China and the West

– in Westminster Hall at 10:57 am on 13th October 2009.

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Photo of Mark Field Mark Field Conservative, Cities of London and Westminster 10:57 am, 13th October 2009

May I welcome you to the Chair, Mr. Taylor? I often hear your interventions from the other side of the Chamber, but I hope that there will be slightly fewer interventions today than there normally are during the debates that I introduce on economic affairs. I shall speak in some detail about the implications for UK policy of relations between China and the west, and about the global economic implications of those relations in what is obviously a globally trading and highly integrated world economy.

The collapse of Lehman Brothers last September triggered an unravelling of the global economy so swift that its cause and scope was beyond the comprehension of not only a bewildered public but most politicians and financiers. Since that time, a huge number of jobs have been junked, global trade has slumped spectacularly and Governments across the globe have borrowed unimaginable sums to shore up our ailing economies. The implications are so colossal and, indeed, so long term that we do not know their true cost, and I suspect that we will not do so for a considerable time.

If we are to understand the broader reasons why that unravelling has occurred, we should examine the crucial relationship between the world's biggest economy-the United States-and its eastern pretender, China. For many years, that relationship has driven globalisation, but it now has the potential to wound fatally that same project. For a decade or more, the United States-along with the UK-has pursued a model of growth based on debt-fuelled consumption, and the cash and cheap goods provided courtesy of China. Pursued to its limits, that relationship has become dangerously unbalanced, and the myth of its sustainability was brutally uncovered when the complicated financial mechanisms that had hitherto propped it up dramatically collapsed during the past year or so.

The consequences of that imbalance are not yet fully apparent and their impact is still difficult to predict. However, it seems certain that the change will be profound and troubling and that the west's position in the world may never be the same again. In the 1970s and 1980s, Wall street received a number of breaks, which began with the dollar's link with gold being broken by the Nixon Administration's repudiation of Bretton Woods. Later, of course, when Ronald Reagan was President, he ended capital controls. The global bond market expanded and the US economy was liberalised, opening up American savings and pensions. With US pension funds ballooning, Wall street for the first time had access to a huge new source of finance, which it sought to invest to maximum value. Corporations were encouraged to invest globally, to exploit new markets and to demand the highest return for their shareholders, who were often ordinary American pension holders.

Alongside all that came a hollowing out of the US manufacturing industry as companies looked abroad for cheap goods and labour. Indeed, similar trends were afoot on these shores. By the mid-1980s, the American manufacturing sector was increasingly taking advantage of competitively priced, non-unionised foreign workers by moving much of its production abroad. That process only accelerated when the end of the cold war introduced millions more workers to the global economy. The working classes of America were invariably the losers of that deal, but politicians made the case that the benefits to the US would somehow outweigh their collective plight as new employment would be found in services, technology and the like. Workers would be reskilled and the vulnerable would be caught, in the short term at least, by the welfare system.

China was poised and ready to take advantage of those developments following decades of economic darkness, at least as far as the west was concerned, since the emergence of Chairman Mao in the 1940s. The more pragmatic regime of Deng Xiaoping adopted an open-door policy from the late 1970s. The country moved away from command socialism and concentrated on developing strategic industries with the global market very firmly in mind. The United States happily paved the way for further Chinese integration into the global economy, culminating in China's eventual admission to the World Trade Organisation in 2001. That final step was partially aimed at shrinking the trade deficit between the two countries, but in reality that deficit has ballooned, especially in the past decade.

Whilst China did liberalise and open certain sections of its economy, it also kept the door closed to its domestic market. By casting aside the established rules of free trade, China became the overwhelming beneficiary of globalisation, exploiting western markets while reinforcing its own role at the centre of an increasingly powerful Asian market block. That powerful Asian market block will be the reality that we will all face. It will be a challenge, but should also present great opportunities in this country in the decades to come. China simultaneously built up its own internal market and service sector, accrued vast reserves and began to secure stakes in strategically important commodity corporations and those that agreed to transfer technological know-how.

By the late 1990s, the income of the average US citizen had begun to stagnate as the hollowing out of western economies continued apace. To disguise that somewhat unpalatable problem, politicians in the US and here in the UK, its most closely related economic cousin, eagerly took advantage of the low inflationary environment provided by cheap Asian labour. They turned to high consumption as an economic model, fuelled by debt, which was often racked up against Chinese reserves, in the private and public sector. With easy credit and cheap mortgages, US and UK individuals were able to borrow cash as never before, with a false perception of wealth embedded by access to cheap Chinese goods.

Meanwhile, financial services in the west thrived to manage the seemingly insatiable demand for new investment instruments. For politicians in America and China, the relationship between the countries seemed, for so long, to be a classic win-win situation. In the US, citizens could enjoy cheap money and cheap goods, while in China, the immature manufacturing sector boomed as hungry western markets were exploited. For sure, even in the late 1990s, there were some nagging doubts about the sustainability of that arrangement, but to rectify them would have caused short-term economic difficulties and would have got politicians in the west, who always have an eye on the electoral calendar, into hot water with angry voters. Furthermore, the United States was still in the driving seat and would be able to dictate the terms of that relationship with China-or so we thought.

Make no mistake: China will not emerge entirely unscathed from this global recession. A slump in demand has already led to extensive Chinese unemployment, and social upheaval may follow. Given that China relies so heavily on the healthy US consumer, it is conceivable that the unbalanced, overly dependent relationship may yet develop into a tight economic alliance. Nevertheless, China remains on a growth trajectory that seems likely to take its economy past that of the United States by 2050. The US Treasury and its ailing banks have without doubt been stabilised by Chinese loans and loans from other sovereign wealth funds from the middle east. The US market remains very dependent on cheap Chinese imports, and it is hard not to conclude that China holds most of the cards when negotiating the terms of its bargain with America. What is more, its ascendancy, and that of its near neighbour, India, may be just beginning.

Last year, as the financial system collapsed at a breathtaking rate, US and European banks and Governments quickly borrowed colossal sums to shore up their operations. That borrowing was largely funded by China's vast surplus. In that way, a trend that was already in motion-a shift, as I always put it, of economic power eastwards-has been markedly accelerated. The legitimacy of western capitalism has always been bound up in the idea that it can best deliver prosperity to the masses, offering many millions a route to middle-income stability each year. But as jobs and money have been sucked eastwards, that mass prosperity, for the west at least, may no longer be guaranteed.

The wealth of the past two decades is increasingly being regarded as an illusion, and the competitive edge that the US and Europe might have had over China and India in services, technological development and scientific research might just as easily be taken from us. China is churning out millions of industrious, well-qualified engineering and technology graduates every year or two. As it controls stakes in so many western corporations, it is also able to transfer and copy intellectual wealth with ease. Soon the powerhouses of Asia could be undercutting western labour in not only manual but white-collar and the most highly qualified management positions.

I have visited China twice-three times if one includes my trip to Hong Kong in 2006-and I have seen at first hand how rapidly China has been able to transform itself. On my last trip, I led a delegation of local Chinese business folk from my constituency-Chinatown, in Soho, is, of course, in the Cities of London and Westminster-and we visited the two booming cities of Beijing and Shanghai. I was accompanied by half a dozen British-born business men from the London Chinatown Chinese Association.

During the first leg of our trip, we stayed in the Pudong district of Shanghai. Only 15 years ago, Pudong was just a handful of small farming villages, but it has since been swallowed up into the enormous Shanghai metropolis, and the Chinese have built from scratch a financial district that, in addition to having countless skyscrapers, is populated by 2.8 million people. Shanghai's overall headcount is now about 20 million, which is three times the population of London, which is Europe's biggest city.

