Lords Sitting of 6 December 1978

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Leicester.

THE FALKLAND ISLANDS: SEISMIC SURVEY
The Earl of LAUDERDALE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have been able to assess the results of the seismic survey for hydrocarbons which was commissioned last year in the South-West Atlantic including the area around the Falkland Islands.
The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, we have now received the data from the two companies who were authorised to carry out surveys of the Continental Shelf around the Falkland Islands. The work of evaluation has now begun.
The Earl of LAUDERDALE: My Lords, I thank the noble Lord for that reply. Can he tell us the names of the two companies which have carried out the surveys, and also by whom they were contracted to do them?
Lord GORONWY-ROBERTS: My Lords, yes, certainly. It was last year that Her Majesty's Government and the Falkland Islands Council authorised two companies, Texas Instruments and Western Geophysical, to survey the area of the Continental Shelf around the Falkland Islands. Consent was, of course, conditional upon the companies making their seismic data available free of charge to the Governments.
The Earl of LAUDERDALE: My Lords, while thanking the noble Lord
110
for that reply, are we to understand that this was in no sense under contract jointly to the Argentinian Government? Also, can he say whether the area surveyed was indeed that of the Malvinas Basin, or can he describe in any other way the area covered?
Lord GORONWY-ROBERTS: My Lords, without notice I could not define precisely the area of the survey, but that is a point of fact on which I hope to satisfy the House, and in particular the noble Earl. On the first point, certainly not; this survey was commissioned by Her Majesty's Government, but, of course, the two companies concerned are free to sell the information on commercial terms to whoever applies to them for it. I understand that the Argentinian Government have availed themselves of this information independently of us, but on terms different from that which I have just described as appertaining to Her Majesty's Government.
The Earl of LAUDERDALE: My Lords, am I right in understanding from that that the Argentinian Government are making their own appraisal of the value of the survey and its results?
Lord GORONWY-ROBERTS: My Lords, exactly; I should have said that. We are having our own evaluation made of the two surveys, in particular of one of them. No doubt the Argentinian Government will be evaluating the data which have been made available to them separately by one or both of the survey companies concerned.
Baroness ELLES: My Lords, did the Minister say that the Government had "commissioned" these firms to do this work? Therefore, are the Government paying for these surveys?—because he said that they were getting their reports free from these two companies. I should be grateful if the Minister could clarify whether or not the Government are paying for this information and, if so, tell us how much?
Lord GORONWY-ROBERTS: My Lords, I am grateful for that intervention which enables me perhaps to qualify the word "commissioned" or to use instead the word "authorised." Last year the British Government authorised the two

111
companies I mentioned to engage in these surveys, the condition being that they made their seismic data available to us free of charge.
The EARL of LAUDERDALE: My Lords, perhaps the Minister will undertake to lay in the Library of the House, or give in a Written Answer to a Question, a statement giving the area covered by the surveys? Will he undertake to do that?
Lord GORONWY-ROBERTS: My Lords, I indicated earlier that I would seek to do that, and I shall do it in the way in which the noble Lord has indicated. Possibly he might consider putting down a Question for Written Answer, and I shall see what I can do.
Lord HAILSHAM of SAINT MARY-LEBONE: My Lords, shall we ever be let into the secret of what was there?
Lord GORONWY-ROBERTS: My Lords, we can all live in hope.

CAR PRICE INCREASES
2.40 p.m.
Lord PLANT: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government by what percentage Ford and British Leyland have increased the factory prices of their vehicles each year during the last four years; and what are the factory prices of similar vehicles in the USA, Japan, Germany and France.
Lord LEONARD: My Lords, in 1975, 1976, 1977 and 1978 to date the ex-factory prices of Ford vehicles rose on average by 20 per cent., 16 per cent., 20 per cent. and 9 per cent. respectively, and those of British Leyland vehicles by 17 per cent., 23 per cent., 19 per cent. and 12 per cent. respectively. I regret that information relating to the factory prices of foreign manufacturers' vehicles is not available.
Lord PLANT: My Lords, will my noble friend agree that to many people at least it seems that the price of cars in the
112
United Kingdom has increased two and a half times in four years, whereas General Motors and Ford worldwide have only increased their prices one and a half times? In view of the fact that Ford United Kingdom made £4,000 profit per employee last year, will my noble friend confirm that its car price increases will be subjected to scrutiny by the Price Commission?
Lord LEONARD: My Lords, I am not in a position to substantiate or to disagree with what my noble friend says about the prices of cars of General Motors compared with the prices of British cars. However, the Price Commission is a statutory body which in itself can check if it feels that the profits are not in keeping with the prices which are charged to the public. I do not think that I can speak for General Motors and the prices it charges in this instance.
Lord HARMAR-NICHOLLS: My Lords, is the noble Lord not aware that we in this country should be disturbed that plant owned by Ford in Europe gives a return of 98 per cent. whereas identical plant owned by Ford in this country gives a return of only 66 per cent.? It is that fall in the output here compared to abroad which affects the prices which can be charged and which, more importantly, will decide how successful the company will be in employing people in the future.
Lord LEONARD: My Lords, I am afraid that the noble Lord is getting into the area of productivity, which to me is a different question from the Question which we are discussing here.

