HC Deb 03 December 1957 vol 579 cc327-48

Motion made, and Question proposed, That this House do now adjourn. [Mr. Finlay.]

8.57 p.m.

Mr. G. B. Drayson (Skipton)

We were all very interested to hear at the beginning of the Parliamentary Summer Recess that the Parliamentary Secretary to the Board of Trade was to visit South-East Asia and that during the course of his journey he would be paying a visit to the Chinese mainland. We all welcome visits of Ministers abroad to promote trade, although, of course, it is the business man who ultimately has to conduct the trade by getting together with his opposite number in the country concerned. It is most encouraging when Ministers go on these arduous journeys to try to promote the business of the nation.

I am glad that the Parliamentary Secretary will have an opportunity tonight to give to the House some of his impressions of that tour. It so happens that this debate coincides with the departure from this country tomorrow of an important Chinese economic and technical mission, led by Dr. Ch'i Chao-ting. In fact, a farewell reception was held at the office of the chargé d'affaires this evening at which both the Minister of State and the Parliamentary Secretary to the Board of Trade were present. When we see two Ministers from the Board of Trade attending a function of that kind, we can at least assume that the Government are taking this subject very seriously. A number of Members from both sides of the House also attended, including my hon. Friend the Member for Aberdeenshire, East (Sir R. Boothby) who, I have a feeling, will be on his way to Peking via Huddersfield very shortly, following on what I have seen in the daily Press today about his recent latest interest in the business world. The reception was attended by a comprehensive group of British industrialists and none of our leading firms was missing. Those to whom I spoke gave me the impression that they were extremely keen on promoting trade with the Chinese mainland.

The technical mission that has been over here for six weeks has visited over 200 factories and institutes, including Harwell, Calder Hall, The Royal Aeronautical College and Liverpool University, where it saw the cyclotron. At the same time we have had in this country two other missions from China. One, a textile mission, consisted of seven persons. They are still here and they have visited Lancashire and Yorkshire and, I believe, factories and mills in my own constituency. It is hoped that business will result from their visit. I am told that a building mission has also been over here, the members of which spent some time at the Building Exhibition and visited a number of firms connected with the trade.

The main economic mission about which I am speaking was invited by the Sino-British Trade Council. This is a new organisation set up to promote trade with China. From discussions with the people concerned. I know that they are always looking for some organisation which will assist them in that rather difficult part of the world. I hope that this organisation will be found to be the setup for which they are looking, and that no firms will find that they are excluded. A problem has arisen over the last few years in that some of what we regard as the old China hands have fallen out of the trade and a number of new China hands have entered it. This has created a certain amount of friendly rivalry. To my mind, that is a good thing, because it is not right that any one section of the community or the trading world should think that it has a monopoly in any area. These areas should be free and competitive for all those who have the energy and the enterprise to try to penetrate them.

I was glad to see in The Times this morning that Dr. Ch'i Chao-ting said at a Press Conference before leaving that his mission had found many items of interest in the United Kingdom, and that increased trade could be expected. He also said, and this is important, that China now had an export balance with the United Kingdom.

I have myself been interested in trade with China and Eastern European countries for over five years, and the Parliamentary Secretary knows the part he personally played in stimulating that interest. This country has had a long and honourable trade association with the people of China. We have always found that the word of a Chinaman was his bond, and people tell me that before the war their trading relationships with that country could not have been happier. Therefore, many of them want to pick up the threads which, unfortunately, have been broken in recent years.

I as much as anybody else regret the circumstances which have led to the reduction in trade. It is not part of my object tonight to touch on the political considerations which have resulted in that. Nor do I think that it is a good thing to start trade discussions or negotiations by criticising the form of Government or the Ministers of any country with whom one hopes to conclude a business arrangement. Those things can happen in foreign affairs debates, or among diplomats, but the business community does not want to have any part in them. At the same time, business men look to the Government for guidance, because the Government have wider considerations in respect of other countries with whom they want to maintain the fullest co-operation.

I was told this evening that the mission was well received wherever it went and that one firm even laid on a private aeroplane to take the mission from one appointment to another. The question arose about Chinese trainees coming to England to learn techniques.

Mr. John Rankin (Glasgow, Govan)

Or Scotland.

Mr. Drayson

Yes, or Scotland. They were to come to the United Kingdom to learn how to use machines and the new techniques which they hope to acquire.

