15 October 2008
Mr. Geoffrey Clifton-Brown (Cotswold) (Con): It is a great pleasure to serve under your chairmanship, Mr. Illsley. It is also a great pleasure to take part in a debate secured by my old friend the hon. Member for Nuneaton (Mr. Olner). I shall let hon. Members into a little secret. I did my Industry and Parliament Trust fellowship with British American Tobacco and I used to be given free cigarettes, which I gave to the hon. Gentleman. I hope that that has not contributed to the fact that he is retiring from the House at the next election. The House will miss him sorely when he does retire. It was great to hear from him this morning.
I congratulate the hon. Gentleman and the chairman of the all-party group on China, the hon. Member for Wirral, South (Ben Chapman), on jointly leading what was obviously a fantastic trip. I think that the Minister and I are feeling rather left out. We seem to be the only ones in the debate who were not on that trip, but I cannot really feel left out, because I have been to China twice and I am to go to Hong Kong and China again in November. What has been said today proves that we need to understand a great deal more about that rather strange country that many people in this country do not know enough about. By travelling and seeing with one’s own eyes what is going on there, one can get a snapshot of how the world is changing.
I echo the comments made by the hon. Member for Wirral, South. The world is changing, in his excellent phrase, from occidental to oriental. Having been to a number of other south-east Asian countries, I know that the world is moving eastwards. We need to use all our assets to try to get into that world with trade and everything else. Currently, not enough of those assets are used. The hon. Member for Sittingbourne and Sheppey (Derek Wyatt) mentioned the figures for the UK consuls. We need to use the Foreign Office, UK Trade and Investment, the China-Britain Business Council, the British Council, the BBC World Service and, indeed, our ancient contacts with Hong Kong to get into the Chinese market. We do not use those contacts enough.
Let me put the Chinese market in context. Whereas the gross domestic product per head in America is $45,000 and in the UK is $33,000, it is only $5,300 in China and $2,700 in India. The staggering facts are that, over the past seven years, whereas the US has grown by only about one third and, interestingly, the figure for the UK has doubled, the figures for China and India have gone up by three times. That gives an idea of the pace of relative change of the so-called western world and the eastern world. I take on board the fact that China’s economy is predicted to be larger than that of the US by 2040.
Several hon. Members have criticised the fact that our trade deficit with China is growing—a fact that we need to bear in mind. It has grown by 67 per cent. in the past six years alone. We are importing more goods from China, and yes, in many ways that is good for the economy. Contrary to what was said, I think that that is deflationary because we have been importing cheap rather than expensive goods. I think that we have had a deflationary effect from our trade with China, but ultimately we must try to ensure that the trade gap with China is closed.
There was a lot of criticism in the debate. I do not want to major on that, but my hon. Friend the Member for Hertford and Stortford (Mr. Prisk) put his finger on the issue. The fact that we have nine regional development agencies, all with offices around the world, many in the same city—for example, Shanghai—pitching for the same business, dilutes the UK brand. It was said that in the past 10 years France has doubled its trade with China and Germany has trebled its trade, yet Britain still lags behind. I spent a great deal of time with UKTI earlier this week, but with the best will in the world, Britain needs to do a better job. It simply is not doing a good enough job.
China has had five golden years of economic prosperity, but as the hon. Member for Wirral, South mentioned, there are fears that the Chinese economy is slowing. Inevitably, with the worldwide financial problems that we face, China’s economy will slow from a growth rate of 10 per cent. perhaps to 8 per cent. or less. The real worry for the world at the moment—or perhaps the benefit; I am not sure—is that Chinese factories are beginning to slow down. They are using less commodities, which is why we are seeing a drop in commodity prices and particularly in oil prices, from a high of $140 a barrel to the current price of about $90. That may help the world to recover.
We need to consider carefully what China is doing in respect of its trade with the rest of the world. We have heard about the sovereign wealth funds—huge funds. The figure given was $1.8 trillion; mine is $1.5 trillion. Nevertheless, those are enormous funds, built up from currency reserves. If they are used benignly, as seems to be happening at the moment—for example, a 9 per cent. stake has been taken in Morgan Stanley and a 3.1 per cent. stake in Barclays—that can be a very positive thing for the world.