TEMPORARY CIVIL SERVANTS
2.43 p.m.
Lord CAMPBELL of CROY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have reached any decision about the possible extension of the limit of five years for service by tem-

113
porary civil servants since the replies given in the House on 7th June (Hansard, cols. 1229–1231).
The LORD PRIVY SEAL (Lord Peart): My Lords, a new Civil Service Order in Council, which came into force on 1st December, clarified the Commission's powers and strengthened their control over recruitment to all permanent appointments. Under this, the great bulk of short-term appointments by Departments now have to satisfy the Commission's open recruitment requirements whereas that was not essential under the previous rules. The new order also established that special advisers will not be required to resign solely on the grounds of having served for five years. Their appointments, which remain limited to the life of the current Administration, are self-evidently not permanent and therefore do not require the certification of the Civil Service Commission.
Lord CAMPBELL of CROY: My Lords, I thank the noble Lord the Lord Privy Seal for his Answer. Since a way now seems to have been found for making short-term appointments permanent in order to cater for the special political advisers, are the Civil Service unions satisfied that the traditional system of entry through the Civil Service Commission's open competition is not being eroded?
Lord PEART: No, my Lords, I cannot accept that. Indeed, noble Lords will understand that the previous Conservative Administration also appointed specialist advisers. I do not think this will alter the character of the Service. As a matter of fact, I do not have a special adviser myself.
Lord CAMPBELL of CROY: My Lords, is the noble Lord aware that none the less no appointment was held for longer than five years, and that this is therefore a significant change? Does the noble Lord remember his replies to questions on 7th June about having a debate in Parliament before such changes were made? In his capacity as Minister for the Civil Service, is he intending to use a Parliamentary opportunity longer than Question Time in order to explain these developments and invite discussion?
Lord PEART: My Lords, I think we can have a discussion through the usual channels. I am quite prepared to have a debate, but I think we must settle it that way.

FISH STOCKS: CONTROL OF FACTORY SHIPS
2.45 p.m.
The Earl of CROMARTIE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will take steps to limit the number of factory ships permitted off the West Coast of Scotland and to regulate their use in order to protect employment in west coast fishing ports, to conserve the stock of mackerel and to reduce the pollution of the coast.
The MINISTER of STATE, SCOTTISH OFFICE (Lord Kirkhill): My Lords, the Government have no plans to limit the number of factory ships. Purchases by these ships, which provide a valuable export market, have not prevented the home processing industry from obtaining supplies, nor have they affected employment levels in the industry. The fishery is regulated in the interests of conservation by means of statutory licensing which limits the quantity of fish which each fishing boat can land or transship. Because of the availability of the mackerel stock, however, large quantities of fish would, in the absence of the factory ships, have had to be sold for reduction to meal or oil at a much lower price. In the light of the experience of this year's fishery, my officials are considering with Ross and Cromarty District Council the possible introduction of further controls to prevent pollution.
The Earl of CROMARTIE: My Lords, I thank the Minister for his Answer. I should like to ask whether the Minister is aware that last year there were six of these factory ships opposite Ullapool and within Loch Broom, and that this year there have been 25? Is he aware that this has caused a great deal of pollution to the coasts? Perhaps the Minister has never

115
smelled these things. The stink is absolutely appalling. Is he also aware that this is causing a considerable adverse effect to our own West Coast fishermen?
Lord KIRKHILL: My Lords, of course the fishing season is now over, as the noble Earl will be aware, but I can advise him that Ross and Cromarty District Council intend to promote an order. I can further confirm that I am aware that pollution has occurred, which of course is one of the reasons why the district council seeks to promote the order which will come before us. I do not think I can say anything other than that the Government imposed a quota on each fishing boat this year in an attempt to contain mackerel stocks.
Lord DRUMALBYN: My Lords, is the noble Lord aware that on a day not so long ago, perhaps six weeks ago, 35 Russian vessels were counted in Loch Broom, and that Ullapool was thronged with Polish fishing vessels?
Lord KIRKHILL: My Lords, that may well be so. The point I was trying to make is that the season finished in October.
Lord CAMPBELL of CROY: My Lords, will the noble Lord consider the following, and will the Government consider action upon them? First, numerous foreign vessels which are not fishing vessels but processing and transport ships are causing pollution and nuisance, and the Ross and Cromarty Pollution Order, which has only just come out, is unlikely to go through Parliament before May. Secondly, unless something is done to control the catch by British fishermen, the mackerel is likely to disappear as the herring has.
Lord KIRKHILL: My Lords, the season does not start again, as the noble Lord, Lord Campbell of Croy, will know, until next August. The Ross and Cromarty Order, one hopes, will be effective before that date. I was saying earlier that during the Scottish summer mackerel season the fishing quota allocations varied between 3½ tonnes and 5 tonnes per crew member per day. That was a licensing restriction. I should also advise the House that
116
fishery scientists considered that, for 1978, 450,000 tonnes could be fished, but of course the Government restricted that.
Earl FERRERS: My Lords, is the noble Lord able to say whether this kind of problem will remain with the United Kingdom Parliament, or is it likely to be devolved to the Assembly?
Lord KIRKHILL: My Lords, the Department of Agriculture for Scotland remains with the Secretary of State for Scotland.
Earl FERRERS: My Lords, does not controlling Russian trawlers come within the responsibility of the Foreign Office?
Lord KIRKHILL: I am sure that is true, my Lords, but I thought the noble Earl was going to remind us of a debate at the time of our devolution deliberations when we wondered whether the Scottish Assembly could express a view on foreign affairs.
Lord HAWKE: My Lords, is the Minister aware that Devonshire and Cornish fishermen would not wish this little controversy to be confined to the Scots?
Lord CLIFFORD of CHUDLEIGH:My Lords, will the noble Lord bear in mind—this follows on the last supplementary—that the fishermen in the South-West, particularly apropos the mackerel stocks, are equally or more so affected by the point raised by the noble Earl, Lord Ferrers, and that off Falmouth there are not only Russian factory ships but also Scottish fishermen with their purse seine fishing nets, removing the basic mackerel stock from the whole of the South-West?
Lord KIRKHILL: My Lords, I indicated that since October last they had moved away from Scottish waters.
Earl JELLICOE: My Lords, is the Minister aware that despite intense and expert activity off the West Coast of Scotland last summer I managed to catch only seven mackerel? More seriously, will the noble Lord undertake to keep under very close review the ques-

