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This debate takes place at a particularly opportune time, in view of the unfolding drama involving mainland China—the People's Republic of China—and Taiwan. I speak as chairman of the British-Taiwan parliamentary group; my interests are fully declared in the Register of Members' Interests, but let me add for the avoidance of doubt that I have visited Taiwan twice as a guest of the Government of the Republic of China on Taiwan.
There is no doubt that relations between Great Britain and Taiwan have improved enormously in the past few years, and that that has resulted from a great deal of hard work on both sides. I pay tribute to members of the British Government who have been involved, and to our representatives in Taipei who have worked so hard to build up trade and cultural relations with the Republic of China. The House and the country owe a great debt to those involved in such work—for instance, Mr. Mon-ice and his successor, who has recently gone to Taipei.
I also pay tribute to the work done by representatives of the Republic of China in London, particularly Dr. Eugene Chien and his admirable staff, who have worked hard in recent years to make relations between our two countries increasingly warm. And I pay tribute to the remarkable and redoubtable Dr. David Liu, head of the cultural office in this country, whose distinguished work in building close educational and cultural ties was recently and appropriately recognised by the University of Central England in Birmingham. The university awarded Dr. Liu an honorary doctorate, a thoroughly well-earned tribute and distinction.
The objective indices of the improvement that is taking place can be found everywhere, but let me highlight two or three that really matter. There is no doubt that trading and commercial ties are becoming much closer. That is a two-way process: although the balance of trade is not to Great Britain's advantage, ICI, Glaxo-Wellcome and many other British enterprises are investing in Taiwan, and the Taiwanese are beginning to invest in the United Kingdom. Most recently, a huge investment in Scotland was announced. I particularly welcome that, because many of my constituents have relatives who live in the part of Scotland where the enterprise is to be based. I hope that their families will secure employment in the Motherwell area.
That is by no means the only investment, however. There are successful Taiwanese enterprises on Tyneside, in the west midlands and elsewhere, and the Taiwanese have invested in the City of London. I hope that there will be further inward investment. I pay special tribute to all who are working so hard in this country, and with the British Government, to secure those investments.
There has been a huge increase in the number of Taiwanese tourists coming to this country. Until a few years ago, it was very difficult for people from Taiwan to travel to Great Britain. Although niggling difficulties remain, much hard work has been done to try to reduce them, and I pay tribute to all those involved. We have much to gain from the Taiwanese students who come here. The staggering increase in their number is the most dramatic development of all. When I first became interested in the subject, only a handful visited this country each year—certainly fewer than 100. Now, the number is rising 10,000.
It is understandable that the Taiwan authorities should want only the best for students who go abroad to enter further and higher education. It is therefore not surprising that they wish to send so many to our universities and colleges. Although some of those in higher education are pessimistic about their financial opportunities, the fact remains that our further and higher education institutions are the best in the world, and are recognised as such. It is not surprising that so many students want to go to Cambridge, Imperial college, the London school of economics, Oxford and scores of other institutions, and I hope that they will arrive in ever larger numbers.
The figure that my hon. Friend has quoted is truly remarkable, given that the figure for the People's Republic of China is only about 8,000. That is a major achievement.
We should bear in mind the current tensions between the two countries, and the fact that the Chinese authorities in Beijing have repeatedly suggested the concept of one country, two systems for Taiwan along with their plans for Hong Kong. Notwithstanding the current dangerous circumstances—one wishes that both sides would cool it—and bearing in mind the fact that Taiwan is historically a province of the Chinese motherland, does my hon. Friend agree that it would be a great mistake for the American authorities to encourage the Taiwanese population, or politicians, to think of future independence?
I thank my hon. Friend for his observations. He chairs the British-Chinese parliamentary group, and has extensive experience of relations between Great Britain and China. I know that his words—along with mine and those of my right hon. Friend the Minister—will be minutely scrutinised by people in Beijing, Hong Kong and Taiwan, and throughout the Asian Pacific region. The debate is taking place at a time of extraordinary sensitivity in the development of Chinese relations and policy towards all China—in which I include Hong Kong, the People's Republic, Taiwan, Macau and the whole Chinese world. My hon. Friend is right to sound a note of caution, and I hope that it will be heard and acted on by the authorities in Beijing.
Tension is clearly rising rapidly, and the danger of a miscalculation could be considerable. It is important that every effort should be made in the international community to lower the temperature and reduce the danger of any such miscalculation. Taiwan's greatest triumph has been its moves towards establishing a genuine popular democracy. It is extremely difficult to do that—not merely to hold an election and to ensure that it is the only election that is ever held, but to establish genuine and legitimate democratic institutions and ensure that freedom can be fully exercised in all areas of life, not just in the election of a national leader.