What we do not want is China using its might through sovereign wealth funds or, indeed, its trade with Africa for unfair trade advantage. We want to watch carefully what the Chinese are doing in Africa, because we want to see fair treatment of African countries. Basically, what China is doing in Africa is providing infrastructure in return for mining rights. Those deals need to be scrutinised very carefully to ensure that China is not mortgaging the future of some of those countries.
I congratulate the chamber of trade in the area represented by my hon. Friend the Member for Southend, West (Mr. Amess) on the Essex-Jiangsu partnership. That is a fantastic effort. It is a pity that the Government cannot follow that effort by promoting the same proportion of trade leads as Essex county council manages to do. Essex chamber of trade may well have something to teach UKTI and the Government on how to do business with China, because it is clear that we are not doing the amount of business that we should, and fears have been expressed about the effectiveness of the China-Britain Business Council. I do not want to knock the council; it has done a great deal of good over many years, but that does not mean that it cannot improve its performance from now on.
The other important factor that my hon. Friend mentioned was the need to teach Mandarin in schools. He may be interested to know that a school in my constituency is a Chinese academy and teaches Mandarin. I got the Chinese ambassador to go to the school, and the delight of the children—not so much the delight of the ambassador, because their Mandarin was not up to his expected standard—in being able to converse with the ambassador in Mandarin was fantastic. We perhaps need to stop the over-preponderance of teaching French in this country and start to teach Mandarin and Spanish, which are two of the most widely spoken languages in the world.
The market that we are discussing is huge. China has 1.3 billion people. It has moved 200 million people out of poverty in the past 10 years. They have moved from rural to urban areas. There is still a huge disparity of wealth between the rural and the urban areas. I have been into the hinterland in China. I have seen some of that disparity of wealth, but I have also been to Urumchi, which is one of the cities in the far west, and it is similar to a modern western city, so whereas everyone talks about the eastern seaboard with regard to doing trade with China, there is plenty of trade to be done within China.
I have a lasting memory of China—I almost lost my life there. I fell 20 ft down a concrete shaft in China, but I survived and I am going back, because I want to discover more about that exciting country. It was when I was in Urumchi, talking to the Speaker of that Parliament, that I coined the phrase that the 19th century belonged to Britain, the 20th century belonged to America and the 21st century will belong to China.
We must make friends with China. We must do more trade with it; we must have more cultural links with it; we must have more exchange with it; and we must have more educational exchange with it. Every time I have visited China, I have been to a school: to see those young people’s enthusiasm for learning English is fantastic. We should capitalise on the fact.
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I congratulate the hon. Gentleman and the chairman of the all-party group on China, the hon. Member for Wirral, South (Ben Chapman), on jointly leading what was obviously a fantastic trip. I think that the Minister and I are feeling rather left out. We seem to be the only ones in the debate who were not on that trip, but I cannot really feel left out, because I have been to China twice and I am to go to Hong Kong and China again in November. What has been said today proves that we need to understand a great deal more about that rather strange country that many people in this country do not know enough about. By travelling and seeing with one’s own eyes what is going on there, one can get a snapshot of how the world is changing.
I echo the comments made by the hon. Member for Wirral, South. The world is changing, in his excellent phrase, from occidental to oriental. Having been to a number of other south-east Asian countries, I know that the world is moving eastwards. We need to use all our assets to try to get into that world with trade and everything else. Currently, not enough of those assets are used. The hon. Member for Sittingbourne and Sheppey (Derek Wyatt) mentioned the figures for the UK consuls. We need to use the Foreign Office, UK Trade and Investment, the China-Britain Business Council, the British Council, the BBC World Service and, indeed, our ancient contacts with Hong Kong to get into the Chinese market. We do not use those contacts enough.
Let me put the Chinese market in context. Whereas the gross domestic product per head in America is $45,000 and in the UK is $33,000, it is only $5,300 in China and $2,700 in India. The staggering facts are that, over the past seven years, whereas the US has grown by only about one third and, interestingly, the figure for the UK has doubled, the figures for China and India have gone up by three times. That gives an idea of the pace of relative change of the so-called western world and the eastern world. I take on board the fact that China’s economy is predicted to be larger than that of the US by 2040.