Whilst out there, I also travelled on the Maglev train that links Pudong to Shanghai's international airport. The technology for that electromagnetic train system dates back to the 1930s-it was a German invention-but it was adapted for commercial use only relatively recently. We smoothly travelled at some 430 kph, or 275 mph, on that state-of-the-art transport system. In all, the 21-mile journey took eight minutes from start to finish; one can just imagine the degree to which a Maglev link between the City of London and Heathrow would ease the strain of doing business here, although I suspect it would also mire us in the endless planning wrangles to which major infrastructure projects in the UK are subject.

During that visit, I also saw the sparkling, state-of-the-art dock development. That involved driving across the 20-mile Donghai bridge, which is the longest bridge across water in the world, but took a mere three years to build. The port, which has been developed on largely reclaimed land in the bay outside Shanghai, features acres of containers stacked up, literally, as far as the eye can see. It had been only a few years since my first trip to Beijing, but the change in China's political capital was enormous, not least because that metropolis was, at that juncture, preparing for the 2008 Olympic spectacular. So, we can only imagine what China will achieve in the coming decade.

So, what will China do with the strong hand that it has now engineered? Many assume, perhaps naively, that along the path towards economic superpower status, China will inevitably become more open, democratic and western. We assume, in this country-or perhaps just hope-that it will abide by the western ideals that have shaped the world's international institutions and laws in the past 60 or so years, and that it will perhaps play by our rules. But all those notions betray a fundamental misunderstanding of how China operates. Westerners have confused the material wealth brought by access to cheap credit and cheap goods as a physical demonstration of our superiority in the world. However, the debt accrued by the west has come at a cost, a cost that perhaps too many outsiders, certainly in the political class, do not fully appreciate, but that will become apparent in the decade ahead, in terms of both future economic health and, more importantly, global influence.

China has played, and continues to play, a patient game. Not for that country are the quick fixes and instant gratification inevitably pushed for by western democracies. Indeed, a more long-term strategy has been pursued, best illustrated by Deng Xiaoping's 24-character strategy: observe calmly; secure opposition; cope with affairs calmly; hide the extent of our capacities; bide our time; maintain an assiduous low profile; never claim leadership; and make some contributions apparently from the sidelines. I believe that it is inconceivable that China will not now seek to exercise its muscle on the international, diplomatic and military stages as a result of the strong hand that has been quietly won economically in the past decade.

In fact, that power is already manifesting itself. Take, for instance, China's refusal to condemn explicitly the nuclear ambitions of either Iran or North Korea. Look at its military action in Tibet, despite the international outcry, and the continued unease in Taiwan, of which, I suspect, we have heard only the first Act. The influence that China exercises across large swathes of commodity-rich Africa, from Sudan to Zimbabwe, is also apparent. Similarly, from the Caribbean to the south Pacific, it is systematically buying up influence at the United Nations among its smallest sovereign nations. I have seen with my own eyes the number of countries that only a few years ago recognised Taiwan but that now recognise the People's Republic of China, and those countries are all individual voters in the UN. China is increasingly likely to reject US military, economic and humanitarian pressure, even when it is under Barack Obama's leadership. It will have greater success in any future competition for resources and power and will be able to ignore the norms and rules, as we have set them, of the international community.

What does all that mean for the UK? I am interested to hear what the Minister will say, and I appreciate that his eyes are now slightly closer to home, following his latest promotion, on which I congratulate him, but I am sure that he will have some things to say about this matter, and no doubt his successor, when looking at Chinese affairs, will have this at the top of the agenda.

Curiously, now that the price of our national profligacy has been put into sharp focus, policy makers seem determined to return to business as usual. Further borrowing and the maintenance of historically high levels of public expenditure seem, I fear, the order of the day, as the Government seem reluctant to prepare voters for some very inconvenient truths. With typical impatience, the media are already beginning to ask when the recession will end, as they hunt for green shoots in every dark corner. The cold reality, however, is that we must accept that for too long this country has been living way beyond its means, riding a wave of abundant credit, low inflation and inflated house prices, which have combined to create a false hope of ever-rising living standards. As a medium-sized economy primarily reliant on a hitherto booming financial services industry, we shall remain vulnerable, I fear, for some time to come.

For those middle-income folk outside the gilded corridors of finance who are unwilling to accrue wealth largely via housing debt, the economic stagnation has became ever clearer well before the recession. Average salaries and wages have stagnated for almost a decade, a fact that has been disguised by the grossly inflated asset prices, particularly private housing. For younger people in particular, merit and hard work were no longer translating into secure, well-paid jobs and affordable homes. Despite this, I believe that the past 15 years will soon be regarded, and for some time to come, as having been the very best of times. The long, hard slog of a slow recovery will be difficult to swallow for a nation used to assuming that its debts would never be called in. British employees are owed nothing more than the Asian sweatshop worker, and even the graduate-level openings of tomorrow might equally be filled in the decades ahead by qualified and hard-working 20-somethings from the east.

A rapid return to sustainable economic growth cannot be taken for granted. Complacent hopes of British exceptionalism might not see us through. We might not have the money to cushion this blow, as we have had in the past, with a generous welfare system. In the short term, we need to take a long, hard look at the books and sharply pare down our spending commitments. In the longer term, we need to make a strategic decision on the direction of our economy: whether to gamble our future on the possible resurrection of the financial services industry alone, going it alone as some sort of beacon of dynamism, or whether to diversify our economy and, implausible as it might sound today, tie our future more firmly to Europe in the hope that our strength-in-numbers approach will shield us from the stiffest of economic competition from the east.

The City of London, which is in my constituency, is already acutely aware of the increasing influence and economic power of China and has been preparing for Chinese growth for some time. Over the past decade, the City of London corporation has actively sought to engage with the Chinese leadership and with Chinese regional governments and business leaders, particularly since China became a member of the WTO eight years ago. While much of the corporation's work in China has been undertaken by representative offices in both Beijing and Shanghai, the City's annual, high-level outward visits involve a significant role in advancing relations for visiting delegations. The City appreciates that the regular interaction with China's economic decision makers is vital to London's continued position as an international financial centre as it provides the City with an ongoing opportunity to influence the development of China's financial sector. It is an approach that is already reaping dividends. China's State Council has cited the City of London as a model for Shanghai. The willingness of both countries to engage openly and share expertise has resulted in a greater flow of trade, which benefits UK-based industries in financial services and those firms seeking to expand and grow in a developing market.

With emerging markets accounting for an increasing share of world growth, London knows that it can no longer act in isolation if it is to remain a leading financial centre. The City has therefore worked to foster a web of financial, educational and cultural connections with traditional financial centres, such as New York and Hong Kong, but also with Shanghai and Bombay. Under the umbrella of the memorandum of understanding between the City of London and Shanghai, the corporation has also developed a strong partnership with the Shanghai financial services office, which is tasked with developing Shanghai as a financial and maritime centre. That interaction provides a vital insight into the thinking of the Shanghai government and gives City firms attending round tables and meetings access to Chinese officials. It also allows the UK model to be better understood by China and helps UK firms to win business as the Chinese financial sector grows.

The corporation has also been supporting the Treasury's economic and financial dialogue with China. That collective effort to assist UK firms, share UK expertise and reinforce with the Chinese authorities the fact that there is a two-way benefit of greater trade flows is vital to the success of many UK-based financial services firms, especially the large number seeking to expand in China. As a result, 13 of the 79 qualified foreign institutional investor licences available are held by UK companies, which is higher than for any other European country. UK firms have been sharing knowledge of the corporate bond market in order to reduce China's reliance on the banking sector, and those UK banks will be well placed when foreign banks are allowed to underwrite corporate bonds.

Due to the work being done to link the UK financial services industry to China, the UK now runs an invisible trade surplus with China, in which the balance of trade is about 2:1 in Britain's favour. That contrasts sharply with our visible trade balance, which runs 5:1 in China's favour. UK banks now account for 10 per cent. of foreign banking in China, generating significant revenues for the UK. Our companies are heavily involved in Chinese markets for insurance, legal services and other professional services. For instance, PricewaterhouseCoopers, the global accountancy firm, is the leading firm in China, measured by fee revenue, followed by Ernst and Young, Deloitte and KPMG. Amid all the gloom and doom in the financial services industry, from our own shores and perhaps also from Wall street, there are some good news stories, and this has been one specifically important area, and I would be interested to hear what the Government will do to ensure that it continues to work in that fashion.