One leading firm to whom I spoke said that they had no objection whatsoever to that, but felt that the place to discuss such things was Peking and not London. I am told that the firms were impressed by the vast knowledge of the Chinese mission and by the products which it appeared to require. The old trade which they knew before the war, they told me, is a thing of the past and the Chinese are asking for much higher-grade products and had interests much more widely spread than hitherto.

Here again, it is necessary for firms anxious to trade in that part of the world to adjust their thinking to the new conception of a planned economy. The Chinese are embarking on their second five-year plan and it is necessary for business men to study what that plan is. They are not asked to say whether they approve of it, or whether the Government concerned are arriving at the right conclusions, or whether the plan is sound, but at least if they know something about the plans for the road building, electrification, textile and agricultural programmes, they are able to assess what part we can play in providing goods for those enterprises Of course, that is the reason why the mission came over here—in anticipation of the second five-year plan and to see what part British industry could play in providing the goods needed.

This, perhaps, is where the Government come into the picture, because they can give some guidance on matters such as payments, whether the Government are providing E.C.G.D. cover to those who are exporting to the China mainland, whether a definite figure has been decided for how much cover can be given and what credit policy the City of London should adopt towards long-term or medium-term credits to China.

An ex-Member of the House, who used to sit on these benches, asked me tonight what the Government intended to do about a further modification of the strategic controls. It must be agreed that in an age when we have Sputniks going round the world, not having been launched by any country in the West, the idea that we have a number of technical secrets or special machines about which the other half of the world should not know is a little out of date.

Nevertheless, my experience, in talking to these businessmen, is that they need a constant reassurance that in penetrating these markets they are acting in conformity with Government policy. That is one of the matters upon which I should like the Parliamentary Secretary to touch tonight. In his speech on the Address the President of the Board of Trade reaffirmed that the more East-West trade we could do, the better. He seemed to suggest that he would like this to take place largely in consumer goods; but consumer goods are a two-way traffic, and we must be prepared to accept items as soft as those which we wish to export.

The President went on to indicate what a tremendous market there could be for washing machines in the Soviet Union and, no doubt, in the Chinese mainland, but he must realise that the prelude to the use of washing machines is electrification, and the first contribution that we can make—and I know how anxious electrical firms are to participate in this—is to assist the Chinese in their vast electrification programmes. When that has been put under way the washing machines and all the other apparatus requiring electricity will no doubt be bought from this country upon a competitive basis.

Next to the European market, Russia and China have the largest populations which can be exploited—I use the word "exploited" in a quite friendly way—technically and commercially, as potential customers for our goods. I have always felt that these two markets should not be ignored. As it is, Western Germany is doing a great deal more trade with the Chinese mainland than we are.

I understand that the figures for January-August of this year show that Western Germany imported £9.4 million worth of goods from China—which was 14 per cent. more than the United Kingdom did—and exported £13.6 million worth to the Chinese mainland. I should not like to suggest that they were exporting the type of equipment or goods which our own manufacturers are precluded from doing, but there is a definite suspicion in industry that that is the case. Our own exports to China over the same period were £7.4 million. As for Japan, their exports were two-and-a-half times the amount of British exports. One cannot forget that these were two countries which we defeated in the war. Now they are doing infinitely more trade than we are with one of our oldest customers.

As I have said, the Chinese nation is embarking upon its second five-year plan. It would be churlish not to wish it success in this. I hope that it will contribute to their happiness and well-being, and raise the standard of living of the population, and that British industry will be able to play its part in furthering its aims in a world of peace.

9.15 p.m.

Mr. John Rankin (Glasgow, Govan)

I wish to congratulate the hon. Member for Skipton (Mr. Drayson) on his speech. In every respect it was an excellent contribution to the solution of a problem which has disturbed us for far too long. I regret that the viewpoint he put so well has not been more commonly accepted by hon. Members on that side of the House. I hope that the hon. Gentleman has struck a new note and that we shall hear from the benches opposite more voices seeking to come to a more favourable solution than we have reached so far on this question of trade with China.

A long campaign has been conducted from this side of the House on the issue of trade with China. It resulted in an announcement a few months ago that the differential between the strategic ban on Russian and China trade would be wiped out. With the hon. Member for Skipton, I hope that that is only a partial step and that the Government will consider the advisability of going the whole way. I do not know whether the Parliamentary Secretary can say something about it tonight as a result of his visit to China, but it would be a happy conclusion to the events which have been occurring over the last few weeks were he able to say that the ban is to be abolished altogether.

As the hon. Member for Skipton pointed out, the ban is being ignored by some Western nations. In the College of Iron and Steel, in Peking, last autumn. I saw a piece of apparatus which is on the list of banned goods. We are honouring the agreement but, as was indicated by the hon. Member for Skipton, West Germany is one of the nations which is not, and is profiting accordingly.