117
tion of the possible depletion of mackerel stocks both off the West Coast of Scotland and off the West Coast of England?
Lord KIRKHILL: I can give absolute confirmation to the second point made by the noble Earl, my Lords.

EUROPEAN COUNCIL MEETING
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, with the leave of the House, at a convenient moment after 3.30 this afternoon my noble and learned friend Lord McCluskey will repeat a Statement being made in another place on the meeting of the European Council.

CHINA: RELATIONS WITH THE UNITED KINGDOM
2.53 p.m.
Lord RHODES Lord RHODES rose to call attention to the importance cf our improved relations with China; and to move for Papers. The noble Lord said: My Lords, having gone through the throes of wishing I had never put down my name on the Order Paper, I wish, paradoxically, to thank those who have made possible my appearance here this afternoon and to thank those who will be supporting me in this debate.
Yesterday, as I was on my way to the station in Manchester, I passed the end of a street called Granby Road and for old times sake I turned in to have a look at it. There I saw the "To Let" and "For Sale" signs; the street in which the mandarins of textiles once held their business. Those were the days at the early part of the century that I can remember. I recall my father coming back from where he was a workman in a finishing mill bringing with him "chaps" which were pictorial identifications of the consignees; guaranteeing the quality of what was in the package. That was a long time ago, and I can remember people going to their work in a carriage and pair, something which people in this House cannot remember.
I make no claim to be an expert and my appearance here this afternoon stems from leading a delegation of all-Party Parliamentarians to China last June. I
118
stress all-Party because there is no one Party that can presume to represent this country when it comes to visiting a nation with 900 million inhabitants; it is an all-Party consideration. Some time ago I was at a function at which the then Chinese Ambassador was present and I heard in critical tones that it was a long time since an all-Party delegation had visited China. I was told by the Chinese Embassy that if I organised a group of Parliamentarians, it would be very welcome in China. That I did, and the delegation consisted of four from this House and six from the Commons.
Normally, Parliamentary delegations from this country are sponsored and financed by either the Inter-Parliamentary Union or the Commonwealth Association, both of which are in receipt of Government money. However, the Chinese would have nothing whatever to do with the Inter-Parliamentary Union because the Russians are members of it. Nevertheless, the Inter-Parliamentary Union did a good deal of the organising for me and I pay tribute to Brigadier Ward, whose recent death was such a shock to us all; he was a fine soldier and gentleman with a flair for the job he did for the Inter-Parliamentary Union.
The delegation was unusual, in that every member did a piece recording his impressions; that broke new ground, and our decision to take our own rapporteur who understood the idioms and nuances of the Chinese language paid off handsomely. It is to be hoped that that delegation was the first of many. When the Foreign Secretary, Mr. Huang, was in this country—I hosted a lunch in his honour in this place—he said he would welcome many more such delegations.
So many topics could come up for consideration, but I will save time by mentioning only one. Future delegations could apply their minds to how the Chinese view the EEC. Although Europe has gone through the motions of signing an agreement the Chinese tend to regard the Community in purely military terms. For instance, there was not the slightest inkling that the Community might have to act in consort against low-priced Asian exports. This is only one of many instances of the need for the mutual exchange of information that could take place by means of Parliamentary delegations.
We might say that 1978 has been a vintage year in terms of relationships, the highlight being Chairman Hua's visit to Romania and Yugoslavia; the dancing in the streets of Bucharest certainly seems to have paid handsome dividends. The Governor of Hong Kong, for the first time, attended the People's Republic of China's National Day, an historic occasion. On 23rd October of this year two tremendously significant things happened. First, Mr. Teng, the Vice-Premier, signed an agreement and treaty with Japan. On the same day Mr. Vance from America visited Moscow. It is significant that never has a person representing America been received in Moscow in so friendly a way as Mr. Vance was on the day when the Treaty was signed between Mr. Teng and the Japanese.
Very significant. Perhaps more important to us is the great interest that the improvement of our relations with China has had on the thinking of the ordinary man in the street here in Britain. Not for years have I found reaction to an international event so enthusiastically received as the improvement of our relations with China in the past two years. The people of this country are thrilled, and they feel safer for it.
A week last Monday I attended in Brussels a meeting with DG IV, a group which has to do with competition. They told us—and my friends who went with me from this House will corroborate this— that we want to get away from the ordinary conventional manufactures. Of course, everybody is going in for industrialisation. We have not yet reached anything like the point of saturation, but we shall before the end of the century if industrialisation goes on at this speed. They gave us a lecture on what we should make. They told us that we ought not to bother so much about textiles, or steel, or coal. We should be involved in computers, something modern, they said. When I asked which one, I am afraid that I did not get an answer.
Having been admonished by the pundits in Brussels, I come back and think about what we are good at. What are the sophisticated things that we can make? The first thing that I can think about is the Harrier. Before we went on the visit
120
we were briefed on the subject by Aerospace, in the company of the Foreign Office representatives. We were loaded by Aerospace with pamphlets advertising the virtues of jump jets. They are trying to make us into their salesmen. It became a topic of interest at every important interview, and by now the saga of the Harrier has assumed classical proportions.
