact is that the Chinese state still delivers significant services, significant benefits and significant improvements to the lives of its people, notwithstanding the manifest and widespread corruption that is taking place. So it really is not the case that people are making large contributions to the state through taxes or whatever and seeing all that eaten up by rapacious officials.

Yes, of course, rapacious officialdom is a preoccupation; it is a particular preoccupation in the countryside, because this is where ordinary people come into contact with it. In the urban environment, this is much less the case; if you live in a Chinese city and you are middle-class, you probably do not have quite as much connection with corruption, although you will have a connection in other ways. For example, if you want your children to get a good education, you basically bribe the teachers; if you want your parents to get good medical treatment, you bribe the doctors, and so on-this is just the way of life in China.

That does cause concern. The Party are acutely aware of the concern it causes, and they are working to improve the delivery of services to the population. They have periodic crackdowns on the most egregious displays of conspicuous consumption. There was an incident not so long ago where a senior provincial official was photographed wearing a dozen different Cartier or Rolex watches. This went viral, and the official in question was relieved of his post. You get these periodic injunctions, saying, "Don’t party at the public expense. Behave in a more modest fashion." This normally lasts for a while; once the pressure eases, people revert to how they were before. This is one of these things that just comes and goes.

Q42 Sandra Osborne: How do you think the financial crisis since 2008 has affected China’s international role, including in terms of the UK?

Mr Inkster: Well, there has been something of a sea change in China’s perception of itself and in China’s relative position in the world. As was said in the previous session, the Washington consensus is perceived by China to have been a false god. After many years of being lectured at and told this is what they have got to work towards, they are now taking the view that, actually, it is not necessarily the case that the West knows better than they do. The fact is that China’s willingness to buy US Treasury bonds and to continue, effectively, investing in the US economy has become critical to the stability of the global financial order. I think it was Hillary Clinton who said not so long ago, "How do you get tough with your banker?" The fact is that, once the financial crisis bit, all the countries of Western Europe and the USA were turning to China and saying in effect, "Do you have any spare cash?" I think that has put China in a very different position-a position where the Chinese feel much greater self-confidence and a much greater disposition to challenge the established order and to argue for what they would characterise as a more diverse international order, one that was more tolerant of different approaches.

Q43 Sandra Osborne: So, if that is the case, what is your opinion of this idea that they want to export their political and economic position to other countries? Do you think they do or not?

Mr Inkster: No, I do not think they do for a moment. I do not think they really have an export model of their political system. As I said, the Chinese line and what they are arguing for in international forums is what they call diversity, which is basically a willingness to tolerate different ways of doing things.

The Chinese economic model is a very pragmatic model. It really is always only about what works, what delivers results and what delivers returns on investment, and politics is much the same. The Chinese Communist Party is a Leninist party in terms of its organisation, but from an ideological perspective it is not really Leninist and it certainly does not want or require other countries to adopt its way of doing things.

Q44 Mr Baron: What do you believe is the greatest risk to the Chinese economic model? Is it an increasingly aspirant emerging middle class? Is it the pegging of the yuan to the dollar-against a strengthening dollar? Or is it something else?

Mr Inkster: The biggest challenge that China’s got at the moment is a rapidly ageing population, and it is causing considerable concern. The one-child policy has had some very perverse demographic consequences, and the result is that within a very short period of time we will be in a situation where one worker will be supporting an inverse pyramid of eight people who are not productive. That is a cause for particular concern. I do not think that China is a country that can seriously contemplate using mass immigration as a way of resolving this problem-it is just not going to happen that way-so it will have to think of other ways of doing it. However, I think that this is its single biggest concern at the moment.

Q45 Mr Baron: Is there a close second?

Mr Inkster: Market volatility bubbles in property and stock markets are a particular concern. Stock markets perform a very different function in China from that which they perform here, because basically the Chinese banking system is so dysfunctional that nobody in their right mind would put their savings there and so everybody puts their money on the stock market. That is effectively where their savings go. So, any major stock market collapse could have serious consequences. Ditto property bubbles. A lot of people buy property and then don’t live in it, in order to let it preserve and increase in value. If value is rapidly stripped out of it, that can be a real problem.

Q46 Mr Baron: Looking abroad, China has emerged as a major trade partner and source of overseas aid for a good number of countries now, particularly when one looks at Africa. What is your take on whether China’s overseas aid and economic activities are driven by commercial interests and objectives, or by more strategic political objectives?