With the hon. Member and the Parliamentary Secretary, I attended tonight's function at the office of the chargé d'affaires, in Portland Street, and I had the opportunity of a word with Dr. Ch'i Chao-ting. He seems very happy about the outcome of his mission and I was glad to hear from him that those of his experts who had visited many industries in Scotland had come back with good prospects. I agree that that applies to the whole of the United Kingdom.

What impressed everyone tonight was the nature of the audience present at that function. I am sure that it must have impressed the Parliamentary Secretary. I stood for a while at the door listening to the names being announced. Although I did not know the gentlemen, I recognised the names of some of the most famous people in British industry. That is a good thing. In a way it is a remarkable thing, because it shows that the industrial magnates of the United Kingdom are keen to trade with China. They recognise that a market of 600 million people simply cannot be ignored and that it is stupid to do so.

I do not think that it would be wrong to say that most of those gentlemen are supporters of the party opposite and perhaps contribute to its funds. Yet it is the party opposite which has beeen opposing their desires and aims all the time.

It is a ridiculous position to land ourselves into. It has been political in its inspiration. We have been the victims of the Chincom Committee, in Paris. Because America has said that a certain line must be followed in regard to China for political reasons we have humbly followed the road that she marked out for us.

Not only have we refused new business but, as the hon. Member has said, we have destroyed old and existing good business. I have quoted in this House the example of the Bergius firm, in Glasgow, which had a long-standing trading contract with China in the export of diesel engines. Its trade was stopped, even though the Chinese were willing to continue it. The firm was anxious that it should be resumed, and it approached me. HANSARD will show that I have raised this matter, but to no avail.

In the spring of this year I received an extraordinary reply from the President of the Board of Trade, who said that one reason why we could not have trade with China was that she would require to go to Russia to get loans to finance that trade. The hon. Member for Skipton has told us tonight what I told the President of the Board of Trade in the spring, that China had a sterling balance of about £150 million. I received that information from sources which are beyond question, and it is true. The balance was there. It is possible that during the period of our inactivity this year the balance may have been whittled down a little because so many other countries are anxious to trade with China.

We, or at least the Government, are not agitated greatly about trade with China. Superficially, at least, to judge by the activity and the response from the Government Front Bench, the Government have not been bothering a great deal. Repeatedly, over three years, they have rejected the suggestions which have come from this side about trade with China.

In the autumn of last year, when I was in China with colleagues from both sides of the House, we were assured by the Ministers of Trade and Commerce, the Vice-Minister for Foreign Affairs, and others, that a growing number of countries were anxious to trade with China and that China was establishing trading agreements with countries in South-East Asia and the Middle East. While we were there a trade mission was going to Japan to try to establish a trade agreement. Perhaps a good part of the trade that might have come our way has already fallen into other hands. I am sure that the hon. Member for Skipton would agree that if that has happened it is most unfortunate for this country.

I could talk for a long time on this subject; I have been talking about it for nearly three years. I remember the Easter Adjournment debate I initiated on this subject, when the Foreign Office responded and I got a very unhelpful reply indeed. I hope that the Parliamentary Secretary will give a more helpful response to his hon. Friend the Member for Skipton than I got in the Easter Adjournment debate from the Foreign Office.

9.25 p.m.

Mr. Harold Davies (Leek)

First, may I say how grateful I am to the Minister for being in his place so early this evening because the main debate collapsed, and the Minister has definitely shown his great interest in this subject by being on the Front Bench in time to hear his hon. Friend the Member for Skipton (Mr. Drayson) open this valuable and important debate. Whatever else I may say. I do say that the House is grateful to the Minister for paying this attention to a vital matter at this juncture. The hon. Member for Skipton had the courage to come with me in 1952 and 1953 to the Far East and Russia—

Mr. Drayson

Not to the Far East.

Mr. Davies

I stand corrected, but the hon. Member was with me in Moscow when we tried to open up this question. Some of us have suffered all kinds of silly names, being called fellow travellers and all that idiotic phraseology in the cheap newspapers, but Britain does not live unless she can export. If in the name of ideology and politics we are to neglect a market of 600 million people we shall deserve a lower standard of living.