The question is: do we want to sell it, or do we not? Please can we have this unravelled? What are the strategic, political, and economic issues that Dr. Owen talks about? We are told that we must resist pressures from those who want us to sell, and to resist pressures from those who do not want us to sell. We are told that we must achieve a balance. What is it that deters us? Is it NATO? We can understand very well that we cannot sell unless the United States and NATO are in agreement. Is it because the Chinese have demanded too stringent terms, or are we afraid of the inference that a Harrier sale would be taken as a new alliance with China? Or is it simply that the Russians do not approve? Russia has issued warnings on radio and to foreign correspondents. Mr. Brezhnev himself sent a letter to Mr. Callaghan and to President Giscard. There must have been many Russian tongues in Russian cheeks when it leaked out about that correspondence, threatening us with the terrible consequences of selling Harriers to China.
But, my Lords, we cannot go on indefinitely being undecided about these matters. First it is on, then it is off. It is like a reluctant bride, or a child blowing the seeds of a dandelion. We shall have the worst of both worlds if we are not careful. Tell the Russians straight: we have arrived to do this deal, which is a straightforward defence transaction which contains no aggressive element whatever.
One of the greatest moves that could happen in this world today is to create the conditions so that 900 million people in China have at their disposal enough power to be able to take the drudgery out of farm work. This means electricity. We in this country have the wherewithal to make that so. Think of the generating equipment that we could turn out. But if, through the sale of a few Harriers, we

121
are precluded from taking that opportunity, we shall regret it for as long as we are a nation.
Let the Russians be told that this Harrier deal is chicken feed in comparison with the 350 nuclear "subs", the big Russian fleets in all the oceans of the world, and their deliberate ruinous commercial shipping policy. I am not anti-Russia; I really am not. I have done as much as anyone in my time to aid good friendship between the Russians and ourselves, but this is the time to do something about this question.
My next point concerns the leg of our contact with China; I am talking of Hong Kong. We know that it is an anachronism. We know that traditionally its survival has depended upon its usefulness to mainland China, as a vital link with the outside world and a useful source of foreign capital. The improved relationship between China and the Western world is already changing the role of Hong Kong, and its value in consequence is enhanced as a point of neutral contact. I have heard it described as having the attributes of a fluid flywheel, taking up the strains and stresses between Orient and Occident. That is a flowery way of putting it, but it is true. Today Hong Kong exists as a free zone of China under British management, and full advantage should be taken of this fact. Speculate for a moment on what would be the situation if instead of British management, the management was. German, or French, or what have you—put your own name to it. Think of how busy they would be. Hong Kong's future lies in the ability to meet three criteria: first, its relationship with the United Kingdom; secondly, its value to the people of China; thirdly, its ability to meet the demands of a more sophisticated and better educated younger generation.
What we are gaining from China or what we are able to subscribe in the opposite way to China, will depend in a large measure on how that is done in co-operation with Hong Kong. Our trade figures are pathetic. I wonder how many noble Lords in this House know the figures. I do not wish to bore your Lordships with figures because I want to sit down before long. Last year, £1,000 million worth was purchased by Hong Kong from China, while £4 million worth
122
was bought from Hong Kong by China. Hong Kong sells to Britain £400 million worth; Britain sells to Hong Kong £270 million worth; Britain sells to China £60 million worth. So Hong Kong and Britain together amount to £64 million worth. It is a pittance. The scope here is enormous. If it is properly handled and some energy put into it, think what can be done in expanding our trade and fulfilling a function as we should see it by taking the drudgery out of farm work in that great country. The Chinese would respond to this. The Chinese want us to. There are people responding to this challenge in Hong Kong, Anglophiles, like the Kadoories, who are doing this job for us. I refer particularly to the sale by us in recent months of the generating plant which will keep 2,000 men busy for four years in this country.
Not so long ago you could not discuss the future of Hong Kong with the Chinese without embarrassment, but now there seems to be no topic that you cannot discuss, so while I was in China I raised this question of the future of Hong Kong many times. The reply was always pat, and it was this: "Hong Kong belongs to China. We do not rate Hong Kong as a Chinese Province like we do Taiwan, but as a special case which we shall deal with all in good time, but we shall deal directly with London when we do". They go on to say that, so far as they are concerned, there is no treaty, which can of course be interpreted in two ways. The one I prefer is that there will be no loss of face in China if British management continues after 1996.
On the evening before I hosted the lunch in this House to the Chinese Foreign Secretary there was a programme on television called "Money". In that programme the question was asked, "What are the Chinese like when it comes to paying? That was a very sensible question. It might have been a Yorkshire-man's question; it might have been a Scotsman's question; but there it was. I was dying to give them the answer. My mind went back to the time when several institutions in Hong Kong asked me to go out and help them with their problems in 1967, when the bombs were going off at the beginning of the cultural revolution. They put me in the top penthouse at Jardine Matheson's place

