Long-Term Strategic Challenges Posed by China

Lord Purvis of Tweed Excerpts

Thursday 19th October 2023 Lords Chamber

[Lord Purvis of Tweed (LD)]

My Lords, on a number of occasions when opening this debate, the noble Earl, Lord Howe, referred to “epoch-defining”. I believe that an epoch is the shortest geological period, but it refers to a few million years. I find myself agreeing with the noble Lord, Lord Balfe, that we do not have to go far back to China’s referring, as it still does, to the century of humiliation between the mid-19th and 20th centuries, the source of which was a repudiation of British approaches of colonisation, exploiting minerals and goods, unequal treaties and territorial exploitation. We must be self-aware that what we are calling for now is in many respects in direct opposition and contrast to how we were perceived more than 100 years ago.

The noble Lord, Lord Swire, is absolutely right: the interesting backdrop to the debate today is the discussions between President Putin and President Xi in Beijing and the joint statements that were made as part of what the noble Lord, Lord Alton, referred to as the friendship without limits. The noble Lord, Lord Balfe, is right: sometimes our opponents may become friends, but we often maintain friends with limits on that friendship. That is the context of the debate today, and I am grateful, as we all are, for the contribution of the noble Lord, Lord Alton. I must say that with his growing list of sanctions against him, I am getting slightly envious; I think I am doing something not right enough. He is putting us to shame, but that is testimony to his persistence and work in highlighting human rights abuses, and it is to his credit.

The authoritarianism and assertiveness that the noble Earl, who is not in his place, mentioned at the start of this debate is that the PRC is growing both internally and externally. Only yesterday, I met a delegation of senators from the Philippines who told me of China’s increasing harassment of shipping, which is of growing concern to them.

The recent reforms to liberalise the Philippine economy are now being seen through a national security lens in critical sectors. I will return to this later regarding consequences within the UK, but it is worth repeating that concerns raised on these Benches are not on the people-to-people relations with the Chinese people—whether students or workers in education or culture, as the noble Baroness, Lady Coussins, indicated. However, the noble and gallant Lord, Lord Stirrup, was right to highlight the International Relations and Defence Committee’s report, which signalled the concern that there was a strategic void in the approach of the Government. While the Minister indicated the three pillars as the Government’s response, I find myself in agreement with the noble and gallant Lord that this is not a sufficient response to the committee’s recommendations.

We know that China’s approach is long term and strategic. After my party’s conference—at which I had meetings with those from Hong Kong as well as Liberal Democrats who have left China because of the concern for human rights abuses—I travelled to Malawi, Ethiopia and, last week, for the Westminster Foundation for Democracy, I was in Hanoi and the Vietnam/Laos border area. It was fascinating to be in Lilongwe, at a Parliament built by China on a road that is being constructed by China from the airport; then to be on a flight from Lilongwe to Addis, which goes through Lubumbashi in the DRC and which filled up with Chinese workers because Chinese companies own 15 of the 19 industrial copper cobalt lining concessions in the DRC; and then to travel to Hanoi from Dubai, seeing the myriad flights across the whole country.

I return to the very points that the noble Lord, Lord Swire, made regarding why we should not complain about this; we should observe it, but also act ourselves. It was fascinating to be in Vietnam on the WFD programme because of the desire of the Vietnamese to expand and deepen their relations with the UK on a strategic basis, in everything from education and research partnerships to sharing some of our experience so that they can diversify their relationship with China.

Regarding Africa, however, the noble Lord, Lord Swire, is right. It is very welcome that His Majesty will be visiting Kenya for his first non-European state visit. However, the last time that a British Prime Minister made a bilateral visit to an African country was when Theresa May went six years ago. She promised then that the UK would be the biggest G7 investor in Africa by this year—a commitment that was dumped within six months. It is no surprise, therefore, that when it comes to what could well be more predictable partnerships, they will look to China as being a more reliable partner.

We know, though, that China’s trading relations in African countries are not unconditional. Its use of strategic debt is not necessarily an approach that we would take in the 21st century. Therefore, a valid opportunity still exists for the UK to be a reliable and predictable partner. However, as has been said in the debate, we have had six Foreign Secretaries in eight years, often with differing views on our relationship with China. We did not have a development strategy for six years and now we will have two in two years. That uncertainty and lack of predictability is a concern.

