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Lord Burnett: My noble friend is right that a widespread culture of secrecy and fear pervades the NHS. I welcome wholeheartedly the establishment of this inquiry and the proposals to buttress the rights of whistleblowers. Will the Government consider making concerted efforts to recruit managers, especially at senior levels, from outside the NHS? I am aware that some high-calibre people are non-executive directors, but we need and should recruit high-calibre non-executive directors in the NHS who are independent, intelligent and fearless.

Earl Howe: I fully agree with my noble friend. We have asked the Appointments Commission to set out proposals for a revised person specification for chairs and non-executive directors to ensure that it is aligned with the current priorities and principles of the NHS. We want to continue to deliver high-calibre non-executives, in particular, who are needed to meet the challenges ahead. The general point raised by my noble friend is well made and we shall certainly take it forward.

Baroness Pitkeathley: My Lords, I declare an interest as chair of the Council for Healthcare Regulatory Excellence. Will the Minister confirm what I think was the thrust of the Statement, which was that regulation and regulatory activities should always be about patient safety and not about maintenance or promotion of professionals? As the strong and welcome implication of the Statement is about putting patients at the centre, does he expect the inquiry to give any indication as to how patients should be supported in bringing forward their concerns?

Earl Howe: On the last point, we are doing quite a lot of work in the department to ensure that patients are supported in an appropriate fashion in their dealings with the health service. Our plans for what we hope to call "health watch" will flesh out that point. I agree that safety lies at the heart of the quality agenda, which was commenced in earnest by the noble Lord, Lord Darzi, when he was a Minister. I have the privilege of being responsible for that agenda, which is being continued with urgency. We are committed to developing the role of the Care Quality Commission to make it a more effective regulator of health services in England. We will bring forward proposals that will focus on the outcomes of the care experienced by patients. The Care Quality Commission will be intimately involved in that.

China: EU Committee Report

Stars and Dragons: The EU and China

Motion to Take Note

4.20 pm

Moved By Lord Teverson

Lord Teverson: My Lords, at the moment we in the western world are inward-looking. What we see as a global financial and economic crisis makes us in the western economies and societies look inwards more than we have done for many years, and we have not been paying as much as attention as we did a few years ago to the rise of many other economies around the

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world, particularly China. Yet the Chinese economy has been growing at some 10 per cent per annum and has become effectively the third largest economy in the world behind the European single market and the United States. It still has a very large trading surplus with the western world, including the European Union, and it is continuing to spread its influence, investment and tentacles across the developing world. It is a country, an economy and a trading nation that we cannot afford to ignore, let alone forget about. We need to keep the focus on it.

For this report, we intended to look at the broad relationship between Europe and China and ask ourselves what the nature of that relationship should be, what it should include, and in which areas the European Union should take action to make sure that the relationship is more effective. For the benefit of the House, I shall give a little of the history of the relationship between the European Union and China. It is perhaps staggering that the current formal legal relationship, in the form of a trading and co-operation agreement, was made between the EU and China in 1985. Although it is 25 years old, it is still valid and is the basis on which EU-China relations formally work. Since then we have seen the introduction of annual summits and, more recently, regular high-level dialogues between Ministers and their equivalents on both sides. Indeed, in 2007 it was agreed that there should be a new partnership and co-operation agreement that would cover a far broader range of subjects than just that of trade as covered in the original agreement. The negotiations towards it continue, but three years later, the agreement is yet to be fulfilled.

The headline from the report and the view of the sub-committee is that, given the important nature of the two entities-one a sovereign state and the other a collection of member states-the agreement needs to be of a much more strategic nature than at the moment. Europe comprises some half a billion people, while China has 1.3 billion. Along with the United States, between us we account for over 50 per cent of global greenhouse gas emissions, and we are major players not just in the world economy but in how the world will work in the future. We believe, therefore, that we should have a much better and more strategic relationship with China.

One of the themes that came up repeatedly throughout our studies was the concern whether Europe had already lost the game and was being left out in terms of future global relations, so that we would have a G2-the two being, of course, China and the United States. We considered this many times, but the committee felt that that was not the case at this point, that it certainly should not be the case, and that the G20 model, in which China participates strongly, would provide a much better role in terms of future inter-governmental co-operation at the global level. The G8 is clearly moving on; it is important to include the developing nations within that, and China could play a strong role. At the moment our relationship with China is not a strategic one. It was described by one of our witnesses-and agreed by the committee-as more representative of a collaborative relationship.