Thankfully, the City of London welcomes China's increasing role in the global economy and regards it as not only a major opportunity for UK firms, but a way of influencing Chinese policy. China will remain a major exporter, but the City believes that Chinese leaders accept that a balanced economy also requires increasing domestic consumption. The UK-based financial services sector can play a crucial role in that and will feature prominently at the Shanghai Expo in 2010. By working in partnership with the Chinese Government and firms, the City of London Corporation seeks to derive maximum benefit for UK firms in mainland China, and from Chinese firms establishing operations in the UK and becoming part of the international financial centre that is the City.

The recent economic demise has never been outside the bounds of possibility. History is full of banking crises, burst bubbles and periods of economic darkness, but the breathtaking speed at which economic power will shift firmly to the east is new. The fundamental imbalance in the economic relationship between the United States and China will now either cause that relationship to implode, or problems will be prolonged and made more acute by a continued tsunami of debt. Either way, the coming decades are likely to be shaped by the emergence of an increasingly confident China that is keen to flex its muscle economically, politically, culturally and, in short order, I suspect, militarily. Others may wish to discuss further the military aspect. Understandably, given the constituency that I represent, my speech has focused more on matters economic and financial.

I believe and fear that the west's hope that it can somehow assume continued dominance in the knowledge economy may prove optimistic. Within the next 20 years, it is quite likely that intellectual property rights as we know them, be it licensing, patents or copyright protection, which have underpinned the west's competitive advantage, will undergo an overdue radical philosophical shake-up. An ever more assertive China will argue that traditional IP structures are no more than the west's attempt to impose its own form of protectionism to suit its particular demographic.

We should not assume that the dominance of our values in determining global trade will remain unchecked. If there is to be a longer-term price for our collective indebtedness, I fear that it will be for the UK to watch, with increasing impotence, it become our turn to suffer as the rules of the global trading game are changed to our detriment. It is fundamentally for that reason that we need to get balance back in our economy and reduce the debt at the earliest opportunity.

I look forward to hearing what the Minister and other Members who wish to contribute to this debate have to say. As I said, the subject is rather wide-ranging, and I have perhaps focused unduly on matters financial and economic. I hope that others will feel that that they can speak openly about matters in respect of China that are closer to their heart.

Photo of James Gray James Gray Conservative, North Wiltshire 11:22 am, 13th October 2009

I thank my hon. Friend Mr. Field for his initiative in calling this debate and congratulate him on the magnificent tour d'horizon that he gave just now, particularly in respect of economic relations between China and the west. It is perfectly reasonable that, as the Member who represents the City of London, he should do so.

Looking forward over the next 20 to 50 years, anyone who ignores the likelihood of China becoming an economic superpower, to use my hon. Friend's expression, is ignoring some basic economic realities of the world's history. If, 50 years from now, China and India between them-alongside the United States and, one presumes, some European influence as well-do not dominate the world's economy, I would be extremely surprised. I do not have the figures to hand, but they are simply astonishing, particularly on information technology. I believe that I am right in saying off the top of my head that 400 million Chinese-some five times the entire population of Great Britain-currently own a mobile phone, 400,000 Chinese are actively blogging, and the number of personal computers is simply beyond the realms of imagination.

The fantastic developments in China in every kind of industry, often but not necessarily in partnership with western companies, are second to none. Anyone who looks at either Shanghai or Beijing, as my hon. Friend did, sees just from the quantity of pollution in the air how much industry there is in those gigantic cities. They are without question economic superpowers.

China's membership of the World Trade Organisation is very much to be welcomed and gives a flavour of things to come, and the Chinese are to be congratulated on the enormous investment that they made in preparing for the Olympics last year. I recently saw with my own eyes the change in Beijing over the past 10 years, which is simply astonishing.

In all of that, it is vital that the UK, which is one of China's most important trading partners, extends and harnesses economic and trading relationships-and we are doing so: things are going remarkably well. Some very good relationships have been developed between us and the Chinese over the past 20 years or so, and I am sure that that will continue over the next 20 years.

I wanted to take part in this debate to speak not about the economy, but about a fly in the ointment of good relations between us and the population of 1.2 billion in the People's Republic of China. My comments result from a visit that Lord Alton, Lord Steel, Derek Wyatt and I made to China and, in particular, Tibet during the summer. I wish to touch on a couple of Tibetan issues, if I may.

One of the arguments that I advanced in meetings with senior Chinese officials in Beijing was that it seems extraordinary, at a time like this, with the economic potential that my hon. Friend described so well, that there should be visits from parliamentary delegations such as ours. Indeed, the previous week, the Minister of State, Foreign and Commonwealth Office, Mr. Lewis, who I believe at the time was the Foreign Office Minister with responsibility for China-we are all slightly muddled as to which Minister has responsibility for which areas at the moment. I believe that I can correct my hon. Friend by saying that the Minister present here today-the Under-Secretary of State for Foreign and Commonwealth Affairs, Chris Bryant, whom I congratulate on his promotion-now has responsibility for China, unless I am much mistaken. If I am, he will no doubt clarify that later. We are all mistaken-we do not know who does what at the Foreign Office.

Photo of James Gray James Gray Conservative, North Wiltshire

Is Lord Mandelson in charge of everything? [Interruption.]

Photo of James Gray James Gray Conservative, North Wiltshire

I beg your pardon, Mr. Taylor. I am being diverted from my subject.

My point was that our parliamentary delegation and the one the previous week, which included the Minister of State, headed to Tibet and Beijing for high-level discussions, and those meetings were dominated not by the potential for trade with China, nor by its economic influence in the world, but by the issue of an ageing, retired priest living in north India-namely, the Dalai Lama. Important as other issues are, that little issue of Tibet-a country whose population is some 2 million, compared with China's population of 1.25 billion-has such overwhelming influence on our relations with the People's Republic of China. We tried to make the argument to the senior Minister whom we met that it would surely be in China's best interests to find some sensible solution to the difficulty of Tibet and the Dalai Lama, so that the effect on China's relations with the rest of the world is removed.

It seemed to us that several things could be done. My hon. Friend the Member for Cities of London and Westminster mentioned in passing the military presence in Tibet, and we certainly saw plenty of evidence of that. Tibet was opened briefly for the visit of the Minister of State and for us, and then of course was closed again for the 60th anniversary of the foundation of the People's Republic, but during our brief visit we certainly saw a significant military presence. There were many soldiers and vehicles and definite evidence of suppression of pro-Tibet or free Tibet feelings within Tibet.

We sought to raise with the Chinese in Tibet a large number of human rights issues, including absurdities such as Tibetan monks who put up a picture of the Dalai Lama being arrested for doing so and any Buddhist monk refusing to condemn the Dalai Lama being arrested. Such things are absurd. They are symptoms of a totalitarian state of the kind that we no longer see in western Europe.

We tried to argue to the Chinese authorities that suppressing pictures of the Dalai Lama was not dissimilar to our attempts to suppress the speaking voice of the Northern Ireland IRA. Do Members remember that we used to have pictures on television and actors reading out the words over the picture? Suppressing pictures of the Dalai Lama is an absurd thing to do. It calls attention to him and gives wrong messages.

We tried to develop with the Chinese a middle-way solution, to use the Dalai Lama's expression. Lord Alton was particularly keen on the potential of looking at some parallel with Vatican City, where the Pope reigns supreme in an independent little parcel or palace in the middle of Italy.

There is a variety of different solutions and all sorts of ways that we could think about the situation. The first thing that has to happen is face-to-face negotiations between senior Chinese officials and the Dalai Lama himself. There is absolutely no point in having the Dalai Lama's representatives; there must be face-to-face negotiations. Surely, then, the Chinese could find some kind of solution to the problem.