As the hon. Member said, in debates on foreign affairs we can attack ideologies, but when we are talking of trade, even if we are considering people with a Communist Government, we must realise that they are the most keen businessmen in the world. I have seen them in action, not only in the Far East, but all over Europe and also in the United States of America. The Russian engineer and the Chinese engineer devote their lives to their work because they believe in something. Unfortunately, the West does not believe in anything; we are becoming completely cynical. We do not believe in Christianity and we do not believe in Conservatives—[Horn. MEMBERS: "Hear, hear."] It is no good hon. Members on this side of the House saying "Hear, hear" for I am not so sure that the public believe in us at the moment. This is a serious philosophical and political point in the history of the Western world.

Here is something stimulating, real and concrete, the building up of trade with a new nation fighting its way through the hard rock of poverty to new standards of life. For eight years we fought in our own party to get this recognition. Now our policy is clear on the matter. We say that when we are in power—and that will not be long in coming we shall recognise China and try to get her a seat on the Security Council. If the United States of America is idiotic enough to think that it can keep a nation of 600 million people out of the comity of nations for the purposes of politics it deserves an elementary lesson in world politics and world economics.

When I travelled between Wuhan and Peking, I saw the mighty bridge built by the Russians across the Yangtse. I spoke to a Chinese engineer there. He was about sixty years of age and had been trained at the Imperial College of Science in London. He said, "I only wish some of our young Chinese boys could come to London to be trained in your engineering and technical schools." Because of this idiocy of visas and political differences we are afraid of allowing young Chinese to enter this country to be technically trained. Does it not follow as day follows night that if they get the technical training in this country they are more likely to use the "know-how" and machines of British industry? Let us get rid of the dusty old 1920 cobwebs of building a barrier against China. We can make the same mistake with China that we made with Russia after the 1914–18 war and develop xenophobia against Britain.

The trade mission which has been in Britain was impressed, but I must make a criticism to which I hope British business men will listen. The mission went to many factories and were shown around by men and women with different points of view, many of them, perhaps, Conservatives. That does not matter. We wanted the trade. One point which was absurd, however, was that there was too much silly secrecy about British processes. Many of these Chinese experts, especially the technicians and those in the building industry, wanted information about our "know-how," but everybody seemed to be afraid that they would copy it. There is no need to be afraid of copying. It is rather like this silly business of the secrecy about the hydrogen bomb. We have reached a point when a sixth-form schoolboy who studies enough nuclear physics will one day be able to make a hydrogen bomb from a tin of condensed milk and a little bit of apparatus.

Mr. Drayson

I hope the hon. Member will agree that there are certain industrial and technical processes which we would not show to the Americans or anybody else. If a firm developed a new process of making artificial fibre, for instance nylon, we should want to keep that in the country for as long as possible. Just because certain parts of an establishment are not available for inspection, it must not be assumed that there is something sinister and quite apart from the ordinary commercial practices.

Mr. Davies

I qualified my statement. I said "the silly secrecy". It seems to be creeping over the world. Everyone is going around whispering in everybody else's ear. We are talking a kind of padded cell politics. Hon. Members should have listened to the Prime Minister's answers today about the hydrogen bomb. To me, in the twentieth century, that is padded cell politics and this is padded cell economics.

Mr. Raymond Gower (Barry)

It is a good phrase, anyway.

Mr. Davies

It sounds good and it is correct. When a population of 40 million people, in order to please America, will not trade with 600 million people, that is padded cell economics. I wish my hon. Friend the Member for Glasgow, Govan (Mr. Rankin) would not keep walking around like a Jack-n-the-box.

Mr. Rankin

A Jack-in-the box does not walk.

Mr. Davies

The hon. Member for Skipton said that China has a planned economy. The truth is that United States capitalism must now use the planned system. In some fields private enterprise is so large that there must be planned economy in the world. While he second five-year plan continues in China, it would be foolishness on our part not to try to get the maximum amount of trade with China for this country. Hon. Members on all sides of the House who have travelled in the Far East can confirm that other countries are trading with China.

I remember travelling on a TU104 this summer and seeing a Polish engineer who had been building harbours for the Chinese in Canton. A Swedish firm was selling ball bearings, but British firms were kept out of China because the Chincom Committee had said so. If hon. Members opposite are directors of firms and they send contracts to Paris, they will find that the terms of those contracts are known to all the Western countries in the Chincom Committee. Much advantage has been taken from contracts sent by manufacturers to the Chincom Committee.

We should tell the United States of America tonight that we want a complete revision of the strategic list. My hon. Friend corrected me about the bridge, but he was not correct in his comments about the strategic list because the other night we had a silly Statutory Instrument by which we were to prevent blueprints from going to the Far East or Russia. It is silly—

Mr. Rankin

if my hon. Friend will allow me—

Mr. Davies

No, I am busy now.

