United Kingdom and China

Lord Howell of Guildford Excerpts

Thursday 7th November 2013 Lords Chamber

[Lord Howell of Guildford (Con)]

My Lords, like my noble friend Lord Clement-Jones, I congratulate my noble friend Lord Dobbs on his extremely eloquent opening to this important debate, and I look forward greatly to the two maiden speeches to come.

I am going to suggest that the main focus of our concerns should be not just on the straightforward bilateral relationship between the UK and China, and not just at governmental level—although that context is extremely important. However, the plain fact is that China now operates all around the world in a polycentric manner, and our interface with Chinese activity and development needs also to be polycentric, not just at government level but at all the soft-power levels, between people, professions and organisations—and particularly in education, which is why the point made by the noble Baroness, Lady Warwick, was so valid. Educational links are extremely important at every level, including right down to primary level, at which connections can be made via the internet every morning.

On the economic side, China is now the main trading partner of many of the most influential economies in both the developed and so-called developing world. As the noble Lord, Lord Dobbs, reminded us, those adjectives are rather out of date. China has become the most sought-after source of capital. Countries, including ours, do not just wait for China to come calling but actively seek out and court Chinese investment. China now funds foreign Governments, underwrites or donates schools and hospitals, and pays for and constructs massive infrastructure projects throughout several continents. That often makes China, for the recipient country, a considerably more attractive and easier investor to deal with than the World Bank.

China has a major impact on both west and east Africa. On the European scene, the Chinese are active in Warsaw and other capitals in working out how to develop shale gas, among other resources. They are very active in Latin America and Australia—with which they now have a huge trading partnership—and throughout the Indian sub-continent, particularly in Pakistan and Myanmar. The Chinese are building a colossal base at Gwadar in Pakistan and huge ports at Chittagong in Bangladesh and Hambantota in Sri Lanka. I say almost in passing that they are sending to the next Commonwealth Heads of Government Meeting in Colombo next week 100 delegates in order to involve themselves in business in that region. It sometimes seems as if the Indian Ocean, rather than the Atlantic Ocean, is becoming the main area of a new pattern and centre of world trade. Indeed, it is forming itself into a sort of maritime version of the old Silk Road—although that, too, is very active.

On the financial side, China now purchases global resources in such huge volumes that it has become the commodity price setter and key influence on markets. It is feeling its way to establishing the renminbi as a rival currency to the dollar, experimenting in Hong Kong and now coming into London, which is extremely welcome and good for us—as long as there is no discrimination with other foreign banks in the City of London. China has a stockpile of $3.5 trillion in foreign currency reserves. These are enormous figures.

On the energy and climate side, China’s appetite for energy resources and its own path towards a new energy pattern will frankly be decisive on all of us, regardless of our own policies. It is the world’s biggest coal importer, the world’s biggest oil importer and the world’s biggest emitter of carbon dioxide. It is building rows and rows of new coal-fired stations—not necessarily CCS-enabled, but very much more efficient than the old ones—and a large number of new nuclear stations. It has massive wind farm investments, although I put “investments” in inverted commas because there is not much evidence that they are paying their way or even being used; however, they are on a very large scale. It is buying up oil, gas and coal concessions around the world. It claims, so the Energy Minister there told me, to have more shale gas than the United States; but I am told that the geology is difficult and there is the problem, to which my noble friend Lord Dobbs rightly drew attention, that it may lack adequate water resources. On the nuclear side, of course, China will now be involved in our own nuclear fleet replacement programme, beginning with Hinkley Point, although I shall feel a bit more reassured when I see the money actually arrive.

On the social and political side, Chinese aid and investment around the world help development, but in some cases they bolster despotic regimes and aid states bent on violence and anti-democratic programmes. We need to show the Chinese, in our dialogue with them, that those moves are against their own interests. They affect the great cities of China just as much as they affect our country.

On the international and foreign policy side, China wants to be a world power of a kind, but if it is to be one, it will have to accept responsibilities at a greater level than hitherto on the global stage. After all, it imports 50% of its oil from Iran and Saudi Arabia, but one has to ask just where China is on Middle East issues, on Iran’s nuclear issue and on Syria and chemical weapons. Quite often, the Chinese seem outright detached or just negative.

China has limited territorial expansion plans. As we know, it regards Tibet and Taiwan as unquestionably part of China. It does, however, allow Hong Kong amazing freedom, including its own currency and representation in international bodies including parts of the Commonwealth, which is all very good for us in the UK. China is now aggressive towards Japan, which is regrettable; their two countries are vastly interwoven in trade terms and together add up to about 18% of the world’s GNP, so it is utterly in our interest to see that they settle quarrels like the Senkaku Islands. Moreover, China is still very prickly on questions of human rights and governance values.

We can work with this fantastic worldwide spread of activity; we can work with it constructively and we can advise about involvement in Africa, perhaps leading to a rather happier course because of our long experience. When I speak to my Chinese friends, they say, “Well, we are very big—a billion or more in population”. I tell them that we are very big as well; we are the Commonwealth with 2 billion or more and therefore we can speak to each other on equal terms. We should do that.