The all-party group produced a weighty document yesterday. I will not bore hon. Members with it this morning, but I recommend that people-officials in particular-have a look at it. We took forward some discussions with Chinese officials. As my hon. Friend mentioned briefly, I found that there was some degree of puzzlement about why the Chinese should allow Tibet to become such an important matter and such a big fly in the ointment. We have to ask why the Chinese built the railway on which the train in which we went from Xinang to Lhasa ran, which cost, along with the road, many billions of US dollars to build. The Chinese said, "Oh, it is to encourage tourism." It really was not. There has not been all that much tourism in Tibet, particularly not when the borders are closed and visas are refused even to visiting ambassadors. I am not sure that it is to do with tourism. They said that it was to do with economic development in Tibet. If that was so, there are large parts of China where they could, today, be building railways. The notion that they built the railway simply for economic development in Tibet seems wrong. A glance at the map shows that Tibet lies somewhere between China and India, and I suspect that that probably has much more to do with it. The large number of troop movements that we saw on the trains, as we passed them on the way in, seems to suggest that it has more to do with the Chinese interest in Tibet.

All of that is worrying. I hope that Her Majesty's Government begins to look at the matter as follows. This is an insignificant dispute, involving an ageing priest living in north India and the questions of who is in charge of Buddhism and what the exact meaning of "autonomy" is. The area is called the Tibet Autonomous Region and there is some dispute between the Dalai Lama, the Chinese and ourselves as to what autonomy is and what sort of autonomy Tibet should have. Is it the same as Scottish autonomy within the United Kingdom, for example, or the same as the Tamils might wish for in Sri Lanka? There are many different kinds of autonomies. Is it not extraordinary that such a detailed, historical matter of insignificance in the big picture of world events should be souring our relations, and those of western Europe and the United States, with the People's Republic of China?

It seems to me that the officials to whom we spoke were beginning to accept that argument. I got the impression that they were slightly yawning and saying, "This is all very silly, can't we talk about important matters?" Her Majesty's Government ought to try to find a way of saying to the Chinese Government, "Let's solve that one. Let's move forward. Let's think about your strategic reasons for the vast Chinese investment in Tibet. Let's have a look at what our real relationships ought to be. Let's find a way of solving a rather silly little problem in the big picture and move forward from here."

I found it chilling, when we returned to our hotel in Beijing, on the way back to London, to be told as we tried to go for a walk along one of the main boulevards after Tiananmen square that we were not allowed to leave. Being British, I just ignored that and strolled out down said boulevard and no one seemed to object, although it could have caused an international incident had it gone wrong. We were told not to leave our hotel because of the rehearsal for the 60th anniversary parade through the centre of Beijing, for which the whole of the middle of Beijing was closed down, with all the population removed from it. This gave us a bird's eye view of the military part of the parade-the whole parade was quite extraordinary-amounting to hundreds, perhaps thousands, of military vehicles, including intercontinental ballistic missiles, endless nuclear weapons and a vast array of military hardware redolent of the Soviet Union at the height of Soviet power. I found it slightly chilling that, at a time like this the Chinese should not, in this parade, focus on trade, industry or history, or on joyful peasants dancing in the streets, but on hundreds and thousands of vast pieces of military equipment parading. They did that to send a strong message to the west. It certainly sent a strong message to us.

I endorse the remarks made by my hon. Friend the Member for Cities of London and Westminster. There is more to China than the vast economic potential that we all know about. We have to think carefully about precisely what its military, diplomatic and international ambitions may be.

Photo of Jo Swinson Jo Swinson Shadow Minister (Foreign and Commonwealth Affairs), Liberal Democrat Spokesperson (Foreign Affairs) 11:34 am, 13th October 2009

I congratulate Mr. Field on securing the debate and opening it with such eloquence, setting out the economic challenges that the UK and other countries will face in the context of China's growth and emergence as an economic powerhouse. It is an important subject and, as is often the way with 90-minute debates in Westminster Hall, we could spend much more time discussing it, because it has so many aspects. We have heard about the economic side and Mr. Gray has focused on Tibet.

The recent celebrations of the 60th anniversary of the People's Republic of China were well publicised. I share the concern expressed by both hon. Members about the fact that China chose to celebrate with cruise missiles, unmanned drones and nuclear missile carriers, because those are not what most people would think of as the main symbol of their country's pride. There is genuine concern about freedom of expression and the human rights situation in China, and I will touch on that in my remarks. However, it is important, when passing judgment on other countries, that we look to the difficulties that we face in our own country. It is particularly interesting to note that today The Guardian, a national newspaper, has effectively been gagged, preventing it from reporting on Parliament in relation to the Trafigura issue. It is important to recall that not everything is perfect here. However, it is also interesting to see how that matter has been taken up by the internet.

The hon. Member for North Wiltshire mentioned the huge number-in the thousands-of bloggers in China. Issues to do with freedom of expression in China will be dealt with by the increasing use of the internet. China spends a great deal of money trying to repress the internet, shutting down sites and so on: YouTube and a lot of other websites have had content from China removed from time to time. For example, if people in China google "Tiananmen square", they get information about the history of the landmark and about visiting it as a tourist attraction, but they will not receive any news within that web search on the atrocities that happened there. Ultimately, however, although China tries to repress the internet, it will end up being a tool for opening up democracy within that country.

Obviously, the huge economic growth of China has brought with it much greater political influence. China is becoming increasingly important in many different diplomatic areas, including nuclear proliferation in North Korea and Iran and human rights issues in Burma, Sudan, Zimbabwe and Sri Lanka. The challenge for the UK is to work out how best to engage with China across a range of issues, not least climate change, where it has a crucial role to play. I welcome the Government's strategy, published earlier this year, called "The UK and China: a Framework for Engagement." I will pick out some points from that in my remarks.

If anything good has come out of the global recession-it is sometimes important to look for silver linings-it is unprecedented international co-operation on economic matters. That will be important as we face global challenges, including a transition to a low-carbon global economy as we approach peak oil, for example. The fact that the G7 has recently decided to make way for the G20 as a forum for global discussion is welcome. It is vital that we recognise the importance in such talks of the emerging economies of China, India and Brazil. China's importance in the move from G7 to G20 is key. We need to go further and reform other international institutions, including the International Monetary Fund, to ensure that the realpolitik of the global environment is much better represented.

As the hon. Member for Cities of London and Westminster mentioned, there are differences in the structure of China's economy versus the economies of the west. China's saving rate in 2008 was more than half its gross domestic product. China requires a reduction in saving, but that is the opposite of what we need to do. It recognises that its people need to spend more to increase its stability. As it reforms its welfare state and health care systems, that will reduce the incentives for the Chinese to save so much of their income, which is in effect an insurance policy and safety net that they create for themselves.

The Chinese are having to change their mindset and culture with regard to their economic habits, and we need to do the same. The average adult in the UK owes more than £30,000. That personal debt is, as I am sure all hon. Members are aware, a huge burden that people are bearing within the difficulties of the recession. An essential task for the Government is to reform the regulation of credit and debt in the UK, so that it is no longer possible for people to get into such unsustainable personal debt. The hordes of junk mail that come through people's letterboxes urging them to take on thousands and thousands of pounds more debt need to be curbed.

Photo of Brooks Newmark Brooks Newmark Opposition Whip (Commons)

In the same way as the hon. Lady is arguing that the Government should have responsibility with regard to how much their debt builds up, surely consumers themselves have a responsibility to decide how much debt they should be taking on.