Mr. Rankin

The differential—

Mr. Davies

No, I am very busy, and I cannot give way.

We must look at the set-up in the British Embassy in Peking. That is not meant in a derogatory sense at all, but the old-fashioned set-up in embassies is finished. It does not merely mean Eton. Harrow, Cambridge or Oxford and a little fluency in an Oriental language and then to be bumped into an embassy abroad. In those embassies we want a few men who can use a spanner and who know what an electric spark is a few men with a little technical knowledge—and men who can give the right technical information. The paucity of information dished out by the embassies in the Orient about the revolutionary and nationalistic forces moving there is absolutely bewildering, and I hope that when a Labour Government come in they will change the set-up in those embassies.

I think that the Board of Trade—and this was a very constructive point put forward by the hon. Member for Skipton, if he does not think it presumptuous of me to say so—should be helping with some sort of export guarantee those people who are willing to adventure in trade in the Far East. Is it beyond the wit of the Board of Trade, of British merchants and British industry to find a formula by means of which we might get the co-operation of the merchant bankers during a transitional period while triangular trade is being developed and while I hope, in heaven's name, common sense will prevail? Guarantee should be given to small firms as well as to big ones who have the courage to pioneer in the Far Eastern market.

British business needs a lead. I want British businessmen, whatever their politics, to feel that if they are struggling for trade with China, or Vietnam, which is also, or was, on the strategic list and is a developing new country, they are not playing a dirty game, and are not frowned upon by the Board of Trade when pioneering British machines, British enterprise, British consumer and British capital goods in the Far East.

If tonight the Minister cannot take responsibility for the strategic list, for a complete reorientation of Far Eastern policy or for the inadequacies of his Prime Minister, there is one thing that he can do. He can get up tonight—and, after all, some Ministers have been to the Chinese Embassy tonight—and tell British businessmen, "If you are trying for trade with China and the Far East, we do not think that you are fellow-travellers or 'Commies'. We think that you are doing a job to raise the standard of living in Britain, and we will do all that we can to encourage you without whispering behind your backs."

That would help British businessmen to feel that if they were pioneering in Peking, far from betraying Great Britain, they were helping her to a new lease of greatness that, I am sure, she can achieve if she has a sensible policy towards the Far East, and towards those 600 million people struggling for better material and spiritual standards of life.

9.40 p.m.

Mr. Ernest Thornton (Farnworth)

I should like to express my appreciation of the valuable and courageous speech made by the hon. Member for Skipton (Mr. Drayson). This is a matter which the House should consider very seriously. I have long held the view that strategic bans or limitations of trade with China are a crass stupidity in the world we are living in today.

I know a little about the subject, because, before I was a Member of the House I was a member of the United Kingdom Trade Mission to China which was sent out by Sir Stafford Cripps in 1946, led by a former Member of the House. Sir Leslie Boyce, later Lord Mayor of London. On that trade mission, we made an abortive attempt to establish trade relations with a China which was obviously collapsing. If it was good tactics to send a mission to China in 1946 under the Chiang Kai-shek régime, we should certainly send one out now if we are really serious about expanding trade.

In 1954, eight years after my first visit, I was privileged to visit China again. Nineteen forty-six was three years before the final collapse of the Chiang Kai-shek régime; 1954 was five years after the Communists had come to power. Anyone wishing to make a realistic appraisal of the difference in the industrial activity and industrial potential could not fail to be impressed by the situation on the latter occasion. It is a great mistake to allow our political prejudices to interfere with our trading prospects if we are to build up our economy and if Britain is to remain strong and powerful in the world.

In the world of today, the strength of a nation in the last resort rests in its industrial potential and scientific and technical skills. These have been developed in China at a tremendous pace. I have been to China on two occasions, and I have been to Russia also on two occasions, first in 1936 and later, in the post-war years. There is no doubt that the industrial, scientific and technical achievements of the Soviet Union are tremendous, but I make so bold as to say that what it has taken Russia 40 years to do China will accomplish in 20 years.

Therefore, in the vast industrial expansion which is taking place and will take place at an increasing tempo in China, we ought to be in on the ground floor. There can be no doubt about that if we are to be sensible about our economic future.