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Looking back on the history of EU-China relations, up until 2003 China saw Europe as an important player on the world stage generally. It saw it as a balance to the power of the United States-in an economic if not a military or security sense-and it took great time to understand Europe and invest in the relationship. In 2003, a small incident changed the nature of the relationship. This was when a number of major member states within Europe started to make it clear to China that the EU arms embargo should be removed. That expectation moved to the brink and, although it may not have made a great difference to the way in which the arms trade worked, it was an important policy decision. However, because of the intervention of the United States, negotiations stopped and the arms embargo remained. It was felt by a number of witnesses that at that point China no longer saw the EU as having a pivotal role in its relationships, particularly with the United States, and that, in many ways, it was a partner to the United States in a different way to China. We still have to recover from that situation.

Indeed, one of the lessons that we learned from that episode is that the EU must never again put itself into a position where it is directly in conflict with the United States in its relationship with China-and certainly not into a position where it changes its own policies. There needs to be much greater consultation and co-operation in that area.

It came through from a number of witnesses that the EU, a major economy-among the world's largest-and a large market for China, failed generally to put leverage on to China in regard to certain decisions. To say that the EU rolled over on every occasion is clearly not the case, but we felt that, given our strong trading position, our market and our position in the world, the EU failed to use its natural power to sufficiently influence Chinese policies in areas such as human rights, trade negotiations, intellectual property and access to markets.

An example of when the EU did not help itself was described by a number of our witnesses. This was when the Heads of Government of three major member states-the United Kingdom, France and Germany-entered into a dialogue with the Dalai Lama. China took diplomatic action and, at the same time, other member states tried to take advantage of the situation. We showed no solidarity whatever and the rug was taken from under the feet of the European Union as a whole-this happened during the French presidency under President Sarkozy-when the Chinese cancelled a summit that was due to take place between the EU and China. The committee asked itself whether China would ever have done what it did to the European Union if the United States had been its strategic partner. There is a great need to show strength of unity and to use leverage wherever possible.

The sub-committee also felt that there was a mismatch of understanding within the relationship. The Chinese embassy in Brussels has some 70 or 80 staff and it sends a large number of students to European and other western countries to understand their culture and the way in which they work. There is much greater understanding of the English language in China than of the Chinese language in Europe. There needs to be much greater investment in our understanding of China.

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A possible outcome of that lack of understanding is that we look upon China as a single entity. To a large degree, it is clear that it is. It is a centralised, unitary state, with one-party rule everywhere apart from in Hong Kong. However, we forget that there are 31 different provinces in China whose provincial Governments have many powers, even within international investment projects. There are also some 55 minority populations, of which the Han Chinese are by far the largest. The EU therefore needs to have a more complex view of China as a nation, particularly in its dealings on development issues.

The sub-committee was in China for one week. You cannot see a great deal of the country within that time, but we did visit one of the industrial areas in Guangzhou and the Pearl River Delta. Although this is a major industrial area, and although a very effective UK trade delegation is there, we were surprised to find that EU representation was concentrated within Beijing and that it did not have any trade delegations or staff in the provinces. A presence in the provinces is important not just for promoting trade, which is much more a national issue, but also for market access and for making sure that WTO rules are applied and that the writ of trading rules in Beijing is felt out in the provinces.

However, we were not as utterly pessimistic as I have sounded so far. We were encouraged that China is starting to take on a broader role as a world citizen. It is still finding its way in this area and we felt that it was in many ways hesitant to take on that broader responsibility, let alone a regional responsibility. Yet we were surprised, as might be many of your Lordships here, that China is the largest contributor of peacekeeping troops of the permanent five members of UN Security Council, P5. While it has participated independently in the Somali counterpiracy operation, its naval force has co-operated with the EU's Operation Atalanta and the NATO force. We welcome this taking-on of responsibility, while understanding that there is nervousness among the western security community about what that might lead to in the future. We welcome China's increased world citizenship.