Mr Inkster: The primary driver for China’s engagement right around the developing world is economic, and in particular this absolute hunger-this imperative-to acquire the raw materials to carry on the domestic economic development that is essential to staying afloat. Everything else is purely secondary. If you look at how China engages in a continent such as Africa, there is no single model. It is very much driven by the particular circumstances of the country concerned and by the particular economic factors. Where China is told that it cannot bring its own workers but must employ local workers-as happens, for example, in South Africa-that is what it does. In another country where there are no such limitations on its behaviour, the natural tendency is to bring its own workers, because it has greater confidence in them. The other problem that we are seeing, which is causing increasing concern in Africa, is that the influx of cheap Chinese manufacture is effectively preventing many African countries from moving up the value chain and becoming something other than exporters of raw materials.

But it is entirely the economic imperative. One sees it also in Latin America. In the last two dozen years or so, Argentina’s humid pampas have ceased to be a place primarily for raising cattle and are now basically about the production of soya beans. That is a fundamental transformation driven by China’s economic and commercial imperatives.

Q47 Mr Baron: May I ask you to reflect on that answer and move you to the South China Seas? To what extent can you apply the answer that you gave to the previous question to the situation there, or is this more of a trade-off between Asian politics and relations with the US?

Mr Inkster: It is a complicated three-way relationship. The big strategic issue for China is its relationship with the United States in the Western Pacific, an area that China regards to some degree as its own back yard and as an essential guarantor of strategic stability. Certainly China will never feel secure unless it feels that it controls the terrain up to the so-called first island chain.

I think China is aggrieved, and to some degree puzzled, by the fact that the United States is not prepared to do a deal and effectively agree to split the Pacific in two-"You take the East, we’ll take the West"-which is what China would like. Obviously, that is China’s preferred course, but it is not going to happen, so we have a situation in which the security and strategic situation in that part of the world is driven, first and foremost, by US-China dynamics. The states of the South-East Asian region are basically concerned about the risk of becoming Finlandised under Chinese hegemony, so they have been looking to the United States for support and security guarantees. Of course, that simply exacerbates the relationship with China.

As for the South China Sea, yes, I think Professor Tsang had it pretty much right in the previous session. China has been driven into a not entirely welcome move away from a good neighbours policy, which it was pursuing very effectively until a few years ago, to one that now looks more like a bad neighbours policy. One of China’s big perennial problems is its absence of reliable allies. If the only allies you have are Pakistan and North Korea, you have a problem in that area. Everyone else is not an ally; everyone else is a potential threat. China is very concerned about the degree, as they see it, to which the United States is seeking at every turn to constrain China. The US academic Aaron Friedberg used the term "congagement"-a combination of constraint and engagement-to describe US policy towards China, and I think that pretty much sums it up.

China has been forced into a rather more shrill and aggressive posture than perhaps it would ideally wish. That has been driven by a combination of factors, including pressure from domestic national feeling and a genuine desire and need to control this territory, which is effectively its backyard. The resource dimension is also a factor. There are many issues at work, but I cannot see China backing down from the posture that it has taken. The best outcome that the other participants in this little imbroglio can hope for is some form of "joint" exploitation of resources.

Q48 Rory Stewart: Can we start on the obvious chestnut, which is what can the UK and the US do to encourage China to support a UN resolution on Syria, particularly in relation to arming and some kind of political settlement?

Mr Inkster: There is very little that either country can do at the moment. China was scarred by what happened over Libya. They thought that they had signed up for one thing and they found that the outcome was very different. Part of the effect of that was to effectively neuter those elements of the Chinese policy community who were starting to move in a more favourable direction towards some kind of international intervention.

Q49 Rory Stewart: To what extent in Britain did we properly think this through or anticipate this on Libya? It sometimes seems, as an outsider observing it, that we behaved as though what we were doing with Libya was fine and that China and Russia were being unreasonable in believing that we pushed beyond what we promised. Should we have seen that? Should we have anticipated it? How did we get it wrong?

Mr Inkster: Once we got so far into Libya, the situation took on its own dynamic and there was relatively little that could be done to control it, but I agree that it might have been thought about more carefully at the outset. It is mooted-I have no reason to doubt it-that when President Medvedev, as he was then, was informed of Colonel Gaddafi’s demise, his reaction was, "We’re next." I doubt that China’s response would have been significantly different. This kind of humanitarian intervention is inherently and manifestly undesirable from China’s perspective, because they fear that one day it could be turned against them.

