UK-China Relations

Chris McDonald Excerpts

Wednesday 26th March 2025 Westminster Hall

[Chris McDonald (Stockton North) (Lab)]

It is a great pleasure to serve under your chairmanship, Ms Lewell. I thank the hon. Member for Farnham and Bordon (Gregory Stafford) for securing the debate. It is a pleasure to follow him, because I want to expand on some of the points he made about the dependence of our industry and economy on China.

I have worked in China and have friends there. I am certainly no Sinophobe, but I do think we need to be clear-eyed about the fact that we are in economic competition with China. The hon. Member for Farnham and Bordon described it as a relationship of dependency, and I fear that that is the position. An inter-dependent relationship would be fine, but we are in more of a dependent relationship.

I remember being in China in 2015, at the launch of the 13th five-year plan. I was shocked at what I saw as a big competitive threat to the UK. At that time, President Xi was in London—we had done a bit of a swap—and was meeting the Prime Minister here. The Prime Minister said he was enthused by President Xi’s plan for the belt and road initiative, and he directed the City of London to fund it. From where I was sitting, that seemed like an extremely bad idea.

I was talking to British engineering companies that had been told they would get three contracts in China. In the first contract they would deliver a machine, in the second contract they would deliver the drawing, and in the third contract they would supervise the Chinese company that would do the installation on their behalf. Many of those companies no longer exist because they have been competed out of the market by China.

It is the job of the UK Government to make sure that we site jobs in south Wales rather than Wuhan, and in Teesside rather than Tianjin. I fear that over the past couple of decades we have been too keen to pursue lower-cost goods rather than invest in our own industries.

The industry that I know best is materials. Some of the critical raw materials we need for our future are gallium, germanium and neodymium—I apologise to Hansard reporters for sounding like a Tom Lehrer song. Those are incredibly serious minerals that are essential for our future. For most of them, China either dominates the mining or has the materials processing capability for about 90% of the global market. It is important for us to consider how we can secure materials processing in future.

Just this week Richard Holtum, the chief executive of Trafigura, the world’s biggest private metals trading company, recommended that Governments nationalise their metals-processing industries in order to compete with China.

[Sir Iain Duncan Smith]

The hon. Member is talking about a critical area for us all. Those minerals are best described as the oil of the 21st century: who controls them controls the way we live our lives. Surely we cannot consider that China is benign in this market. Quite recently—about two years ago—China blocked Japan from access to the market, so Japan then set up its own position. That attitude shows us what the Chinese intend to use this for if they have to deal with countries like the UK. If they blocked us off, it would cause us chaos.

[Chris McDonald]

The right hon. Gentleman is exactly right. We heard the Chancellor of the Exchequer say a few hours ago that economic security was national security. The two cannot be divided. Because of our belief in the free market, we thought that as long as we have a trading partner we can buy goods from, we are left in a secure position. But we must why—why does China choose to dominate these markets? Because it is an extension of Chinese foreign policy. The same is true of trade. The Chinese belt and road initiative seems to me to be a deliberate policy to bypass the traditional trading ports of Goa, Aden and Hong Kong, where the UK has historically had a strong foothold, to ensure that China dominates trade routes.

The real question is what we do about this. The mindset we need to have is that China has the first-mover advantage in this new industrial revolution. We had the first-mover advantage in the last industrial revolution. How could a country have competed with us in the late 19th century? That mindset means investing in our own industries, and using our own market to do so. We can learn from China in this sense: we can use our own public procurement and invest in our industries. We have a great nickel producer at Clydach; the Chinese tried to copy that process but were unable to do so. Our Lochaber aluminium plant was set up to serve the nation in the late 1920s, and it still exists and is worthy of further investment. The UK also has one of the six cobalt refineries in Europe.

But what of copper? We cannot achieve anything without copper, yet we have no copper-refining capacity in the UK, despite being the fifth largest exporter of copper in the world. These are the issues that we need to take seriously to ensure that we can have an independent economic policy and an independent foreign policy when it comes to China. That is important for our industries and our foreign policy, but it is also important for the communities like the one I represent, where people have relied on good jobs in these industries. We should prize those jobs being in the UK.

--- Later in debate ---

[Calum Miller]

I agree with the hon. Member on two fronts. First, he and I agree more on our disappointment with today’s growth figure than he gives me credit for. Secondly, the Government have set out that they wish at times to challenge, at times to co-operate and at other times to compete with China, but it is my contention that, as he set out, they are too intent on co-operation and not sufficiently intent on challenge.

I will briefly set out three areas of threat, starting with security and echoing the comments made by others. We face direct threats in the form of cyber-attacks, the threat of China as an ally to our enemies and see China threatening some of our own allies, including Taiwan, South Korea and Japan. Secondly, we face threats in terms of economic vulnerability. Many other Members have spoken about our dependency. In addition, the Government’s regrettable decision to cut the UK’s overseas aid budget creates an opening space for China in the global south, through its belt and road initiative, to increase the debt dependency of countries on itself, and therefore to increase its influence in the world. On the economic side, there are credible reports of China’s attempts to steal intellectual property from the United Kingdom’s university and tech sectors, and I am concerned that the Government are not doing enough to stop that.

[Chris McDonald]

The hon. Member mentions Chinese theft of intellectual property. Does he agree that it is also concerning when we give it away, such as when UK universities set up campuses in China to train Chinese technicians to outcompete British industry?

[Calum Miller]

It is a delicate balancing act, as the hon. Gentleman and other hon. Members have articulated. If we want collaboration and co-operation then information will inevitably flow, but it is important that there is transparency about that and that the right economic benefit is derived from any intellectual property, if it is transferred.

The third, and perhaps most important, area of threat is around human rights and political interference—other hon. Members have spoken about this, so I shall be brief. I too have met with the team supporting Jimmy Lai and his son Sebastien and I call on the Government to reassure us that his case is being upheld. I also had the opportunity to meet with two of those people in the United Kingdom who, in return for campaigning for real democracy in Hong Kong, have suffered being placed under bounties by the Hong Kong authorities— I know that one such person, Carmen Lau, is in the Public Gallery.

The fact that the Hong Kong authorities see fit to distribute posters and letters on UK soil to neighbours, in order to intimidate those who have stood up for political rights in Hong Kong, is appalling. I would like reassurance from the Government that much more is being done, including through our police forces, to identify who, within the allegedly diplomatic team from China, has done that. It is critical that we take these items together, see them as part of one entity and take a holistic approach to China. Too often, the Government have treated such things in compartments, spoken briefly about human rights and then failed to address other issues.

To conclude, I call on the Government to use the apparatus available to them, to generate a human rights and democracy report, to conduct the audit on China that they have promised, to fully introduce the foreign influence registration scheme and place China in the enhanced tier, and to ensure that China is fully considered in the strategic defence review. We cannot allow China to dominate our relationship with it. The Government must be prepared to set out red lines, and to demonstrate the consequences if China does not observe them.