Several hon. Members have criticised the fact that our trade deficit with China is growing—a fact that we need to bear in mind. It has grown by 67 per cent. in the past six years alone. We are importing more goods from China, and yes, in many ways that is good for the economy. Contrary to what was said, I think that that is deflationary because we have been importing cheap rather than expensive goods. I think that we have had a deflationary effect from our trade with China, but ultimately we must try to ensure that the trade gap with China is closed.
There was a lot of criticism in the debate. I do not want to major on that, but my hon. Friend the Member for Hertford and Stortford (Mr. Prisk) put his finger on the issue. The fact that we have nine regional development agencies, all with offices around the world, many in the same city—for example, Shanghai—pitching for the same business, dilutes the UK brand. It was said that in the past 10 years France has doubled its trade with China and Germany has trebled its trade, yet Britain still lags behind. I spent a great deal of time with UKTI earlier this week, but with the best will in the world, Britain needs to do a better job. It simply is not doing a good enough job.
China has had five golden years of economic prosperity, but as the hon. Member for Wirral, South mentioned, there are fears that the Chinese economy is slowing. Inevitably, with the worldwide financial problems that we face, China’s economy will slow from a growth rate of 10 per cent. perhaps to 8 per cent. or less. The real worry for the world at the moment—or perhaps the benefit; I am not sure—is that Chinese factories are beginning to slow down. They are using less commodities, which is why we are seeing a drop in commodity prices and particularly in oil prices, from a high of $140 a barrel to the current price of about $90. That may help the world to recover.
We need to consider carefully what China is doing in respect of its trade with the rest of the world. We have heard about the sovereign wealth funds—huge funds. The figure given was $1.8 trillion; mine is $1.5 trillion. Nevertheless, those are enormous funds, built up from currency reserves. If they are used benignly, as seems to be happening at the moment—for example, a 9 per cent. stake has been taken in Morgan Stanley and a 3.1 per cent. stake in Barclays—that can be a very positive thing for the world.
What we do not want is China using its might through sovereign wealth funds or, indeed, its trade with Africa for unfair trade advantage. We want to watch carefully what the Chinese are doing in Africa, because we want to see fair treatment of African countries. Basically, what China is doing in Africa is providing infrastructure in return for mining rights. Those deals need to be scrutinised very carefully to ensure that China is not mortgaging the future of some of those countries.
I congratulate the chamber of trade in the area represented by my hon. Friend the Member for Southend, West (Mr. Amess) on the Essex-Jiangsu partnership. That is a fantastic effort. It is a pity that the Government cannot follow that effort by promoting the same proportion of trade leads as Essex county council manages to do. Essex chamber of trade may well have something to teach UKTI and the Government on how to do business with China, because it is clear that we are not doing the amount of business that we should, and fears have been expressed about the effectiveness of the China-Britain Business Council. I do not want to knock the council; it has done a great deal of good over many years, but that does not mean that it cannot improve its performance from now on.
The other important factor that my hon. Friend mentioned was the need to teach Mandarin in schools. He may be interested to know that a school in my constituency is a Chinese academy and teaches Mandarin. I got the Chinese ambassador to go to the school, and the delight of the children—not so much the delight of the ambassador, because their Mandarin was not up to his expected standard—in being able to converse with the ambassador in Mandarin was fantastic. We perhaps need to stop the over-preponderance of teaching French in this country and start to teach Mandarin and Spanish, which are two of the most widely spoken languages in the world.
The market that we are discussing is huge. China has 1.3 billion people. It has moved 200 million people out of poverty in the past 10 years. They have moved from rural to urban areas. There is still a huge disparity of wealth between the rural and the urban areas. I have been into the hinterland in China. I have seen some of that disparity of wealth, but I have also been to Urumchi, which is one of the cities in the far west, and it is similar to a modern western city, so whereas everyone talks about the eastern seaboard with regard to doing trade with China, there is plenty of trade to be done within China.
I have a lasting memory of China—I almost lost my life there. I fell 20 ft down a concrete shaft in China, but I survived and I am going back, because I want to discover more about that exciting country. It was when I was in Urumchi, talking to the Speaker of that Parliament, that I coined the phrase that the 19th century belonged to Britain, the 20th century belonged to America and the 21st century will belong to China.
We must make friends with China. We must do more trade with it; we must have more cultural links with it; we must have more exchange with it; and we must have more educational exchange with it. Every time I have visited China, I have been to a school: to see those young people’s enthusiasm for learning English is fantastic. We should capitalise on the fact.
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