I am glad that the noble Lord, Lord Swire, mentioned David Cameron; I did not want to. Part of my concern, interestingly, was previously raised by the Intelligence and Security Committee of Parliament, which criticised his chairing of the UK-China investment fund. That is on the record. My issue regarding that project, which David Cameron was paid an undisclosed sum of money to promote, is that it is now owned by China, since the previous owners defaulted on their debt to China. Therefore, the UK not responding to the use of strategic debt in that region is of significance, and a former British Prime Minister should be more self-aware in that regard and not have his bank balance as his top priority.

We have heard about not just neighbouring countries, but Taiwan. The UK must always stand on the side of democracy, human rights, international law and multilateralism—and I welcome the noble Earl, Lord Howe, back to his place. Our relationship with Taiwan is a very good illustration of how we can both meet our need to support democracy in the region and develop more strategic, economic and diverse trading relations.

At the same time, we need to reduce our economic dependency. The noble Lord, Lord Alton, and I have repeatedly raised our concerns that our level of deficit in trade in goods with China is unsustainable. As the noble Earl correctly indicated, total European trade with China is €450 billion, but the UK trade deficit in goods—just the deficit—is 10%, so over £40 billion. This affects how we communicate with our consumers, who find the importation and purchase of Chinese goods easier through Amazon and online purchases, but find it increasingly hard to buy from our European neighbours. This means that, if there are coercive tactics, or decisions that are arbitrary or made by Beijing, they will affect the British economy disproportionately. When it comes to the resilience of these goods being shipped through the region, we are additionally vulnerable.

I agreed with the earlier comments of the noble Lord, Lord Collins. If there is a Labour Government after the next general election, whether alone or in coalition, in whatever circumstances, we will support their requirement for a strategic audit of the UK’s relationship with China. This should lead to a comprehensive UK strategy based on our values of respect for human rights and the rule of law, aligned with our European partners, but clearly identifying the parameters of engagement that should exist to tackle issues such as biodiversity, health, nuclear non-proliferation and more sensitive areas such as AI regulation.

In returning to the UK economy, I hope that any strategic audit includes a full industrial strategy enabling UK companies to be more aware of what this trading relationship is, to be competitive and more self-reliant with additional government support. This means that we will review the preferential UK market access agreements with China. The noble Lord, Lord Swire, referenced President Xi’s visit, and many of us were in the Royal Gallery to listen to his speech. The Government’s accompanying statement signalled the 17 preferential market access agreements across all ranges of the service sector and the economy. Not one of those, including the continuing ability for Chinese state pension companies to have open access to UK pension funds, and vice versa, has been reviewed to assess whether it is fit for purpose. If, as the noble Earl indicated, China now poses an “epoch-defining” challenge, how on earth could we not review the preferential market access that it has been given as part of the strategic challenge that we face?

The noble Lord, Lord Alton, referred to Newport Wafer Fab. In welcoming that decision, I asked the noble Lord, Lord Callanan, what other parts of the economy would be reviewed on a similar basis to semiconductors at Newport Wafer. He rejected even the concept of a review across the whole sector. That is not sustainable. Similarly, we need to review research co-operation and intellectual property vulnerabilities in our economy. Countries such as Vietnam and others are open to entering into more transparent agreements here.

I will close on the point that the noble Lord, Lord Swire, ended with, because I agree with him. Every Member of this House, particularly the Minister, knows my view about the unlawful reduction of official development assistance. In my view, it is not just the morally wrong thing to do, which is the primary reason I am opposed to it, but a strategic error of enormous importance. This is because of not only the impact that it has had in creating a vacuum which China fills, but the signals it sends, which Moscow and China are using strategically in an alternative narrative. I am afraid that we will find, to our peril in the long term, that although money may well have been “saved” by the cut to overseas development assistance, we will see less return for our strategic value in the future. Whatever happens, we need to be more dependable when it comes to delivering on what we said we would deliver. We need to be a reliable and predictable partner. In many ways, as we have heard in the very excellent contributions so far, we need to do what China is doing, just better and in our way.