123
for three weeks and asked me to help them. I made 14 speeches, trying to calm them down. Jardine Matheson made me an offer. They said: "We know that the Chinese in Hong Kong owe the Yorkshire wool industry £3,500,000. We know that there is a lot of unease about getting paid. When you go back, we would be very much obliged if you would go to the wool delegation and say to them that Jardine Matheson are prepared to liquidate all the Chinese debts". So I went back to the delegation, and I gave them the message. There was silence. Then up got one Yorkshireman and said: "My grandfather dealt with the Chinese, and he always got paid; my father dealt with the Chinese, and he always got paid; I have dealt with the Chinese for 50 years, and up to now I have always been paid. We will tell Jardine Matheson that we will not want their help; the Chinese will pay all in good time". And so they did— but what a recommendation!
The Chinese leaders face the challenge of four modernisations—industry, agriculture, defence and technology—and they are committed to doing it at high speed. But we do not want to underestimate what a disciplined population can do under strong Government. China is now committed to seeking assistance from foreigners —a complete departure from China under Chairman Mao. She aims at being one of the five major industrial Powers by the end of the century. To do this, the support she will need to get in technology and plant from Japan and the West will be enormous. But let nobody think that it is going to be easy: the Chinese are some of the cleverest traders in the world, and there is no doubt that they are adept at getting the best of a bargain. They are tough, and they will have to have tough suppliers.
I mentioned before that we are well down the list of suppliers to China. Japan, Germany, France and the USA are all ahead of us. The Chinese can pay. They know how to manage some of their affairs; and, in particular, production is increased prior to wages and salaries. I expect my noble friend Lord Bowden will have something to say on this, because he made a very notable contribution on this question when we were in China. When I was host to Mr. Huang during the lunch I mentioned, he stressed
124
time and time again that we must master the art of a new system of trading. The system of trading that he meant was barter and compensatory deals. We in London, at any rate, have these skills; we have been doing it for a long time. I ask the Government whether they are making it possible for this activity to receive all the encouragement possible in the near future.
My Lords, I have finished. I have touched on only the fringe of the subject. The noble Lords who accompanied me on that expedition are down to speak, and I have absolutely no doubt whatever that they will fill in some of the important items. But what I would leave with the House this afternoon is the necessity to be free and able to do the job of helping China to take the drudgery out of agriculture and expand their industry. Here is a great opportunity, and I sincerely hope we take it. My Lords, I beg to move for Papers.
3.20 p.m.
Lord O'HAGAN: My Lords, the noble Lord, Lord Rhodes, appeared to be in some doubt at the beginning of his speech whether he should have spoken today. I am sure that he is the only noble Lord who would now have such doubts. This is a crucial subject which he has brought to our attention at a very appropriate time and he has done so with that mixture of tough determination, commonsense and tact that one would expect from a noble Lord who is Lord Rhodes, of Saddleworth in Yorkshire, and who has yet been Lord Lieutenant of Lancashire.
I am not an old China-hand nor even a young China-hand, and unlike, so far as I can make out, every other participant in today's debate I have not been there. I therefore give only one undertaking: I shall not quote, or even make up, any old Chinese proverbs, because I think that a debate of this character must be based on hard facts and not get wafted away in a cloud of sentiment. We are discussing a country which occupies one-twelfth of the whole landmass of the world and provides one-quarter of its population, whose impact on the rest of us in the rest of the century is bound to be something of major importance. One can only guess at the number of people who will inhabit the country of China by the end of the century. Therefore I