It is clear that China's main relationship with Europe is through trade. In 2008, there was a €170 billion deficit between the EU and China. Ironically, one of the outcomes of the recession is that the trade deficit has gone down, but we were reminded that an important aspect of the international recession is imbalances such as that in trade between China and the western economies. The undervaluation of the Chinese currency has enabled China to have very high savings at a time when the West has consumption and very much a trade deficit. So what we see there is a balance that has not changed but needs to change, for future economic stability. With the United States, Europe needs to ensure that there is a resolution of that problem over time before it again becomes a major problem to world trade.

Many noble Lords will be particularly concerned with the human rights issues. We were concerned that there was too much rhetoric and grandstanding and not enough effect in that area, and I know that a number of noble Lords will wish to talk about that. One area that we found very positive, which was never

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mentioned by the Commission in Brussels but which we saw on the ground, was a number of practical justice and rule-of-law policies, investments and developments that were EU-financed and that found success and were welcomed at a provincial level by provincial Chinese government. We felt that those should be particularly strongly invested in. As for the broader human rights issues, it was pointed out to us by China's Government that, through their economic development, social rights have been improved as at no other time in history. Several tens of billions of Chinese citizens had been taken out of poverty by the current growth and regime within China. We do not dispute that-we welcome it. However, clearly it is not acceptable that that still comes at the level of restriction of human rights and democracy that that still represents.

On climate change, we saw the shift of power from west to east at Copenhagen. Although China signed up to reducing energy intensity at the Copenhagen accord, it was a great sign to us of Europe's failure in that negotiation that it was hardly involved in the Copenhagen accord, while China chaired it and influenced how it worked. We are still in a position of having great challenges as we move towards the next meeting on climate change at the end of the year in Mexico.

I shall leave the description of our report at that. The clear message that came over to us was that in the 21st century, as China clearly improves its economic performance even more and its importance in the world increases, it was essential that the EU had a proper strategic relationship with China. Is the Lisbon treaty, which came into force while we were looking at this relationship, going to enable that? It could do-but we were far from convinced that it would. The summit that took place this May was positive, but I do not think that it moved that relationship forward very much. The challenge is with the European Union to use its power, influence and moral authority to create a strategic relationship that works for the rest of the global community. I beg to move.

4.38 pm

Lord Howe of Aberavon: My Lords, it is a pleasure to welcome the speech just made by my noble friend and the report of the sub-committee under his chairmanship. As his presentation made clear, it produced a comprehensive, clear and constructive report containing some plain and important messages both for the United Kingdom and the European Union, as well as the People's Republic of China.

The central message is clearly important. If ever a subject cried out for pan-European consideration, it is the management over the long term of our relations with China. That proposition contains no suggestion of hostility, although I noticed with some irony the use of the word "tentacles" by my noble friend. I know that that was not meant to be a demonstration of hostility. There is no question of hostility, but there is a growing significance and diversity of common interests, all requiring the consideration of collective response by the European Union-on climate change and energy, the WTO and IMF obligations, intellectual property rights, the impact of Chinese investments on developing countries and the possible sources of political tension in North Korea, Myanmar, Taiwan and so on.

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I am glad to be able to welcome what is said in paragraph 303 of the report. It states:

"China... has gradually been prepared to play a more constructive role in respect of some armed conflicts in Africa".

My noble friend did indeed make that point. One must hope for a continuation of that-a less passive role by China, for example, in relation to a different style of conflict, whether in Myanmar itself or in Zimbabwe.

I am glad, aside from my noble friend, to be able to endorse the recognition by our new Foreign Secretary, who made his celebrated maiden speech at a party conference in the debate to which I had to reply. He outshone me throughout the evening as I commented on his speech, rather than he on mine. I have great confidence in him. He has been emphasising the value and necessity of approaching these problems and others from a European base. That is an important proposition.

I agree with my noble friend that the formalities of the Lisbon treaty are far from being a magic wand in this context. I venture to suggest that our own colleague, the noble Baroness, Lady Ashton, although she is not here, has an important role to play in this. Because of her demonstration of leadership qualities in this House, I think that she will achieve a constructive partnership-even leadership-with our own Secretary of State and other colleagues in the foreign affairs field.