The election of a President, which will take place next week, is only the latest step in a process that has been going on for nearly 10 years—since 1987—to establish fully democratic institutions. We should be proud of any country—any region. indeed—that takes such steps. The greatest tribute that I pay those who lead Taiwan is to the courage, persistence and steadfastness that they have shown in unfolding their programme of democratic reform. Only 10 years ago, the stage of democracy that is being reached would have been unthinkable for people who knew Taiwan. Not least for that reason, we should do all we can. I know that my right hon. Friend the Minister and my right hon. and learned Friend the Foreign Secretary are working hard to ensure that the danger of enhanced tension is reduced as much as possible. The People's Republic has announced that the military exercises in the strait of Taiwan are to last nine days. Clearly, prolonging them would be a dangerous step.
Equally, if the People's Republic enhanced the degree of the exercise and, instead of conducting what it calls air exercises over the sea, tested live missiles, leading to aggression against the islands of Quemoy or Matsu, or against the main island of Taiwan, that would lead to a most regrettable and difficult international position. As someone who has tried to study these matters intensely in recent years, I look forward to a time when Taiwan and mainland China can be reunited, but that should not be achieved by coercion or by trying to undermine the remarkable progress of liberalisation and democratisation that has taken place on Taiwan.
Nevertheless, I hope that it will be possible for all Chinese people to come together in one country, even if it involves more than one system of government at some stage. That policy is being pursued by the Government of Taiwan and by President Lee, who has been responsible for that remarkable programme of liberalisation and democratisation. I therefore support reunification, but not reunification by means of coercion, which is not the way to conduct international relations at this stage in the world's history. As the people of Taiwan rank, by reason of their history, as the most sophisticated in the world, to imagine that the rest of the world community will accept an attempt to achieve by coercion an objective that is shared on both sides of the strait of Taiwan, will cause considerable problems in the rest of the world.
Taiwan's revolution has been peaceful and economic. It has led to enormous prosperity and to huge investment by Taiwan in southern China. Let no one for a moment imagine that what has taken place in southern China to the north of Hong Kong would have been possible without Taiwanese capital, which continues to pour into southern China and to build the Chinese economy. Of course, there is a natural partnership between these people and the wish to bridge their political gulfs is a legitimate aspiration.
In recent years, many hon. Members from both sides of the House have had the opportunity to visit Taiwan. I hope that more will go to see for themselves the remarkable developments at Hsinchu science park, the original one-stop shop for the world, now covering 140 acres. Taiwan's gross national product is bigger than that of Scotland, Wales and the whole of Ireland put together.
I congratulate the hon. Gentleman on raising this issue and on the way in which he has sensitively dealt with the topics—the way in which he has talked about the immediate issues and the future will unite the House. His comments about the advance of democracy in Taiwan will also be supported by hon. Members on both sides of the House. It is a great shame that we do not have more time to debate this issue, but I congratulate him on raising it.
I am grateful to the hon. Gentleman. It is important that we speak in the House with one voice on this matter because there must not be any miscalculation of where we stand in these sensitive days. Equally, the future matters. Taiwan, already the 12th largest economy in the world, will play a substantial part in that future. It is an economic powerhouse.
I know that my right hon. Friend the Minister is doing all that he can to improve relations between Great Britain and Taiwan on a number of fronts. My final point may not be my most popular point with him. As Taiwan is the source of the second largest reserve of savings in the world, it is absurd that some international institutions—I have in mind especially the World Trade Organisation, which supersedes the general agreement on tariffs and trade, the International Monetary Fund and the World bank—should not have Taiwan as a participating member.
Some mechanism will have to be found, which may initially amount to less than political recognition of Taiwan, but which will enable it to participate in the world community to a much greater extent than has been possible. I hope that part of the Government's work will involve trying, with other countries, to enable Taiwan to play the full part that her economic power dictates she should play.
That having been said, these are serious times in Taiwan. I hope that the international threshold of anxiety will be lowered. That will be to the advantage not only of Taiwan, but of Hong Kong, of China and of her reputation in the rest of the world.
My hon. Friend the Member for Corby (Mr. Powell) has done the House a service by raising the important and topical subject of Taiwan. The tribute paid to him by the hon. Member for Leeds, Central (Mr. Fatchett) is wholly appropriate and agreed by all hon. Members.