125
take the view that it is entirely right that your Lordships should spend an afternoon discussing relations between this country and China.
I am sure that we are very grateful to the noble Lord, Lord Rhodes, for giving us the benefit of his experience in leading his delegation and also for his work both before and since that time. It provides a good backdrop for the rest of your Lordships to focus your collective wisdom on this topic. I do not think that we want to look at it in a purely bilateral way. I am sure that the noble Lord, Lord Goronwy-Roberts, will not do so, I think that we must look at the wider relationships between China and ourselves as expressed through our membership of the European Economic Community, and also we must take a view as to how China is developing its own perception of its role in the world and how that affects our interests throughout the various sectors of the world in which we have particular interests.
I should like to begin my brief remarks by anchoring them to two quotations from recent articles in The Times. The first is from an August issue and it reads:
"The motive for the Chinese decision to work with the industrialised democracies is hard-headed: a recognition that this is the best hope for providing China with the social and economic dynamism and the strategic security she needs for survival, let alone prosperity".
The second is from an October issue. It reads:
"… it is important to note"—
it is a report of a recent visit to China——
"that in a final session with Vice-Premier Ku Mu, in the course of a very wide-ranging discussion, he made it abundantly clear that readiness to supply required defence material will be an important factor in assessing a country's ' ranking ' as to its willingness to trade with China".
The first quotation was from an article written by the former Secretary of State for Trade, Mr. Dell, and the second from an article written by the noble Lord, Lord Roll, who I am sorry to see is not taking part in today's debate.
To me, those views reinforce the point that the noble Lord, Lord Rhodes, was making so strongly, because I think that when we are looking at the question of the Harriers and their sale we have to realise that this is not a matter that is limited to the question of those aircraft alone but
126
that it is part and parcel of the overall relationship that we have to develop with the Chinese. On that topic, I would only add one or two comments. I have heard that one of the factors leading to delay was that there had to be consultations with our allies. Have they finished—because if they have, what other respectable reasons can there be for a decision not being taken on the sale of the Jump Jet Harriers? Linked to this individual sale, there is the wider question of the sort of expertise that we have in this country and which the Chinese need in order to achieve the "four modernisations" (as they call them) by the target time they have set themselves. We have considerable expertise in hovercraft, in steelworks, in oil development and in petrochemical plant, all of which was discussed and, to some extent, agreed at the recent visit by senior Chinese Ministers. I believe that a target was set for our trade to quadruple by the year 1985.
I wonder whether the noble Lord, Lord Goronwy-Roberts, will be able to fill in more details of this target date and what is now expected and planned by Her Majesty's Government. And I should like to link that question with a question that the noble Lord, Lord Rhodes, raised. It seems that for the Chinese the European Economic Community is much more than an economic club or, if you like, a trade association. They see it as an important political grouping, if not the most important political grouping, on the continent of Europe. I wonder how Her Majesty's Government now see the development of our trade relationships with China in this context. The noble Lord, Lord Rhodes, said something about the framework agreement that was organised by, first, my noble friend Lord Soames and then Commissioner Haferkamp with the People's Republic of China. How will these negotiations on trade be split up between our own bilateral negotiations such as we have had recently and the framework agreements that the Chinese negotiated some time ago with the Community as a whole? The question I want to put to the Government is this: How are they going to ensure that British interests are best balanced between our own mechanisms and ways of doing things and those which the Chinese sometimes seem to prefer?—which are those of the Community.

