§ 1.27 p.m.
§ Mr. H. Rhodes (Ashton-under-Lyne)Following the discussion of that very interesting subject of scientific research, may I switch the thoughts of the House to the Far East? As the time is limited, I propose to curtail my remarks and to make them applicable to the Far East, in particular, rather than the Sino-Soviet part of the subject. I hope that if the hon. Member for Preston, South (Mr. Green) is able to catch your eye, Mr. Deputy-Speaker, he will have an opportunity to dot the i's and cross the t's of what I say.
On 2nd December I drew attention to the speed with which the picture was 1346 changing in the Far East through the extraordinary development taking place in China and to the necessity for our readjusting our thinking about the likelihood of it affecting the United Kingdom economy. I said that we should consider how we can adjust ourselves to the impact of this change.
Agricultural production in China last year rose by 80 per cent. For the first time she has a huge rice surplus. Her wheat production has risen by 15 million tons and her production of soya beans and oil has risen by a corresponding amount. Her cotton crop has been doubled in the last eighteen months. Industrial production is up during the last twelve months by 60 per cent. At the Canton Fair this year 20,000 items of industrial production were on exhibition, and it is interesting to note that 5,000 of them were new in the history of Chinese manufacture.
May I give one or two other figures? In 1957, the Chinese produced 5 million tons of steel, and the estimate for 1958 is 10 million tons. The actual production of coal in 1957 was 117 million tons, and the revised estimate for Chinese production of coal in 1958 is 260 million tons. The scale of this advance is at lightning speed. In 1956, there were 6 million cotton spindles; in 1958, 8 million; and in 1959, 10 million. In 1957–58, they installed 72,000 worsted spindles.
The repercussions are obvious to anyone who is fortunate enough to go to Hong Kong, Japan and other parts of the Far East. If one stands at the waterfront at Hong Kong, watches the consumer goods pouring in and then examines the figures which support one's visual evidence, the urgency and the magnitude of this problem is clearly apparent.
China, with her cotton grown on the spot, more than matches America in cotton production this year; the American estimate this year is 2½ million tons and the Chinese estimate is 3½ million tons. Think of what that means in terms of the domestic production of cotton cloth. We have Japan in the rôle of an offshore island, buying her cotton from America and her industrialists grumbling to us about the price they are having to pay to America for cotton. They complain that it is hopeless to compete with 1347 China on the basis of China growing her own cotton and producing cotton goods and on the basis of the low wage rates in China. This has an impact on Hong Kong, too. It forces Hong Kong to produce cheaper and keeps the wages low.
The likely exportable surplus of Chinese rice could have a tremendous effect on the economies of Burma and Thailand. Those two economies rely on the export of rice, and they can be ruined if this rice is unloaded on to the world market. We know, too, of the problems arising from the pattern of trade in the Far East vis-à-vis Japan and of the tactical reasons for the admission of Japanese wool goods into America, distorting trade throughout the world. America gives a better chance for Japanese textiles to enter her market than she gives for our wool textiles.
We know, too, of the situation which exists between China and Japan through their inability to came to arrangements about a resumption of trade. China is purchasing large amounts of wool tops from Bradford. During the last eight months of this year, out of a total of £12 million worth of goods exported to China from the United Kingdom, Bradford has been responsible for £5 million worth of wool tops. This is vulnerable, because if the politicians have their way in Japan there will be a resumption of trade with China. Wool tops will be part of that trade and the trade now coming to Bradford will go to Japan. That is the kind of distortion which is taking place.
I do not consider that at present China is first-class in terms of marketing her products. I do not think that there are many products which are scientifically marketed by China at present. Nevertheless, the position is causing consternation throughout the Far East. India, about whom we have been rightly concerned because of her low income per head, is particularly worried, as is Ceylon. Perhaps I may give an example, tea. The Chinese are now making an orderly marketing of tea on the London market, which will be followed by many other commodities in the near future. This position has its impact on more items than those which I have mentioned.
I am certain that the impact of China on the trade of Hong Kong, the Far East 1348 and this country is also having an effect on considerations of the European Common Market. May I say that the objections which the French raised to the export of goods from Hong Kong may have some justification. I think that that statement would be supported by the hon. Member for Preston, South; we have doubts about how the system is working.