The strategic bans were placed on China, doubtless, to prevent her becoming strong and powerful as a Communist Power. Notwithstanding the Western boycott of trade with China, China's trade and industrial production in 1954 was the highest to that date in her recorded history. It is obvious, therefore, that the West cannot prevent China's industrial expansion, whatever boycotts we impose, Russia is behind her. What we do not do, Russia will do, with her industrial system, her technicians and scientists, assisted also by the countries of Eastern Europe, some of which, like Czechoslovakia, have very advanced economies and industrial systems. The job is being done by those countries and will continue to be done.

We must appreciate that there is in the world now a self-generating economy within the Communist orbit. The countries within that orbit can isolate themselves, if they wish, from the rest of the world. Their great industrial development, scientific advance and technical know-how will carry on in spite of us. That is plainly proved.

My hon. Friend the Member for Leek (Mr. Harold Davies) referred to seeing the great bridge across the Yangtse River. That bridge had not been started when I was there in 1954. We saw the completion of the Han River Bridge. Three years ago the Yangtse River bridge had not been started, yet it is now complete, probably one of the greatest bridges in the world. The chief engineer in its construction was a Chinese engineer. I met him in 1954, when he was the engineer responsible for the construction of the Han River bridge.

In 1946 when I was there with the United Kingdom Trade Mission we visited the great steel works at Anshan which the Japanese had built. It was a shambles. It had been destroyed by the Communists. The Russians had taken out many of the vital parts. We had one of Dorman Long's experts with us in 1946. He took a very dim view of the prospect of rehabilitating this huge steel works with an output of 1 million tons a year, the largest steel works in Asia. He contended that the job could not be done except with the aid of Japanese, German. American or British experts. When I was there in 1954 I made sure that we visited Anshan again. This enormous steel works had been completely rehabilitated and its output exceeded that of the highest period when the Japanese were operating it.

I also visited in 1946 the great opencast coal mine at Fushun, the greatest opencast coal mine in the world, which under the Japanese attained an output of 8 million tons in one year. In 1946 that was again a shambles. It was paralysed. Practically nothing was being produced. In 1954 the production of that mine had returned to 4 million tons of coal a year.

These great developments are taking place. Doubtless the Minister saw some of them when he was there. I hope that the House will take note of what has been said tonight by the hon. Member for Skipton. I hope the Government will have some useful pronouncement to make on this subject. Nothing we can do and nothing America can do can prevent the continued expansion of industry in China. If we have any sense as a great industrial nation, with a scientific knowledge and a technical know-how and trading experience to contribute, we shall be in on the ground floor and we shall build up again a great trade with China.

9.47 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. F. J. Erroll)

I am sure that we are most grateful to the hon. Member for Skipton (Mr. Drayson) for initiating this miniature debate on trade with China, which has enabled a number of our colleagues in the House to express their views. If I do not reply fully to all the points raised, I hope that hon. Members will appreciate that I must confine my remarks to our trading relations with China. I will not attempt to follow the problem into the rather wider fields which the hon. Member pursued in his interest in this subject.

All hon. Members have referred to the existence of the strategic ban. I think that all hon. Members asked to what extent the British Government are serious about the development of trade with China. I want to make it plain that the Government are in earnest about the development of trade with China. We are very desirous of seeing an increase in trade. To that end, we relaxed the embargo on exports to China on 30th May of this year. This has quite properly led to a renewed interest in the development of trade with China. I stress this particularly, because some hon. Members have spoken as though that relaxation of the embargo was of small significance.

A very wide range of goods formerly embargoed can now be exported. For example, mining machinery, excavators, cranes, contractors' plant, surveying instruments, rubber tyres and tubes, various chemicals and metals can all be exported which were formerly on the list. In addition, most internal combustion engines can now be exported, which will be of interest to the firm mentioned by the lion Member for Govan (Mr. Rankin). The embargo has been lifted on most motor vehicles and tractors, most electrical furnaces, railway locomotives, rolling stock and railway equipment.

I could go on with further additions to the list. It represents a very substantial relaxation and it brings the China list into line with the Soviet list. I mention that particularly, because our trade with the Soviet Union is growing rapidly and is now at about the highest level ever, and that is with a Soviet list which is the same as the China list. It is worth reminding the House that there is great scope for trade with China, despite the present embargo list, as we have been able to prove in our growing trade with the Soviet Union.

The hon. Member for Govan referred to a breaking of the rules on the part of the countries of Western Europe. That charge has often been made, but we in the Board of Trade have never been able to trace any specific case of a participating country breaking the embargo. One hon. Member referred to ball bearings from Sweden, but Sweden, of course, is not a participating country.