127
There are many other topics which your Lordships will wish to consider in detail and it is a very wide range of expertise that is fielded in today's speakers' list. I was going to say something about the special position of Hong Kong, but the noble Lord, Lord Rhodes, has covered all that I had in mind. I would however, reiterate his, questions about the view of Her Majesty's Government as to the special position of Hong Kong and the effect that the developments in the Chinese attitude will have upon it.
I should like to dwell for a minute on figures that do not have rows and rows of noughts about them and do not deal with trade but people. As well as the great part that this country can play in helping to modernise and develop sectors of the Chinese economy, we have a very important role in training, scientific and technical exchanges, academic programmes of various sorts, which could lead to a marked improvement in genuine understanding between people in responsible positions in both our countries. I hope that the noble Lord, Lord Goronwy-Roberts, will be able to fill in a little detail about what has been planned in this field. I understand that the Royal Society is going to act as the umbrella for a series of scientific and technical exchanges. This is something noble Lords would like to hear about, as well as the possibilities for the exchange of students and discussions on topics of mutual interest. If the Chinese officials express enthusiasm for information about how fish farming progresses in this country, I hope that the noble Lord will refer them at once to my noble friend Lady Emmet of Amberley.
There is a wide range of activities which can help cement better relationships between the two countries, some of them to do with trade; some of them political; some of them educational and scientific. We must use them all in order to make greater progress. Years ago it was the custom for people in this country to send china objects to China to be inscribed and fired with designs of their own choosing. My family motto—that of the Strachey family—is "Coelum non animum", which is half a line of Virgil, means "We change our habitation but not our spirit" or "wherever we are we stay Stracheys", to put it more crudely.
128
This motto was sent out to be put on a set of china. There was a technical problem. It came back: "Colum non animum", which means "Cabbage not mind."
I tell this story not as a retrospective criticism of Chinese craftsmanship, nor as a weapon for my noble friends to throw at me when they think I am making a vegetable comment, but because there is a historic relationship between this country and China—a trading relationship. As the noble Lord, Lord Rhodes, reminded us, it goes back a long way. We must not be sentimental about this for the Chinese would not be sentimental, but there is some shared history and there are some shared objectives and some common purposes. While Chinese Communists are still Communists just as much as they are Chinese, there is increasingly the possibility of reaching agreement with them. While we must be realistic about our importance to them in comparison with that of Japan or the Federal Republic of Germany, or other countries whose trade is of a higher order of magnitude or of greater scale of importance, we nevertheless have this old tie and we are still—just—a member of the Community, and this is something that reinforces our trading links with China.
The best thing for me to do, my Lords, is to allow other noble challengers to joust at this subject. It has come up for discussion at a particularly appropriate moment. How difficult it is for us to read the newspapers and understand what wall posters really mean! We in your Lordships' Chamber or in Europe generally cannot judge what is going on in China at the moment. Any of us who attempted to extrapolate from our own experience or to wish in a woolly way that some deeply democratic movement were now beginning, would be likely to be wrong.
Nevertheless, if there is change towards stability and continuity and common sense in trading relationships, this will do more than benefit China—it will benefit stability in the world. If this debate has played a small part in giving your Lordships a chance to say what you feel about this matter from your experience, and the Government a chance to say what they feel now about the state of political develop-

129
ments in China, then I and all my noble friends will think that today's debate will have been very worth while indeed.

EUROPEAN COUNCIL MEETING
3.35 p.m.
The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey): My Lords, with the leave of the House, I shall repeat a Statement now being made in another place by my right honourable friend the Prime Minister on the meeting of the European Council. The Statement is as follows:
"With permission, Mr. Speaker, I will make a statement on the meeting of the European Council in Brussels which I attended with my right honourable friend the Foreign and Commonwealth Secretary on 4th and 5th December. The main topic of discussion was the European Monetary System and matters related to it. The Council agreed that a European Monetary System should be established on 1st January 1979. The five Community countries at present in the snake indicated that they would participate in all aspects of the system, and France decided to join them. At the conclusion of the discussions, the Prime Ministers of Italy and Ireland said that they would need more time for consultations before reaching a conclusion on their participation in the exchange rate mechanism. I explained to the Council that I would not be recommending to the Cabinet that the United Kingdom should participate in the exchange rate mechanism when it begins to function I informed the other Heads of Government that we intend to work for a continuation of the exchange rate stability which sterling has enjoyed for nearly two years.
"I am arranging for the relevant document which was agreed to be published as a White Paper.
"It was agreed that the United Kingdom would be free to join the exchange rate mechanism at a later date if we wish; or of course to remain outside it. We shall of course join in the development of the ECU and of the European Monetary Fund. All Community currencies will be included in the ECU. We are free to choose
130
whether or not we wish to deposit 20 per cent. of our gold and dollar reserves with the European Monetary Co-operation Fund against issue to us of a corresponding value of ECUs. That is a matter the Chancellor of the Exchequer will consider shortly with the Bank of England. In taking a decision we shall take into account the possibility that intervention in Community currencies could be helpful to us in maintaining the stability of sterling.
"We shall participate in the enlarged Community credit which is linked to the establishment of the EMS. This will be without reservation in the increase in medium term credit. As regards the short term monetary support which is more closely linked to day to day exchange rate intervention, we have agreed not to call on the credit increase which is now being made, and our partners have agreed not to call on us. There is also provision for reciprocal consultation about important decisions concerning exchange rate policy between countries inside and outside the exchange rate mechanism.
"At the previous Council meeting in Bremen, I called for studies in the context of EMS about measures to strengthen the economies of the less prosperous member countries. This part of our work was less thoroughly prepared than the work on the system itself. The proposals which eventually emerged provide for additional loan facilities of up to 1,000 million EUA over five years for less prosperous countries participating in the exchange rate mechanism, with a 3 per cent. interest rate subsidy.
"There was a limitation on these loans that they should not be used for projects which might create distortion of competition within other member countries. Member countries not participating in the exchange rate mechanism will not contribute to the financing of this scheme. I stressed the importance of Community policies, taken as a whole, contributing to convergence in the economic performance of members of the Community. It was doubts about the value of the proposals so far made that contributed to the unwillingness of Italy and Ireland to commit