Let us compare the speed with which China has made her development in the last year or two with our action over the Hong Kong cloth quotas. We have accepted a situation in which negotiations on this subject have to take place between industry and industry. A settlement has not yet taken place. I am giving this as an example to illustrate the slow speed with which we work. A settlement may not be reached for many weeks, simply because of inadequate policy on the part of the Government. Had the Government had the slightest idea of a policy on the adjustment which needs to take place at present vis-à-vis old-established, traditional industries in this country on account of the emergence of a Chinese economic colossus, and its effect on Hong Kong and our trade, we could have made progress.
In the absence of a policy this situation can continue to drift, having its effect on many other industries besides the cotton textile industry. I would say to the Government and the cotton trade that if there had been the slightest imagination or the mere semblence of a policy, to go on, I believe that the hon. Member for Preston, South and I could have settled this problem while we were in Hong Kong.
All this is only part of the adjustment taking place in trade generally throughout the world. We know of the determination of poorer countries to raise their standards of living and agree. In the debate on the Commonwealth Economic Conference, following his return from Montreal, the Chancellor of the Exchequer said that a dynamic partnership was necessary. In concluding the economic debate, during our debate on the Address, the President of the Board of Trade referred to the need for an heroic effort.
Can the Government say what the scale of this heroic effort will be? What impact will it have on United Kingdom industry? Is there a timetable for the 1349 adjustment which is bound to take place after competition has increased during the next six months, twelve months, or two years in many of our traditional industries? What is the Government's longterm policy to cope with this matter? These are very important questions, probably the most important questions to which the country needs to direct its attention at present.
I do not expect the Minister of State to answer my questions; they are more fundamental than that. But if we have focussed attention on a problem which must occupy the minds of the people of this country and throughout the Commonwealth we shall have done something. If we can show the way that our minds are working, having examined the problem on the spot, and the type of attitude that we propose to take up in the future and spare no effort to working out a plan to cope with it, then this Adjournment debate might well do some good.
§ 1.41 p.m.
§ Mr. Alan Green (Preston, South)I am glad to have the opportunity of trying to reinforce what has been said by the hon. Member for Ashton-under-Lyne (Mr. Rhodes). He and I spent a few weeks in the Far East recently. We also share a direct stake in British industry. We both represent Lancashire constituencies, and neither of us has a very impressive majority. At a time like this, the Floor of the House appears less of a chasm to me than a river on which we might launch a common warning and a common thought. Obviously, two people who are still separated by the Floor of the House are bound to look at matters, even when they have seen them from the same vantage point, a little differently one from the other.
I want to reinforce the hon. Member's warning about the scale on which China is emerging from chaos. It is easy to be a bore on a matter that is fresh to oneself but perhaps well understood and, therefore, a little stale to other people, but I am certain that this country and the West as a whole do not understand properly what is going on in the Far East today, particularly inside China.
The only point that I want to make is this. One thing that China and Hong Kong have in common is that their main 1350 raw material for economic activity and industrial success is not things; it is people. I have a certain sympathy for the Chinese Government and a certain understanding and appreciation of the difficulties in which it finds itself in the great task that it has of rescuing China from fifty years of chaos. I have far more sympathy for the Chinese people whom that same Government is herding and dragooning on a scale that has never happened before in history, including the time of the Pharoahs.
That raw material of people in China is not being used so much as exploited. The results of the exploitation are to be seen in the most pitifully low prices which the Chinese get for many goods which they sell overseas. Hong Kong, in Lancashire's eyes, exploits labour, but the exploitation is mitigated both by a number of good employees, whether Chinese or English, and by a Government who, I think, are doing their best to mitigate exploitation. There are no such mitigations operating in China. Exploitation of human beings in China is on a vast and, I think, hitherto unknown scale.
If one considers the cheap prices at which Hong Kong can make textiles and then realise that with the same type of labour in the same sort of circumstances the Chinese are offering those same textiles at a third of the low price which Hong Kong charges, one is forced to consider that exploitation of labour inside China is the only way in which those prices can be charged in export markets from China. This is an important point. Six hundred million Chinese driven by a ruthless dictatorship, which exploits first its own people, will get in a position to exploit other peoples outside its borders if that form of economic attack destroys the economies of those to whom China is exporting.