The hon. Member for Govan referred to instruments in the Iron and Steel Technological Institute. I went round the same Institute and I saw the instruments. The only thing I would say to the hon. Member would be to ask whether he was quite sure of the boundary line between West Germany and East Germany. I was certainly deceived and thought that they were West German instruments, but when I looked at the nameplates I found that the instruments were from East Germany.

Mr. Rankin

The nameplate was from West Germany.

Mr. Erroll

In that event, it may not have been an embargoed instrument.

As part of their determination to increase trade with China, the British Government sent me on a visit to China in October. As is well known, at about the same time, on the invitation of the Sino-British Trade Council, the Chinese Government sent to this country an economic and technical mission under the leadership of Dr. Ch'i Chao-ling which has had the opportunity of seeing the many developments which have taken place in British manufacturing techniques during the last few years. Dr. Ch'i and his colleagues have made many friends during their stay in this country and their departure, either tomorrow or Thursday, will be a matter for regret amongst the many people whom Dr. Ch'i Chao-ting has had the opportunity of meeting.

My hon. Friend the Member for Skipton referred to the "old China hands" and the need for not despising the up-to-date methods of what one might describe as the new China hands. We should, indeed, pay attention to the way in which trade with China is developing from an organisational point of view. We are fortunate that British industrialists have decided to set up the Sino-British Trade Council as a body fully representative of British industry. This Council embodies all the five national trade organisations concerned with Sino-British trade, namely, the Association of British Chambers of Commerce, the China Association, the Federation of British Industries, the London Chamber of Commerce and the National Union of Manufacturers. In addition, a special office was set up for the duration of the visit of the technical mission, with a Chinese-speaking representative in attendance, to assist the mission in the planning of its visit.

The hon. Member for Govan referred to the number of distinguished persons at the reception this evening. That, too, is an indication of the great importance which is attached to the development of trade with China. I am sure that all traders, both British and Chinese, will find the services of the Sino-British Trade Council of the greatest value.

Here, I would just interject one note of warning; the British Council for the Promotion of International Trade, on the other hand, has been described several times in the House as a Communist-front organisation, and Her Majesty's Government have had, therefore, to advise firms not to associate themselves with it. There are one or two firms associated with trade with China which are members of the Forty-Eight Group which, I understand, claims that it has no connection with the B.C.P.I.T., but there must be some doubt about this claim so long as the Group sees fit to employ the director of the B.C.P.I.T. as its consultant.

My hon. Friend the Member for Skipton was kind enough to refer to my visit to China and I thought that I should mention briefly to the House some of its principal features. During my mission I was able to see the technical mission in Peking before it left for England and to assure its members that they would receive a warm reception while they were here. I soon realised, in Peking, that if my talks with the Chinese authorities were to be of value, I must see for myself some of the Chinese industrial developments, similar to those seen by the hon. Member for Leek (Mr. Harold Davies) and the hon. Member for Farnworth (Mr. Thornton), who described them in such graphic detail to the House a few minutes ago.

I paid visits accordingly to 17 factories and several trade fairs, two State farms, a technical institute and a recently completed hydro-electric project, in the course of a journey which took me up to Harbin, in the north-east, and down to Shanghai, Wuhan and Canton, in the south. In Peking, I was able to have a series of talks with the Ministry of Foreign Trade, the State Planning Commission, the State Technological Commission, and various other Departments which had an interest in British goods and I had an opportunity for a long talk with the Prime Minister. Mr. Chou En-lai. We covered a wide range of subjects in these talks about which, of course, I cannot go into detail in this short debate.

I can, however, mention some general conclusions which may suggest ways in which our trade with China can develop in the future. In the first place, China is proceeding with a large programme of industrialisation. For this she has received, and is still receiving very considerable help from the Soviet Union and the countries of Eastern Europe. In her planning, however, she is striving towards the goal of industrial self-sufficiency. China realises that it will be many years before this goal is reached and, as I pointed out to the Chinese on many occasions, the more successfully she industrialises, the more likely she is to need to import the specialised products of other highly developed countries.

Britain is well placed to fill these needs and supply these goods, particularly plant and machinery and industrial raw materials which China will need to fill the gaps in her own growing industrial production. The hon. Member for Leek referred to the British Embassy and I felt it was rather a pity that he made those remarks.

Mr. Harold Davies

They were not in a derogatory sense. If the hon. Gentleman will read my speech, he will find that I sincerely hoped that eventually we should develop technical assistance for our embassies overseas, which are doing a good job of work.

Mr. Erroll

I was particularly impressed by the way in which members of our embassy were following Chinese industrial development and taking the opportunity of going on industrial tours organised by the Chinese authorities and taking all possible steps to familiarise themselves with the developments that are taking place.