Photo of Jo Swinson Jo Swinson Shadow Minister (Foreign and Commonwealth Affairs), Liberal Democrat Spokesperson (Foreign Affairs)

The hon. Gentleman is right to say that consumers, too, have a responsibility, although I argue that there is a role for financial education because it is difficult for people to take on that responsibility if they are not well informed about the different products available and what APR means. There needs to be much more information in a very accessible format within the formal education system at school, but people who have left education should also be able to access such advice. Yes, people need to take responsibility, but that does not let off the hook companies that act irresponsibly by lending more than people can repay and by having sky-high interest rates that are just unjustifiable.

Photo of David Taylor David Taylor Labour, North West Leicestershire

Order. The hon. Lady seems to be wandering a little from the main topic that we are debating.

Photo of Jo Swinson Jo Swinson Shadow Minister (Foreign and Commonwealth Affairs), Liberal Democrat Spokesperson (Foreign Affairs)

I welcome your advice, Mr. Taylor, and shall return to the specifics of China.

China is becoming the biggest economy in the world, so we must ensure that we maximise the benefits for the UK. We are the top EU investor in China and it is right that that should continue to be the case. I welcome the Government's stated aim to equip British people with a much better understanding of China and Chinese language skills. Will the Minister enlighten us about how the Government intend to do that? On my visit to China, I was struck by how huge the language barrier is, because of course it involves not just a language, but an entire alphabet and different symbols. I am not convinced that it is necessarily an easy language to learn. None the less, we should be encouraging that to be happening to build better relations economically and more widely.

Climate change is a crucial issue in our relations with China. China has quickly become the world's biggest polluter, and we need to have its commitment at Copenhagen in December if we are to achieve a good deal. I was lucky to visit China last year with the Environmental Audit Committee. We were undertaking an inquiry into the international context of climate change post-Kyoto. I have to say that I was pleasantly surprised by the efforts that the Chinese were already making on that issue. They seemed to be truly committed to reducing emissions per yuan of GDP, which is very welcome, but the challenge that we face relates to the scale of the change taking place in China.

Industrial pollution was mentioned as a visible sign of that. I was struck by the huge motorways going through Beijing. They were eight lanes wide and absolutely gridlocked with the increase in traffic. The fact that hundreds of millions of Chinese are still without access to electricity means that, rightly, there is an incentive-an imperative-for the Chinese Government to improve living standards. However, the downside of that is that they are rapidly building more coal-fired power stations, so working with the Chinese on climate change is essential.

Photo of Brooks Newmark Brooks Newmark Opposition Whip (Commons)

The subject of the debate is UK relations with China, and the UK does have a particular expertise in carbon capture and carbon sequestration, which BP has been leading, I think, in Scotland. Surely we should be using that technology as a means to enhance our relationship with China, because it has about 200 to 300 years-worth of coal, particularly dirty coal. Working with the Chinese, perhaps using that technology, we can help to enhance our relationship and improve the situation with regard to climate change.

Photo of Jo Swinson Jo Swinson Shadow Minister (Foreign and Commonwealth Affairs), Liberal Democrat Spokesperson (Foreign Affairs)

The hon. Gentleman is right to say that technology transfer is a vital part of the relationship, although again, one of the things that surprised me when I visited China was how far ahead the Chinese already are on technology such as carbon capture and storage. We met a collaboration of seven different companies-I think that they are mainly state companies, even though they have different names-that had come together in China to work on CCS. Given the speed at which we are progressing on the issue in the UK, there is a real danger that the Chinese will get the technology up and running before we do, although obviously we should be ensuring that we share that knowledge and information because it is an essential piece of technology. As the hon. Gentleman rightly says, China has coal; it will want to ensure that it provides electricity and it will do that through dirty-coal-fired power stations. We must ensure that CCS technology can be retrofitted to them.

There are other things that we could learn from China on climate change. Its stimulus package announced last November involved huge investment of $90 billion a year for two years in high-speed rail. The Maglev technology used there has been mentioned, whereas high-speed rail in the UK is lagging far behind, although it would provide a much lower carbon alternative to domestic flights.

The Copenhagen conference is only weeks away. I am pleased that the Prime Minister has decided to attend; it is right that world leaders at the very top should be meeting. I say to the Minister that failure is simply not an option; the issue is far too important. We need to ensure that we get China, the world's biggest polluter, on board.

Some human rights issues have already been raised. China is contributing huge amounts of development aid to developing countries, but that is often being used as a way to buy influence. The aid is being used in exchange for access to energy resources. Energy security seems to be driving a huge amount of what the Chinese do. That has resulted in quite a few problems in the international sphere when China has failed to use its influence to prevent human rights abuses-for example, in Sudan. I hope that the Government will continue to pressure China to use the leverage that it has in Sudan to end the support for the militias that are causing such destruction and committing so many awful atrocities in Darfur. It is vital that China, which has huge economic power, also uses its increasing political power. That is why the Government's aim of encouraging China to define its interests more broadly, as outlined in the framework document, is absolutely right.

The hon. Member for North Wiltshire spoke about Tibet. I welcome the recent visit by the Minister of State, Foreign and Commonwealth Office, Mr. Lewis, to Tibet and his article on TheGuardian website about the general issue of human rights, including the assurance that

"This human rights deficit features prominently in our dialogue with China."

It is important that while we recognise the economic and political power that China has, there remains a variety of issues on which its record is, from a civilised society's point of view, unacceptable. We need to ensure that we-delicately and with the required balance-continue to raise those issues and encourage China to move.

Photo of James Gray James Gray Conservative, North Wiltshire

A point that I forgot to mention in my speech is that when the Government slipped through this place-incidentally, without any formal ministerial statement-a change in policy with regard to Tibet, saying that Tibet was now understood to be a fully integrated part of the People's Republic of China, some of us felt that the Government failed to use that sufficiently well as a lever to persuade the Chinese to address some of the human rights issues in Tibet. I hope that the recent visit by the Minister, who raised 19 individual human rights issues, is a portent of the Government taking a stronger line with the Chinese Government on human rights in the future.

Photo of Jo Swinson Jo Swinson Shadow Minister (Foreign and Commonwealth Affairs), Liberal Democrat Spokesperson (Foreign Affairs)

The hon. Gentleman makes his point very well and I hope that the Minister will respond to those comments in his reply. I hope that that visit signals a renewed commitment to finding solutions to the many ongoing problems in Tibet.

I welcome the publication of the UK national strategy on relations with China. Clearly, it is vital that we build strong ties as China grows in influence politically and economically. In recent decades, Britain's influence on the world stage has declined from what it was in the often-cited glory days. The best way for us to make our influence felt will often be to work closely with our EU partners and to be a strong voice in the EU. The Under-Secretary will be well aware of that, particularly given his new role, on which I congratulate him. Obviously, we have many points of contention with Chinese domestic and foreign policy, but we are increasingly learning to co-operate with each other on a wide range of issues from the economy to climate change. I look forward very much to hearing the Minister's remarks.

Photo of Keith Simpson Keith Simpson Shadow Minister (Foreign and Commonwealth Affairs) 11:50 am, 13th October 2009

Mr. Taylor, we normally tend to meet at the parliamentary breakfast club, so it is a great pleasure to serve under you. I warmly congratulate my hon. Friend Mr. Field on introducing this important debate. He spoke with a great deal of knowledge and he was very thoughtful. Although he rightly concentrated on the financial and business side-not least because of the constituency that he represents-he also ranged widely.

The debate is about the implications for UK policy of relations between China and the west, but colleagues have not mentioned the fact that there is no unified western approach towards China. That is hardly surprising because, despite our close relations with some EU colleagues, some Commonwealth countries and the United States of America, there are differences. There are political differences and there are differences because we compete with each other, often over economic relations.