In 10 days' time, the people of Taiwan will go to the polls to elect their President—the first time that they have had the opportunity to do so. It represents the last stage in the development of democratic institutions in Taiwan, a development that hon. Members can only welcome and applaud. It is therefore a matter of grave concern that the People's Republic of China should be conducting missile tests and military exercises with the apparent aim of influencing those elections and of intimidating the electorate.
Four missiles have been fired into the sea near Taiwan's two main ports. Aviation and shipping have been warned to avoid an extensive area near the Chinese coast in the strait of Taiwan, where the exercises will include live firing. Such activities have caused anxiety to people in Taiwan—including the British community there—in Hong Kong and throughout east Asia. They have led the United States of America to take precautionary action. Anything that affects the stability of the region that includes Hong Kong affects us all.
Let me make the Government's position clear. We acknowledge the Chinese Government's position that Taiwan is a province of China. The Taiwanese should be singularly ill advised were they to proceed to a declaration of independence or some similar initiative. Our understanding is that the Taiwanese authorities seek negotiations about reunification, not independence. That echoes the view of my hon. Friend the Member for Harrow, East (Mr. Dykes).
Equally, on the Chinese side, we have no current reason to believe that the present activity is the prelude to a military attack on Taiwan or that the Government of the People's Republic have abandoned their long-standing policy of seeking peaceful reunification, the policy repeated by the Chinese premier Li Peng to our Prime Minister less than two weeks ago. Nevertheless, it is clear that the present position has heightened tensions in the region and is potentially dangerous—indeed disastrous. There is a risk of error or a miscalculation that could have the most serious consequences.
Taiwan is one of the economic powerhouses of east Asia. It is the 14th largest trading entity in the world. As my hon. Friend the Member for Corby said, its foreign exchange reserves are the second largest in the world—they are second only to Japan. For its security, Taiwan has always looked to the support of the United States, which has already backed up its warnings about the seriousness of the position by moving two task forces near to Taiwan. We support and welcome the sensible precautions that the American Government have taken.
My right hon. Friend widens the point to encompass the whole world. Those of us who are concerned about Taiwan and China are obviously here this morning for that reason. Is it not right also to widen the debate so that concern for democracy is shared world wide? Even if we support Beijing, we do not want it to force the extinguishment of democracy as it begins in Taiwan.
I can only agree with my hon. Friend. That is why I welcome the elections in Taiwan, which should not be interfered with by anyone outside, not even China.
The risks of any escalation of the present crisis should be evident to all. I hope that all concerned, but especially the Government of the People's Republic of China, will pay heed to the dangers and proceed with the greatest possible caution and restraint.
That has been the central message of our own public statements about the matter and of the statement issued at the end of last week by the European Union. The Prime Minister expressed our concerns directly to the Chinese Prime Minister Li Peng when they met in Bangkok at the recent Asia-Europe meeting. We are continuing to follow the development of the situation extremely closely and will take all further opportunities to urge restraint and peaceful resolution of differences.
Such a path is not only in the interests of Taiwan and the east Asia region, but it is very much in the interests of China itself. Even though direct trade is still not permitted by the Taiwan authorities, Taiwanese companies have been among the largest investors in mainland China and the indirect trade is worth billions of dollars. My hon. Friend the Member for Corby alluded to that.
The astonishing economic transformation of the coastal provinces of China has, as my hon. Friend rightly said, benefited greatly from this infusion of capital and business acumen from across the Taiwan strait. These substantial economic benefits would be put at risk if the present crisis were to escalate out of control. There could also be consequences of particular importance for us in Britain—but also for China—if the situation led to a drop in confidence in Hong Kong.
I do not wish to be alarmist. The evidence we possess points to intimidation and bellicose activity, but not an attack. The risks at this stage are potential rather than actual. If all sides act with good sense, as I hope and believe they will, calm should return and tensions be relaxed. I believe that all in this House will join me in expressing concern at the demonstrations, which are unnecessary and an over-reaction, and in urging the utmost restraint.
I have so far spoken of the relations between China and Taiwan, as they are the subject of the greatest topical interest. I want now to put on record the flourishing links between Taiwan and this country. Although, like our main western partners, we have no formal diplomatic relations with Taiwan, it has become an important partner for us in terms of trade, investment, tourism and educational exchange. We continue actively to promote those links that are of considerable benefit to both sides. So far, 11 Ministers have visited Taiwan in pursuit of those objectives. Only recently, three of my ministerial colleagues from the Scottish Office—it is good to see the one they left behind, my hon. Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton) on the Bench this morning—and from the Departments of the Environment and of Health visited Taiwan to secure further commercial opportunities and inward investment for the United Kingdom.