My hon. Friend the Member for Skip-ton and the hon. Member for Govan and others referred to trainees in England. I mentioned that point myself while I was in China. I said there that we should be very glad to receive Chinese trainees in our works and in our technical colleges, provided that vacancies were available and, of course, the necessary arrangements could be made, in just the same way as they would have to be made in respect of trainees coming from any other foreign country. I have been heartened to learn that several firms have indicated their willingness to receive Chinese trainees if arrangements can be concluded. I believe that there is a genuine desire on the part of the Chinese to buy more from Britain.

It being Ten o'clock, the Motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Bryan.]

Mr. Erroll

I think that we may expect to see a steady but not a sudden or spectacular increase in our exports to China. In trying to trade with China, we must remember that that country has a centrally planned economy and is determined to maintain rigorous control over both her imports and her exports. This is perhaps the best answer that I can give to the question which has often been put to me since my return: can China afford to pay for more imports?

One hon. Gentleman referred to the very large sterling balances held by China. If they are as large as he suggested, I hope that the Chinese authorities will spend them in this country, but I think that it would be perhaps rather a barren pastime to speculate on the precise size of her sterling holdings at any given moment. I am sure, however, from what I learned that the Chinese Government are determined to import from the West only to the extent to which she can earn foreign currency by corresponding exports.

I think that China is moving away from bilateral arrangements and favouring, quite properly in our view, an extension of multilateral trading so that she will be able to use her earnings from one country to pay for imports from another country. That is a form of trade in which Britain can benefit very substantially and in which we are well placed to help the Chinese in insurance, shipping and merchanting transactions should she wish to make use of the services which we have to offer.

I said that the Chinese Government are determined to match her imports by corresponding exports, and to this end the Government of China are embarking upon an export drive and looking to markets in many parts of the world as possible customers, not only for her traditional exports, but also for the manufactures coming out of her new factories. I made inquiries, while I was in Peking, about the question of credit. At present, there is no doubt that the Chinese would prefer to buy from us for cash, and I found no evidence of a desire to obtain goods on credit terms, in the sense usually understood by this phrase. This, of course, may change as the need for imports to fulfil the second five-year plan increases, but for the time being, at any rate. China may, in general, be regarded as a cash customer.

I was asked about E.C.G.D. and what it would do. As regards limits of cover, these are never obstacles which we disclose, and we would not, of course, make an exception in the case of China. E.C.G.D. works on strictly commercial lines and will consider applications for cover as and when they are asked for. We must wait until we see the necessity arising, and my impression, certainly at the time of my visit was that the Chinese wished to trade for cash.

What can we in Britain do to develop our trade with China? Many manufacturers will have had an opportunity of making contact with the technical mission and I hope that they will maintain those contacts whenever possible. There is a great demand in China today, as I found for technical information of all sorts. Manufacturers who supply this need may find that orders will subsequently come their way. At the same time, British manufacturers must not forget that China is bound to develop her own export potential as rapidly as she can, particularly in manufactured goods.

To those firms who are only now thinking of investigating the Chinese market, stimulated perhaps by the news of the mission to England, I suggest that they approach initially the Commercial Counsellor at the Chinese Embassy in London, who will be able to tell them what are the broad trade prospects. At the same time, the Board of Trade will be glad to give advice or information, in so far as it is able, about the Chinese market.

Mr. Harold Davies

What about a handbook?

Mr. Erroll

The hon. Gentleman has asked me about a handbook. I shall certainly be glad to consider that suggestion. The trouble with a handbook is that it has to be in such general terms, if it is to cover the whole of the trade with a country, that it may not appear to have sufficiently detailed information for a particular industry; but I will look into that point.

Further, I would like to inform the House that a new post of Commercial Secretary at our Embassy in Peking has just been set up, and that the first occupant is already in the post. I had the opportunity of meeting him in Hong Kong, just before he went up to Peking, as I was on my way out. I was able to pass on to him some of my own impressions, and I hope he has been able to get off to a flying start. From now on, thanks to his presence in Peking, we shall be in an even better position than before to provide information and advice to would-be British exporters to China.

I have only one small point to add. As has been said. China is a country with about one quarter of the world's population. At present, only about one-third of I per cent. of our export trade goes to China. There is surely scope for an increase, and I believe that with good will on the part of both countries we should see this trade growing steadily during the coming years.

Question put and agreed to.

Adjourned accordingly at seven minutes past Ten o'clock.