As the debate was proceeding, I was reminded of my time as a fresh-faced undergraduate studying history 40-odd years ago. One special subject that we covered was China and the powers, and one of the books that we were invited to read was "The Arrow War" by a young, thrusting mandarin at the Foreign Office called Douglas Hurd. Listening to our tutors, I was conscious of the fact that we often had a very different world view from our Chinese friends, given our history and culture, as well as the influence of the Chinese Communist party. In meetings that I have been lucky enough to have with her excellency the Chinese ambassador, visiting Foreign Ministers from China and visiting party officials-this is not an exact analogy, and colleagues will say that I am trying to set up China in a certain way, but that is not what I intend-China has reminded me to an extent of pre-1914 Wilhelmine Germany. The Chinese are incredibly proud of what they have achieved, they are very conscious of their history and they are very conscious and fearful of chaos and disunity. Perhaps they overcompensate for that outlook, because many of their policies are based on it. My hon. Friend Mr. Gray talked about military deployments towards Tibet, and a lot of China's foreign and defence policy is based not only on Wilhelmine-style bravura, but on deep angst-a fear of chaos and of the fact that China could break up. That is not an excuse for us to pull our punches when we disagree with China, but it is behind a lot of the bravura.

I agree with my hon. Friend the Member for Cities of London and Westminster that the Chinese have a long-term strategic plan-that is how they think about things. The long-term strategic plan is to get themselves into a position where they have economic, military and political leverage. That does not mean to say that they want to fight large numbers of wars-I do not think that they do. However, they do want to get into the position that the old powers-Britain, France, Germany and the United States of America-were in during the 18th and 19th centuries and for most of the 20th century, and we should recognise that. In fact, we should inform the Chinese in our conversations with them that we know what they are about. They take a very hard-nosed and pragmatic view of finance, politics and military affairs.

I want to take up a point raised by Jo Swinson, who speaks on behalf of the Liberal Democrats. When one talks to the Chinese, there is an innate contradiction in the fact that China is still a one-party state, although there are now elections in the Chinese Communist party, as the Chinese are fond of pointing out. As the hon. Lady said, however, China's population-particularly its younger population-is at the cutting edge of interest in technology, the internet and everything else. The Chinese authorities therefore face a major problem in squaring the circle between very limited democracy and political participation by the population, major problems with large ethnic minorities and education. The younger generation of leaders is aware of that, but they do not as yet know how to deal with the issue, and we might be able to give them some advice in our talks with them.

I forgot to congratulate the Minister on his new ministerial responsibilities. I have been a shadow Minister since 2005, and every time I blink there is a new Foreign Office Minister in front of me. Baroness Kinnock is now the new Lord Malloch-Brown, with responsibilities for Africa, but she will presumably also speak on Europe in the Lords. The Minister-like 007-will continue to deal with the rest of the world, although he will also speak more formally on Europe. However, we welcome him to the debate.

Let me touch briefly on a number of other issues. Conservative Members fully support my hon. Friend the Member for Cities of London and Westminster. We have major national strategic interests in having good, close relations with China, but we should not be afraid to tell the Chinese-forcefully at times-when we disagree with them, because the Chinese do that to us. At times, they seem to think that we should pull our punches, but there is an equivalence. We should not necessarily be rude or denigrate the Chinese, but there are times in formal discussions when they should be made aware of our views. They will perhaps realise that the more they are drawn into international organisations. That may happen as a result of China's membership of the G20 or of some of the contradictions that China will face as a member of the UN Security Council.

I want to touch briefly on four issues and four countries over which we have issues with the Chinese. The first, obviously, is Iran and nuclear proliferation. Iran is China's third-largest supplier of oil and it is crucial to China's economy. Earlier this year, China and Iran announced a $3.2 billion three-year natural gas deal. It is estimated that trade between the two countries rose from $400 million in 1994 to $29 billion in 2008. That means that relations between Iran and China are very close.

[Sir Nicholas Winterton in the Chair]

So far, the Chinese have been very reluctant to go along with any form of pressure or sanctions on Iran, but that is not to say that we do not need to continue to bring pressure and influence to bear on them. The Iranian regime might just listen-I put it no higher than that-to representations from China and Russia rather than to anything that we might say.

The second issue, which I shall merely mention, because the hon. Member for East Dunbartonshire has already discussed it, is the importance of China's role in climate change. Whenever we talk to Chinese Government representatives about climate change, their usual answer is that they do not wish to be lectured about it by the west. We have been climate polluters for 200 years, and the Chinese sometimes find what we say a little rich. As my hon. Friend Mr. Newmark said, however, we may have a lot to offer the Chinese in specific technological areas.

I will not touch on the global economic crisis, because my hon. Friend the Member for Cities of London and Westminster made some good points about it.

The final specific point that I want to make-once again, this is a sensitive area, but we should put the matter on record-is that there is no doubt that as part of a strategic plan the Chinese Government are only too happy, and would see it as perfectly legitimate, to involve themselves in what we would now call economic and military espionage. That is part and parcel of leverage. There is a vast amount of evidence for that, particularly in the United States of America. The Chinese Government or Chinese companies, either indirectly or directly, by investing in western companies, have been involved in knowledge transfers-what we should call illegal knowledge transfers. They are only too well aware, from having watched the wars in Iraq and Afghanistan, that the old kinds of military conflicts are not likely to be relevant in the future, and therefore the Chinese military is heavily into thinking about ways of countering the kinds of advantages that the United States military has in asymmetrical warfare.

The Chinese watch that very closely, and, indeed, only recently I read a translated volume by some Chinese military officers who wished to perfect a system in which if they were ever involved in a crisis involving other countries-the book did not spell out which countries-they would be able literally to close down a power's information technology. One thinks of that as the stuff of Hollywood blockbusters. I see the Minister frowning. I can just imagine him here in the 1930s, hearing about the idea that somehow or other mechanised units might go through the Ardennes. There would have been much tut-tutting from the Minister, saying that it was a physical impossibility. That is not a fantasy world at all. I believe that it is something into which the Chinese are putting vast investment. Once again, we should make it quite clear to them that we know what they are doing, and perhaps we should think about how we are to address it.

I want to touch on some specific countries, the first of which is Sri Lanka. In its war against the Tamils, Sri Lanka relied heavily on Chinese help-not only political but economic and military. China has a long-term interest in the development of Sri Lanka, and not least in acquiring a major naval base. In May 2009 China voted against a resolution by the UN Human Rights Council calling for an investigation into allegations of war crimes by both sides during the military conflict. Once again, that is an area in which we are in conflict with China. By "we" I mean, of course, the United States of America and most of our European allies as well. What discussions have the UK Government had with representatives of China about its support for the President of Sri Lanka? Have concerns about China's actions at the United Nations been raised by UK officials? Given that the EU Commission will decide later this week-in fact in a few days, on 15 October-whether Sri Lanka can retain its generalised system of preferences plus trade concession, what assessment has been made of how effective that will be in persuading Sri Lanka to improve its record on human rights? Will Sri Lanka simply turn to countries such as China to support its textile industry?

Secondly, I want to mention Burma. China is Burma's largest trading partner, and the country's biggest source of foreign direct investment. China has repeatedly shielded Burma from action by the UN Security Council. How can China's deep financial ties with the ruling military junta, in the form of diplomatic support, trade links and the sale of military hardware, be harnessed to ensure stability and economic development in the country? Last month the US Secretary of State, Hillary Clinton, announced that the US would enter into dialogue with the Burmese junta and would effectively consult and seek the help of countries such as India and China as part of its new policy. Did the US Administration discuss the formulation of their new policy with officials from the Foreign and Commonwealth Office? In June 2007 China hosted low-profile talks in Beijing between representatives of the United States and Burma. What can be done to persuade China to continue to pursue similar initiatives?

The hon. Member for East Dunbartonshire touched on the issue of Sudan and Darfur. China, as we know, has very close relations with Sudan and has invested heavily in the area. Once again, it has provided direct military support, including jet fighters, to the Sudanese Government. Have the UK Government urged the Obama Administration to make Sudan a priority in their discussions with China, given the sheer humanitarian horror that is going on there? What assessment has been made of China's support for the implementation of the comprehensive peace agreement in Sudan? How closely are the special representatives from China and the UK working to ensure peace, stability and development in Sudan?