My second major point is no less important than the first. In Britain's case, at least, and not just in relation to foreign policy, there is truly an important independent role to be played. There are two reasons for making that point. The first is the probability that both our countries, the United Kingdom and the People's Republic, are likely to remain permanent members of the United Nations Security Council. I know from limited experience in that context that it gave an opportunity for me to collaborate with my then Chinese opposite number in that venue. It is no disadvantage that the only other European member is France.

The second reason for confidence in this relationship is the fact that the United Kingdom and China have a long, although sometimes chequered, mutual relationship with each other. We share a sense of history that we are not able to share in quite the same way with other countries.

For me personally, if I may digress for a moment, my own contact with this concept first arose on 5 January 1950. Together with my noble friend Lord Jenkin of Roding, who is not here today, and one other Cambridge undergraduate, I was, rather surprisingly, in Ebbw Vale preaching the cause of Conservatism and holding what was laughingly called a "brains trust" in the constitutional club of that important community. On that day, the news had broken that Ernest Bevin, that terrible socialist Foreign Secretary, had announced Britain's recognition of the People's Republic of China. Surprisingly, members of the club asked us the question, "Do you Conservatives agree or not agree with this rash decision taken by this socialist Foreign Minister?". We had all been well trained by Professor Sir Hersch Lauterpacht, and we all responded collectively to say, "Of course we agree with Ernest Bevin's decision". That laid a firm foundation for my relationship with China thereafter.

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The next step came, a little more seriously, in 1973 when I had my first meeting-in the United Kingdom, as it happens-under the benevolent surveillance of my noble friend Lord Walker, who, unhappily, is not with us at the moment. I was Minister for Trade and Consumer Affairs, and I met my Chinese opposite number. Again, the bridge was being built a little further. For that reason or some other, I became a friend of China to the extent that, in 1978, I found myself invited as a guest by the People's Republic together with my noble friend Lord Brittan of Spennithorne and my noble kinsman who is not here. The three of us were in the party together. I remember one episode. There was a notice put out by the China Dailynewspaper to the effect that:

"Vice President Gu Mu had received British Member of Parliament Geoffrey Howe and his wife Leon Brittan".

We overcame that.

During that visit one of our missions was to search for the existence and effectiveness of anything resembling the rule of law in China. We found very little evidence of it. The gang of four were only just being identified as being responsible, with Chairman Mao, for the destruction that had taken place. In Beijing itself we searched for lawyers and eventually met three ageing and retired lawyers from what had once been Beijing University, and that was not very encouraging. In Shanghai, on our last day, we went inside a police cantonment and were there shown what purported to be a law court. There were only two characters there with white shirts on who claimed to be judges and turned out to be retired generals. When we asked them whether there had been any acquittals during their time at the court, they said they could not recollect anything of that kind. I say that not to be humorous but to emphasise the extent of the depth of uncivilised culture that the Chinese themselves are beginning to acknowledge as they get away from the rules that had been made.

Six years later, I was privileged as Secretary of State, under the leadership of my noble friend Lady Thatcher, to take part in the Hong Kong negotiations. One saw then, in the wisdom with which those were conducted by the then Chinese leader Deng Xiaoping, the extent to which their leadership was developing wisdom that would lead it far into the future not just in economic terms but in political and institutional ones as well.

Deng Xiaoping's four-word phrase "one country, two systems" was one of the wisest things that one has ever had to work within. He hoped that it might one day work for North and South Korea, and we must share his hope. He hoped that it would one day work in Germany, but he was overtaken by the collapse of the Berlin Wall. It enabled him to ensure that the agreement we made for Hong Kong guaranteed the survival of the rule of law in a strong form and guaranteed the existence of the Court of Final Appeal, which still includes two members of our own Supreme Court. It provided for a Legislative Council constituted by elections to come into existence in due course and that the Executive should be accountable to that legislature. That process moves on. Universal suffrage is now likely to arrive in 2017.

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I mention that for our own significantly useful impact on the future of Hong Kong and then offer a word about such influence as we may have on the great mass of China itself. It is well known that China regards human rights as a strictly internal matter. None the less, it does recognise pragmatically that her own commitment in that direction-and there is such a commitment-as well as to the rule of law requires technical support which makes her willing, in practical terms, to study the models of other legal systems. China has long felt that the United Kingdom has much to offer in this area. We have found ourselves leading a handful of countries-the United States, Canada, Germany and Scandinavia-at a serious level on these human rights issues.

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