The centre of our activity is our unofficial office in Taipei, the British trade and cultural office, currently under the direction of Alan Collins. The office boasts seven front-line commercial staff dedicated to helping British business. Its cultural section has an excellent record in attracting Taiwanese students to the United Kingdom. Several high-profile events were staged last year, including the British festival in Taipei and a British promotion in Kaoshiung. More events are planned for this year to enhance British interests. The active British chamber of commerce in Taipei, which the DTI helped to establish several years ago, also offers help to British business men. The DTI holds regular talks with the Taiwan authorities on a wide range of trade issues to improve access to the market.
My hon. Friend mentioned the work done by the Taipei representative office in London. Our lack of diplomatic relations means that we cannot afford Dr. Eugene Chien and his colleagues the privileges and immunities that go with diplomatic status, but we do make every effort to minimise any practical inconveniences that they may face. We believe that they share our aim of developing the practical links between Taiwan and the United Kingdom.
In this regard, I believe that our record speaks for itself. Last year our exports amounted to £962 million, a remarkable increase of more than 30 per cent. on 1994. Recent commercial successes included Davy International's £75 million contract from the China Steel company to design and build a new blast furnace. British companies are in the running to construct both a high-speed rail link between Taipei and Kaoshiung and an £8 billion metro project in Kaoshiung. The Government are committed to offering all the practical help they can in pursuit of those opportunities.
British firms are also showing their commitment by investing in Taiwan. Glaxo has completed a major pharmaceutical plant in Hsinchu and Kingfisher B and Q has signed a joint venture worth £10 million and is setting up a pilot do-it-yourself home centre store in Taiwan, which is due to open in March this year. Eagle Star has signed a joint venture to create Eagle Star Insurance Life, whose operations are due to start very soon. ICI plans to build a second chemical plant for completion in 1997, which would put its investment in Taiwan well in excess of half a billion US dollars.
The United Kingdom is also an increasingly attractive location for Taiwanese investment, as my hon. Friend rightly said. In the past, Taiwanese manufacturing investment has been mainly concentrated in the USA and east Asia. The first investment in Britain was when Tatung set up a manufacturing plant in Telford in 1984. Over the past five years, the United Kingdom has become the preferred European location for a further 10 companies with a range of products from penicillin to hard disk drives.
The announcement in November 1995 of the Chunghwa investment of £260 million to build a plant in Lanarkshire, creating 3,300 jobs, is a sign of things to come. It is the largest so far by a Taiwanese investor in the United Kingdom and, I might add, the largest single investment by a Taiwanese company in Europe. We expect it to generate more inquiries from smaller companies wishing to follow Chunghwa's lead.
It is important that we remain active in Taiwan to capitalise on the potential for further investment opportunities on the back of our recent success. The United Kingdom offers a highly attractive environment to Taiwanese companies, with a skilled and flexible work force and a warm welcome from local and national Government.
In recent years we have also made significant efforts in the area of education to attract Taiwanese students to the United Kingdom. An education fair, with representatives' attending from all major British colleges and universities, is held every year. There are now more than 10,000 Taiwanese students at British colleges and universities and the number continues to grow. We are also benefiting from an increasing flow of Taiwanese tourists and business visitors, especially since we simplified visa procedures in December last year.
All this represents a record of solid achievement in deepening the practical links between Britain and Taiwan. Despite our lack of diplomatic relations, we remain wholeheartedly committed to developing closer ties. We see great potential in the future for the promotion of United Kingdom exports and investment, attraction of tourism and the promotion of educational links in the United Kingdom and Taiwan.
Although much has been done, much more could be done. We intend to work closely with British companies to ensure that they take full advantage of the opportunities. We will continue the partnership between the British Council and the universities to promote educational contact. We will intensify our campaign with the regions of the United Kingdom to attract investment and create jobs for British workers at Taiwanese-owned factories. That requires a sustained effort. In the United Kingdom, investors have access to the European single market, but retain the freedom to run their businesses as they wish—and an overseas investor in the United Kingdom has all the rights and privileges of a British investor. No wonder we are doing so well together.
I know that the House will join me in congratulating my hon. Friend on what he had to say about the excellent relationship between Taiwan and the United Kingdom. The fact that he spoke without a note in his hand shows that he spoke from the heart. There are many here who hold Taiwan in their hearts.