I have raised my questions not to try to trick the Minister-he is too good to be tricked, and he has some clever officials to provide him with briefing notes. I have raised them because we are directly involved in all those issues, which are raised time and again in Westminster Hall and the main Chamber of the House. Indeed, Mr. Speaker himself has taken a direct personal interest, particularly in Burma. It is right and proper that we should be seen to raise these questions, not in a hostile way, but so that, hopefully, the representatives of the Chinese embassy in London will see that they are being raised and are important to British parliamentarians. We do not see those questions as a way to destroy relations between China and the UK, but they are issues on which there is strong public feeling and opinion in the United States and western Europe.

I am grateful to my hon. Friend the Member for Cities of London and Westminster for raising this important debate. Our relations with China are very important. They should be frank and robust and British Governments, of whatever political party, and the Foreign Office and other Government Departments should attempt to have a long-term strategy towards China, just as China has a long-term strategy towards us.

Photo of Nicholas Winterton Nicholas Winterton Conservative, Macclesfield

I am grateful to the hon. Gentleman for the succinctness of his remarks, which will give the Minister adequate time to reply.

Photo of Chris Bryant Chris Bryant Parliamentary Under-Secretary (Foreign and Commonwealth Office), Parliamentary Under-Secretary (Europe) 12:07 pm, 13th October 2009

It is a delight, as ever, to serve under your chairmanship, Sir Nicholas, although I disagree with you and think that it would have been rather nice if Mr. Simpson had spoken a little longer. It is always a delight to hear his pearls of wisdom, whether they are cast before swine or not.

I congratulate Mr. Field-I would call him my hon. Friend, I think-on his comments and on securing the debate. It is very timely, and he did not so much take us on a tour d'horizon as give us a historical outlook. It was a succinct and prescient look at China's relations with the west. As the hon. Member for Mid-Norfolk just said, it is difficult to assess quite what one means in speaking of China's relations with the west, because the west is multifarious, but perhaps I shall come to those issues later.

I should apologise because I have something of a cold, which is the reason for the slightly odd sound of my voice. I am not sure whether it is a Peruvian cold, or a Venezuelan or Colombian one, but it came across the Atlantic with me last week. An anecdote may explain what I think our attitude should be in discussing this issue. I went to the theatre three or four years ago, and a couple there were having a ferocious row just in front of me. It ended with the woman turning to her husband and saying, "The worst of it is that you are so blasted patron-ising". He turned to her, kissed her on the forehead and said, "It's not 'patron-ising'; it's 'pat-ronising', my dear." That is a true story; he was a brave man. I would merely say that I sometimes think, in particular in the case of countries that are distant from us and whose cultural expectations and understandings are different from ours, it is all too easy to seem patronising. Even with countries in Latin America it is easy for British diplomacy to seem heavy-handed, aggressive or neo-colonial. Iran sometimes feels the same, and in China, the least effective form of diplomacy will be one that feels as if a heavy stick is being wielded, or that is in any sense patronising.

The comments made by the hon. Member for Cities of London and Westminster about the global financial crisis and the changing role of China are important. We must see China as an ally, rather than a distant country that somehow or other we have to subjugate in discussions. That is certainly true economically for the UK, because the economic opportunities are very dramatic. In 2008, trade between the UK and China was up by 16 per cent. Exports to China grew by 25 per cent. The UK Trade & Investment presence in China is our largest presence in any market-that is important and as it should be. We have set ourselves a trade target of $60 billion by 2010, and we will achieve that only if we are able to proceed on the basis of alliance, friendship and economic co-operation, rather than through a more high-handed approach.

The hon. Gentleman raised one issue-intellectual property rights-about which I disagree with him. Clearly, there are different cultural understandings about how intellectual property should be looked at. Under the Napoleonic code, there is a different understanding of intellectual property rights compared with that found in British law. Through international organisations that are involved in intellectual property rights, we have managed to find a way of ensuring that those who develop ideas have a means of progressing to economic opportunity.

In the UK in the past we have been good at developing ideas but not so good at progressing them into the markets. That is one of the key points that Lord Mandelson has focused on and that we as a country need to focus on. I know that Adam Smith said that intellectual property rights should not really exist because copyright is a fake right, but I wholeheartedly disagree. I believe that those who have developed an image, an idea or a patent should have the security to develop it. Without that financial and economic opportunity, it is difficult to see how most people could secure the investment and the development of new ideas.

Nowhere is that more important than in health. The growing relationship between the UK and China on health issues is important on several different levels: first, in relation to intellectual property rights; secondly, in relation to dealing with some of the major illnesses that face the world, not least HIV/AIDS and tuberculosis, and also in terms of reaching development goals in other parts of the world.

Mr. Gray, whom I consider a friend, having co-operated with him in the all-party group on the Army, referred to what he called "the fly in the ointment"-the issue of Tibet. On behalf of the Government, I would like to congratulate him, and the group that went to Tibet. It was an important part of British dialogue with China, which tried to enable China to understand better the concerns of people in this country and across the European Union. The European Union has tried to speak with a united voice on the issue, and by virtue of doing so, has been far more effective. I congratulate the hon. Gentleman, Lord Alton, Lord Steel and my hon. Friend Derek Wyatt.

The hon. Member for North Wiltshire mentioned the significant military presence in Tibet, and considered whether the suppression of pictures of the Dalai Lama made the situation worse. He wondered whether something similar to the Vatican City model would make more sense. He expressed incredulity about China's bothering to make the issue so important that it becomes a fly in the ointment, not only in its relationship with this country, but with many other countries around the world.

That sense of perplexity is shared by Ministers and the Government. The Minister of State, Foreign and Commonwealth Office, my hon. Friend Mr. Lewis, who is the Minister responsible for China, visited Tibet in that capacity to clear up the issue. He made many of the same points that were noted by the hon. Member for North Wiltshire and his friends when in Tibet, and he raised a series of issues to which I hope to return later.

Jo Swinson made several important points, and I am grateful to her for that. If she does not mind my saying so, I felt that she erred down a slightly Liberal Democrat line when she started comparing the case that is in The Guardian today-or not in it-with the repression of freedom of expression in China. I think that those who want to make a comparison between China and the "Chinese situation in the UK" are rather over-egging the pudding. [Interruption.] I see that she wants to over-egg her pudding even more, and I am happy to take an intervention.

Photo of Jo Swinson Jo Swinson Shadow Minister (Foreign and Commonwealth Affairs), Liberal Democrat Spokesperson (Foreign Affairs)

I want to clarify my point. I was not saying that such matters happen here to the same extent as in China, but before we pass criticism on what happens elsewhere, as the Minister pointed out at the beginning of his speech, we need to look at our own situation and ensure that we deal with genuine problems in our country.

Photo of Chris Bryant Chris Bryant Parliamentary Under-Secretary (Foreign and Commonwealth Office), Parliamentary Under-Secretary (Europe)

I think that freedom of expression is well advanced in this country. The significant difference is that the rule of law applies. I do not know anything about the individual case to which the hon. Lady refers. I tried to google it, and the Google that I use in this country has not been interfered with by the Government. In China, the Google search engine is rather different. I urge the hon. Lady not to be too Liberal Democrat about things in life-on the whole, it will make for a much easier and more sensible life. I think that I have carried the whole Chamber with me on that point.

The hon. Lady referred to reform of credit and debt in the UK and there was a bit of interplay about the responsibility of borrowers. My view is that we should already have stopped the use of credit card cheques, guaranteed loans and the rest of it, and I hope that we will move to do so soon.

On language skills, the Department for Children, Schools and Families has been conducting a major survey on teaching Chinese in schools in the UK, which is obviously very important. Currently, one in six secondary schools teach Mandarin, but only 1 per cent. of primary schools do so. The Foreign Office and the UK Government believe that Chinese needs to feature more prominently across the curriculum. Chinese history and geography should also be an important part of the curriculum if people are to have a full understanding of the world in which they are growing up.