It is important that all countries which are likely to receive Chinese goods should be careful to ensure that the receipt of those goods does not destroy their own internal stability and internal economy. I understand that in a free world, the Western part of the world, it is difficult, indeed impossible, to order all countries of the world to join the same sort of general staff to form that economic counter-attack to Communism which one would wish to see. One has to bear in mind the susceptibilities of new emergent nations, the feeling that they can manage 1351 their own affairs perfectly well without us telling them how to do it, the feeling that they do not want to be warned against what may happen to them if they go on trading with China on their present lines.
I should, however, like to be satisfied that strenuous, intelligent, consistent efforts are being made by a country such as ours to warn the world about what is happening in China. Then the rest of the world must make up its mind whether it heeds the warning and acts on it; but we must give the warning.
I should like to give one small illustration of what I mean. A common article, white bathroom tiles, exported from China to Hong Kong, is priced in Hong Kong by the Chinese at 15½ Hong Kong cents. a unit. The local Hong Kong product is priced at 27 cents. a unit. Surely that shows that there is exploitation of Chinese labour in China. The Japanese product shipped to Hong Kong is 16 Hong Kong cents., the Chinese being careful to charge a price which undercuts Japanese competition. These tiles are offered in Germany at 10 cents. and in Canada at 7 cents. Surely these different pricings of the same article should be widely known, because the article is clearly being dumped in one of those countries, possibly in all of them, to the immediate detriment of normal, acceptable trade patterns.
We have to stir ourselves and our friends to meet these attacks. Against dumping and against organised exploitation of Chinese labour, we must have ready a defence if we are not to be swamped by Chinese competition.
§ 1.48 p.m.
§ The Minister of State, Board of Trade (Mr. J. K. Vaughan-Morgan)I congratulate the hon. Member for Ashton-under-Lyne (Mr. Rhodes) and my hon. Friend the Member for Preston, South (Mr. Green) on their very thoughtful and interesting speeches. The hon. Member for Ashton-under-Lyne has raised a subject which is of immense interest and concern not only to my Department, for whom I am replying, but to many other Departments and to many nations.
I am grateful to the hon. Member and my hon. Friend for their courtesy in discussing with me privately last week their impressions of their recent visit to Hong 1352 Kong, Ceylon and Japan. They have given me much food for thought, and, if it does not sound too patronising, I should like to say how much they have stressed the value of journeys abroad by Members of the House. The news and views which they bring back supplement so usefully and helpfully the rather arid documents which one sometimes receives through official channels.
The hon. Member will not expect me to answer all his points in the time available. But I can assure him that since I saw him last week I have been giving a lot of thought to this. All the points that he has raised will be examined and a great many of them will require very careful consideration.
Today, I will concentrate mainly on Chinese competition in Far Eastern countries. In recent months we have had many reports of increasing Chinese competition in manufactures and in consumer goods, particularly in markets in South-East Asia. I have been looking into the statistics. Leaving out the present year, the statistics which are available show that there has been no major expansion of total exports from China to South-East Asia since 1956. I would emphasise that it is difficult to get detailed figures, and that the figures we have are not necessarily final or accurate.
The imports of South-East Asian countries from China were £122 million in 1956 and £121 million in 1957. They appear to be running at about the same level this year. Imports into Hong Kong account for more than half of those total figures. Within those totals, or in the current year, there may possibly be a switch from the traditional lines of Chinese exports which are mainly foodstuffs, to manufactured goods. On the other hand, judging from the reports from China, they may have a considerable surplus of rice for export in this coming year, as the hon. Gentleman said.
The most significant development, as has been rightly pointed out, is the increasing ability of Communist China to export manufactured consumer goods at low prices. The main example of this so far has been cotton textiles, and this naturally attracts attention because the trade of some other South-East Asian producers in cotton textiles is considerable. Japan, Hong Kong, India and Pakistan are all concerned. The reports 1353 available to us suggest that the total volume of exports of Chinese manufactures to South-East Asia is so far fairly limited. It is true, none the less, that such manufactures are being offered at remarkably low—one might even say sensationally low—prices, undercutting Japanese goods by a substantial margin.
As a result of the severe import restrictions which are in force in some South-East Asian countries, the Chinese exports of these manufactured goods have been concentrated in a few markets, notably Hong Kong, Indonesia and Malaya, and probably Japan has been the main sufferer so far. It is not easy to assess the motives behind these Chinese exports. Those motives are not necessarily sinister. We should recognise, indeed, we should welcome the fact, that the increasing industrialisation of China must be leading to larger import requirements. China may well need to export more to pay for her increased imports, and if we look at the figures for our own trade with China we see that there is a substantial opportunity there for our own industries. We should not neglect that side of it.
