United Kingdom and China

Lord Watson of Richmond Excerpts

Thursday 7th November 2013 Lords Chamber

[Lord Watson of Richmond (LD)]

My Lords, I too join in thanking the noble Lord, Lord Dobbs, for instigating this debate and congratulating my noble friend Lady Neville-Rolfe on her excellent maiden speech. I am sure that we shall hear more from her as the months go by. She and I shared a fascinating visit to Beijing in 2010 to look at the rapid changes in retailing in that city. For me it was also a huge contrast with my first visit to Beijing in 1977, a year after Mao Tse-Tung’s death and a year before Deng Xiaoping’s return. It was then, of course, a city of bicycles; it is now one of traffic jams brightened by a profusion of pink Rolls-Royces.

Any attempt to evaluate recent developments in our relationship with China requires perspective. The best any of us can do in a short debate is to share relevant experience and any particular insight that such experience may have given us. Mine centres on the contradiction in China between extraordinarily rapid economic growth and change and the continuity of monopolistic political power and the impact of this contradiction on our relationship.

As has already been pointed out, we are having this debate two days before the third plenum of the 18th Central Committee of the Communist Party of China, the first for the party chief and State President. There is much speculation that this could bring about a change as radical as that brought about by Deng back in 1978. My second visit to Beijing was in that year. Even then, as a foreigner, you felt the force, like a second earthquake, of impending change. Twelve months earlier I had been restricted to the Hotel of Foreign Nationalities, with its shop selling only the little red book and admiring accounts of Red Guards who had done the right thing by denouncing their parents. The year 1978 was all about change, with China opening its relationship with us and with the rest of the West, and life flowing into new channels of entrepreneurialism and trade. That year changed our relationship. Will 2013 do the same?

China is in the forward planning and investment programmes of virtually every major business in the western world. Countries compete frantically to sell to China and to attract investment from China. Boris Johnson and George Osborne outdo each other—and outdid each other—as super-salesmen. Some, of course, urge us to shed all restraint and become a new generation of buccaneers. Many people advocating such a course believe that we would do far better in China unfettered by the European Union—conveniently ignoring the fact that Germany, at the very heart of the EU, sells four times the value of goods and trade to China than we do.

Whether singly or as the EU, we all know that recovery from recession turns critically on what happens next in China. Here we face the contradiction with which I began: amazing change on the one hand, and the continuity of communist power on the other. It is that contradiction that will challenge the third plenum, taking place behind closed doors this weekend.

Will Hutton, writing in the Observer after George Osborne’s visit, dubbed him, uncharitably and unfairly, “Bambi in Beijing”—allegedly because he had ignored the obstinacy of Communist power and the determination of the party to retain it. No doubt that determination does exist, but it is shot through with contradictory pressures. There are the aspirations of an urban population of 665 million, many in the 129 Chinese cities with populations of more than 1 million people. There are the great disparities of wealth between those still stranded on the land—or, indeed, dispossessed by urban development—or trapped as what must be described as sweated labour in so many regimented factories. There is the urgent need to liberalise the economy and break up state monopolies if consumer spending is to soar, as it must, as the domestic economy becomes China’s key source of growth. There is the imperative to do this as China’s export advantage of low production costs erodes. Above all, there is the tension between economic liberalism and political control.

The Foreign Office Minister believes that,

“political reform and economic reform come hand in hand”.

If they do not, failure could foster a catastrophic shift in the tectonic plates beneath China’s surface. In the other place, the Prime Minister assured us that the UK will stand firm on human rights. It would be good to hear the Minister confirm that there was no apology from the Prime Minister for the Dalai Lama’s visit to London and his meeting with him. Human rights and political reforms are, in the end, the only way to sustain and grow the prosperity of China. So old and deeply talented a civilisation has the ability to resolve these contradictions, and it is our hope—and our interest—that it does so.

Let me end on a personal note. In the north-eastern city of Shenyang my late mother-in-law, a brilliant German businesswoman, Erica Lederer, began to manufacture decorative goods for the German market very shortly after the cultural revolution. She admired the people, their skills, their competitiveness and their friendship. At the centre of Shenyang stands perhaps the biggest statue of Mao Tse-Tung in the whole of China. Under his granite feet the talent and aspirations of ordinary Chinese people were even then, in that first year after the cultural revolution, beginning to shift the ground, and are doing it so much more so today.