A significant number of Chinese students come to the UK to study, and we are keen to foster that. In my responsibility for consular services, it is one of the areas where we need to do some work to ensure that the visa regime for those who come to study in the UK makes that possible, rather than impossible. That exchange of educational opportunities is important.

Photo of Mark Field Mark Field Conservative, Cities of London and Westminster

Let me reiterate the Minister's words. There are some concerns from several providers, and a slight danger is that in the debate about immigration, it is easy to hit on numbers. One of the easiest ways of reducing headline numbers of migrants is to stop the educational programmes to which the Minister refers. He is absolutely right. We need to foster strong connections between some of the brightest and best from China, India and elsewhere overseas, not least because of the long-term benefits that that will bring this country. Those young Chinese people will often go back to their country, build up businesses, and hopefully become great ambassadors for ongoing trade between our country and China. That is the most important reason for ensuring as far as possible that the sort of work that the Minister is hopefully doing continues. We must make sure that our consular relations with regard to those student visas are as smooth as possible.

Photo of Chris Bryant Chris Bryant Parliamentary Under-Secretary (Foreign and Commonwealth Office), Parliamentary Under-Secretary (Europe)

I could not make the point better than the hon. Gentleman. I would add only that the British Council has an important role to play-as does the World Service-in enhancing the reputation of Britain as a place in which to learn English and study other subjects.

The hon. Member for East Dunbartonshire referred to climate change, which I will discuss in a moment. In particular, she mentioned high-speed rail. When she next has an opportunity to speak to Dr. Cable, who is the finance spokesman for the Liberal Democrats, I hope that she will reinforce the point that it is important to protect the electrification of the railway to Swansea, otherwise there would be an inconsistency of policy, and we would hate to see inconsistency in the Liberal Democrat position.

The hon. Lady and the hon. Member for Mid-Norfolk referred to relations with Sudan, which is obviously a vital issue. China should be playing a much more significant role in trying to bring about a peaceful resolution and a proper regard for human rights in Sudan. It has saddened us in recent years when China has used its veto in the UN Security Council not only in that regard but in relation to Burma and Zimbabwe. Human rights issues form a seamless garment. We cannot encourage human rights in one country and choose to ignore them in another just because we share a political outlook on other issues. Raising the issue of human rights is a key part of how we seek to progress British interests.

I think that my hearing is going because I thought that the hon. Member for Mid-Norfolk said that he was a fresh-faced undergraduate 14 years ago. [Interruption.] I just heard the Government Whip behind me cruelly say that it was more like 400 years ago. My eyesight is clearly as troubled as my chest. None the less, the hon. Gentleman made some interesting remarks about the respect for order and the fear of chaos and disunity that sometimes persist in Chinese cultural understandings. I suspect that the opening ceremony of the Olympics will be very different in the United Kingdom from the one that we saw last time, and that is entirely right and proper. We always need to protect those cultural differences.

The hon. Gentleman kindly welcomed me to my post and said that every time he blinks, there is a change of Minister. I am glad to guarantee him that I will remain in this post for the next six years.

The hon. Gentleman also referred to Iran and nuclear proliferation-I always find the word proliferation very difficult to say. He is absolutely right that China can play a vital role, especially over the next nine months, not only in relation to Iran but in trying to achieve a world with fewer nuclear weapons with safer fissile material and with a comprehensive test ban treaty. We were delighted with the role that China played following the second nuclear test that North Korea held. That showed that China has moved forward in the way in which it has chosen to play its role in the world. We hope that it will move in the same direction in relation to Iran-just as the Russians have in recent weeks.

The hon. Gentleman referred to illegal knowledge transfers as if that was a phrase that we all regularly use. It is not a phrase that I have used and it is not a concept that has ever, either legally or illegally, been transferred into my knowledge system. I take his point about economic and military espionage, and believe that that requires close consideration.

In relation to Sri Lanka, Burma and Sudan, it is vital that we maintain a strong and critical relationship with China to enable it to play a more significant role in standing up for human rights in areas where there are significant abuses. The way in which we take such a matter forward is sometimes misunderstood by the Chinese Government, but it is something from which we will not flinch.

The hon. Gentleman said that just as China has a long-term idea of where it wants to take its relationship with the west, it is important that we, too, have a long-term understanding. Earlier this year, I was delighted that the Government were able to produce a framework for engagement-that is the first time we have done that for any country-outlining how we see our relationship with China over the coming years. There are three pillars to the framework.

First, we must get the best for the UK from China's growth. The hon. Member for Cities of London and Westminster referred to the importance of financial services in China. It is vital that we ensure that the investment that has already happened continues and that China sees the City of London as a crucial place in which to conduct its financial business around the world. It is also vital that China should reduce both its tariff and non-tariff barriers on a whole range of different areas. Obviously its membership of the World Trade Organisation is a significant step forward and one on which we wish to build.

Photo of Mark Field Mark Field Conservative, Cities of London and Westminster

In that context, let me stress the importance that the City of London Corporation has placed in recent years on ensuring that it has lord mayors-the big ambassadors for the City-who have strong Chinese experience. I refer here to people such as Sir David Brewer, Sir John Stuttaford and Sir David Lewis, all of whom have worked in China or Hong Kong for significant parts of their career. The fact that China, Hong Kong and various other territories in the region will be very important players should be borne in mind when considering lord mayors in the future.

Photo of Chris Bryant Chris Bryant Parliamentary Under-Secretary (Foreign and Commonwealth Office), Parliamentary Under-Secretary (Europe)

I am thinking of the hon. Gentleman's interventions on me as sub-paragraphs in my own speech because I entirely concur with everything that he is saying, which is all very depressing.

Let me add to the point about how we ensure that we get the most economic advantage for the UK out of China's growth. We will have a British pavilion in the World Expo in Shanghai, which will make a significant contribution to ensuring that the Chinese have a keen understanding of what constitutes modern Britain and of the economic opportunities that we afford. The design by Heatherwick is very innovative. It will be an exciting part of the landscape in Shanghai and is growing apace. I am grateful for the private sector support from AstraZeneca, Barclays, BP, Diageo and GKN.

The second pillar of our framework to ensure that China emerges as a responsible global player plays into many of the issues that hon. Members have raised. I am talking about China's support for the robust sanctions against North Korea following its second nuclear test, and its role in the "E3 plus 3" process in relation to Iran. As I said earlier, we regret the fact that in January 2007, it vetoed a resolution on Burma. Since then there have been significant developments in which China could have played a far greater role. I refer too to the position it took last July on Zimbabwe.

As for climate change, we have seen a significant move in recent days for which we are grateful. China has a national leading group on energy and climate change, which is chaired by the Chinese Premier, Wen. It has a national climate change programme dating from 2007, and in October the leading groups announced that China must incorporate addressing climate change and reducing the intensity of carbon dioxide emissions into national, economic and social development plans. China may be following such a policy for different reasons from our analysis of the need for a robust outcome in Copenhagen, but we will be working closely between now and Copenhagen to ensure that we reach a clear and robust agreement on the need to ensure that global temperatures do not rise 2° above the temperatures of 1990. Moreover, we must ensure that there is a global fund to help us protect the world around us. We also hope for an early conclusion of the Doha development round and we believe that China's membership of the WTO should enable that rather than prevent it.

Finally, the third pillar is about promoting sustainable development, modernisation and internal reform in China. Whether it is on the death penalty, human rights in Tibet or more generally in China, we believe that constructive engagement with China as an economic ally and friend can go forward only when there is a wholehearted embracing of proper human rights.

I am grateful to the hon. Member for Cities of London and Westminster for raising these issues today. If there are any further issues that I have not addressed, I will reply to hon. Members in writing.

Photo of Nicholas Winterton Nicholas Winterton Conservative, Macclesfield

I am sure that the House is grateful to the Minister for his consensual response to this very important debate.