Q50 Rory Stewart: If someone came to you and said that the way to force China or Russia to back a UN resolution was to arm rebels in Syria, because by doing so you could level the killing field, put pressure on Bashar and compel Russia and China to the negotiating table, what would you say?

Mr Inkster: I would say that I do not think it will be that easy to compel either country to support a resolution of this kind, but as Professor Tsang said, China is taking a back seat on this one. Russia is doing the heavy lifting and China is taking shelter behind Russia, which has some direct and significant interests in Syria. In a way, China is arguably more agnostic about the particular merits of the Syrian case. On the question of principle, China is unlikely to accede to anything that would, as they saw it, open the door to forcible regime change.

Q51 Rory Stewart: In terms of the bigger picture, there is something that we believe very deeply in the West. It is a theory that we have developed for 200 years: there is a necessary relationship between democracy, security, stability, economic growth, the rule of law and good governance. All those things go together; we do not see them as mutually exclusive. We have an Anglo-Saxon view and we look at a country like China and see problems with poor governance, corruption, instability and lack of liberty somehow connected to lack of economic growth. To what extent does China feel that? If China doesn’t feel that, are we using exactly the wrong arguments to China in relation to Syria and Afghanistan, where we keep trying to say that these are unstable countries that could pose a threat to you because of the lack of order and governance? Does China believe that and should we be saying that to China?

Mr Inkster: If one looks at Afghanistan as a case in point, China is obviously worried about the potential for instability from Afghanistan in one particular area, namely its potential to act as a haven for Uighur separatists, which it has done, albeit tiny numbers. I think that China is worried about the threat of Jihadist terrorism migrating from Afghanistan into China, which to some small degree it has done; but I think they see that as a containable problem and I would argue that they are right, and that the wider instability is something they can live with. Their calculation is that at some point people have got to actually develop the economic resources-minerals-that Afghanistan now has and China is perfectly placed to do it, when the situation is right to permit it.

It is not the case, and I do not think that anyone of us should come away with the view, that China is inherently hostile to the concept of democracy. This is not the case; there are many Chinese thinkers within the Party structure who look very seriously at democracy and recognise the very real strengths that the system has in terms of self-correcting mechanisms. They understand this and they are not immune to the arguments, but I think they see democracy as something rather different from how we see it. They do not see that democracy necessarily entails multi-party structures or some of the things that we tend to assume as being the case. Actually, I think collectively we made a big mistake by majoring on democracy as an inherent virtue, whereas representative government might have been a much better line to pursue, because that is something they could certainly relate to.

Q52 Chair: Finally, what is your take on the position with North Korea at the moment?

Mr Inkster: As was said in the previous session, China is in a very difficult situation. They do not like the current regime. Relations between China and North Korea have often been absolutely poisonous. Third parties involved in talks in Beijing talk about high-pitched screaming matches going on between the Chinese and the North Korean delegations on a regular basis. Certainly, the North Koreans have some rather curious ways of demonstrating their gratitude for the support that they receive from China.

Henry Kissinger made a valid point a while back, when he observed that we in the West are always looking for solutions to problems, but for China, those so-called solutions are often no more than an admission ticket to a new set of problems that could turn out to be even more intractable than those that you think you have got away from. That is epitomised by the situation in North Korea.

Whatever might come pursuant to a collapse of the current regime is so uncertain that the Chinese are simply going to grit their teeth and live with what they have. In that regard, the Chinese leadership-this applies more generally-is a pretty risk-averse group of people. They are not going to go out of their way to look for problems, much less adventures, in the foreign policy arena. They want to keep things as stable and as quiet as they can possibly make them, and that is pretty much the case with North Korea.

It is a worry for China that the whole North Korean nuclear issue has led to the USA bringing missile defence into East Asia to the degree that it has. For China, that is an existential problem; their calculation is that they have a very small nuclear deterrent and the USA has a very big nuclear deterrent, so a combination of a US large nuclear deterrent plus space domination plus missile defence could equal neutralisation of the Chinese nuclear capability in the first stages of any conflict. That is changing because China has actually acquired a second-strike capability with submarine-launched missiles, which will shortly give it an always-at-sea capability, effectively a second-strike capability. It is still a very uncomfortable situation for them to be in, and they do not particularly enjoy it, but they see the least of all possible evils as tolerating the regime as it is.

Chair: I can safely say that we could go on picking your brains for a long time. Thanks very much for coming today. It is very much appreciated.