While our imports from China have gone up from £12.3 million in 1955 to £15.2 million in the first nine months of this year, our exports and re-exports have gone up from £7.9 million in 1955 to £18.9 million in the first nine months of this year. The exports in these first nine months are 80 per cent. higher than last year. It is an interesting reflection that the bulk of that increase took place in the months before we relaxed strategic controls.
I do not want in any way to minimise the significance of the new developments in Chinese trade. We are all well aware that China has a vast production potential and will one day, probably sooner than later, become a very large-scale trading country. I am aware, also, that the centralised economy of the country enables her to direct goods to export at the expense of the home consumers and she can fix whatever price level is necessary to sell in a particular market. On the other hand, those who trade with her may find from experience that this form of trading has disadvantages. We should not underestimate the benefits and the efficiency of the well-proven trading systems of the free world.
1354 I agree with the hon. Gentleman that the system which has been described is likely increasingly to confront our exporters in many markets, with regard to other countries in the Sino-Soviet bloc as well as China. These offers of trade by the bloc countries are frequently commercially attractive, especially so where developing countries are in need of new outlets for their own produce or where they have received offers of assistance to promote their development plans. It is out of the question for the United Kingdom Government to try to safeguard the interests of Western exporters by always indiscriminately outbidding the bloc countries with offers on more favourable terms. This is so whether talking of aid or trade.
We must also remember that we cannot expect China to be excluded from world markets. Much of the trade that is done with China is, no doubt, very welcome to the recipients, and although it is not in certain circumstances popular to say so, we have to remember that low-cost consumer goods constitute one way of raising the standard of living of the poorer nations. It is not realistic to expect other nations to cut themselves off from advantageous trade with China, although, of course, we consider—and we would stress and warn them—that they would be wise to avoid over-dependence on the Sino-Soviet bloc and, above all, to avoid tying up their trade with rigid bilateral agreements. In the long run, the only real safeguard for our prosperity lies in the expansion of world trade to enable the exports of all countries to share in the expansion.
This brings me to the hon. Member's remarks about the heroic effort that was needed. In fact, I think that phrase was originally used by Vice-President Nixon and was quoted by my right hon. Friend. It seems to us that there are two ways of helping the poorer countries—to grant them aid and to trade with them. On the whole, though, I think that trade is better than aid. As to trade, as the hon. Gentleman will appreciate, we ourselves practise the doctrine that was put forward in the Montreal Conference communiqué that obstacles should not be placed in the way of the export of manufactured goods from the underdeveloped countries of the Commonwealth. That was a heroic effort and display of heroic statesmanship.
1355 On the question of aid, I will not go into all the details. We know what was announced at Montreal about our readiness to make Commonwealth assistance available. We are not the only country in the Commonwealth that is going to help. Canada is raising her contributions. We know the assistance that has come through the Colombo Plan, and the help that the West has given to the Colombo Plan countries was warmly acknowledged at the council meeting in Seattle last month.
It may be presumptuous to say that the Western world as a whole is yet in a position to meet this new challenge fully, or even that we ourselves are yet doing so. On the other hand, it is a fact that the other side advertise their wares and their deeds very loudly without doing as much for the underdeveloped countries as we do; but we should never belittle what we are, in fact, doing. I believe that we have made a good start and that we are setting an example of what can be done under a free economic system.
On the question of intelligence, which my hon. Friend raised, I can assure him that we are in touch with all Commonwealth countries on matters affecting our trade, including, of course, the emergence of Communist China as a trade competitor in manufactures and consumer goods. We shall study what he said and consider whether there is more we ought to be doing and could do by way of collecting information about Communist-Chinese trade and of using the information when we have it.
I should like to congratulate the hon. Member very warmly on raising this problem even for this short half-hour debate. There are, however, far too many facets of it to be covered, even in the course of a full day's debate. The hon. Member is quite right, in my view. The real problem, of this decade, and, perhaps, even of this century, is that of finding how to reconcile and build up an economic relationship between the Communist world and the free world. I think that he has made a great contribution by raising the matter today.