131
themselves. The Commission was invited to look into this whole question and report back to the next European Council.
"As regards the Common Agricultural Policy, the Commission made a report recommending a rigorous price policy as a way of tackling the problem of surpluses, with a freeze on common prices for 1979–80. The President of the Commission announced that the Commission would make its detailed proposals for next year's prices on this basis. The Council agreed to return to this problem and to establish the necessary guidelines at its next meeting in March. There was a short discussion about fisheries and the Commission was asked to make further efforts towards finding a satisfactory settlement.
"Among other topics I should report briefly on two. The first was the agreement to ask a Committee of three drawn from France, the Netherlands and Britain to look at the way the Community works and make practical suggestions for improvements, with a view particularly to the prospective enlargement to 12. My right honourable friend the Member for Birkenhead has been good enough to accept an invitation to serve together with Mr. Barend Biesheuvel of the Netherlands and M. Robert Marjolin of France.
"Secondly, Foreign Ministers discussed the emoluments which should be received by directly elected members of the European Assembly. They agreed that the emoluments should be based on those of Members of national Parliaments and be subject to national taxation. There will be consultation with the Assembly by the President of the Council of Ministers.
"Mr. Speaker, we were greatly helped throughout this long and arduous meeting by the skilful chairmanship of Chancellor Schmidt. We can be satisfied that our country played a constructive part in the months of discussion that led to the construction of the European Monetary Scheme. The initial decision has now been taken and it is for each country to decide whether the proposals now on offer are commensurate with the greater risks involved of going into
132
the exchange rate mechanism. The British Government hope that the greater stability which the dollar has enjoyed in recent weeks will continue and will help the exchange rate mechanism of the EMS when it begins to operate. We for our part look forward to participating in further work which remains to be done on both the internal aspects of the system and in its wider international implications.
"The broad conclusion I offer to the House is that well-constructed and effective international monetary arrangements can assist those who take part in them in certain circumstances but they can be no more than additional supports and that in the end it will be the success of our own efforts in restraining inflation, keeping down prices, maintaining the stability of sterling and remaining competitive that will ensure the long-term well-being of our people."
My Lords, that concludes the Statement.
3.44 p.m.
Lord SOAMES: My Lords, while thanking the noble and learned Lord for that Statement—it is undoubtedly a sad Statement, not only from the point of view of Britain but from the point of view of the European Community as a whole —may I ask him to say what was the major factor: was it the weakness of the British economy or dissent within the Cabinet on all matters European which led the Prime Minister to refuse to participate in the monetary scheme as a whole? Secondly, I notice in the Statement the following words:
"At the previous Council meeting in Bremen I"—
that is the Prime Minister—
"called for studies in the context of the EMS about measures to strengthen the economies of the less prosperous member countries. This part of our work was less thoroughly prepared than the work on the system itself".
Why? Does this show that we have not got the influence we should have in the European Community? Is this a reflection of the amount of political capital which the Government have already used up and of its lack of influence, effect and "punch" in Community circles? Does this also not mean that the refusal by the European Council as a whole to agree on the Commission's Paper on the future

133
of the Agricultural Policy, with all that means to the advantage both of this country and of the Community itself, was not accepted? Is there not some cause and effect there?
Thirdly, may I ask the noble and learned Lord whether the Prime Minister made any proposal at the meeting about discussions between the Community, on the one hand, and the United States Administration and the Japanese Government, on the other hand, as to how to bring greater order into the world monetary system, of which the EMS was to be but a beginning and which is so essential if world trade is to recover and prosper?
Lord BANKS: My Lords, I should like to join in thanking the noble and learned Lord for repeating the Statement made in another place. We on these Benches greatly regret the failure to achieve a comprehensive European monetary system covering all the members of the European Economic Community. We appreciate all the difficulties, but we had hoped that the United Kingdom would be in from the beginning. It is clear that the question of the transfer of resources has been the main reason for the breakdown; and on that it would appear that Italy and Ireland were on our side and took the same point of view in the argument as we did. We certainly agree that the transfer of resources is very important, though it may not be achieved on the scale which is necessary until there is greater political and economic integration than there is now.
I should like to ask the noble and learned Lord whether there was any further discussion on the relative merits of the basket of currencies and the parity grid. Further, how will what is now proposed differ from the existing snake? Is it just a question of France joining the snake? What is the difference between the Italian and Irish positions and our own? Could we not have left our position open, as they left theirs open? Finally, I would hope in any case that the set-back will not be taken by the Government as an excuse for a passive attitude. I would hope that, together with Italy and Ireland, we shall continue to seek for a basis on which all can join.
3.48 p.m.
Lord McCLUSKEY: My Lords, the noble Lord, Lord Soames, described the result of these discussions as "sad". Those participating did not use such a term. Chancellor Schmidt and the President of the Commission described the meeting as having "a limited success". It would be sadder still if, on a wave of some kind of ill-prepared euphoria, members of the Community were to join a scheme which was not durable and effective, because ultimately that would be more destructive than looking very carefully at a scheme such as has emerged.
I was asked particularly whether it was a weakness in the British economy which led to British failure to participate. I would remind the House that the effective rate of sterling has been stable for some 22 months, and that is the best sign that it was not weakness of the British economy which caused the British Government to hold back in relation to that part of the scheme which is described in chapter 3 of the Resolution of the Council, which will be published as a White Paper.
It was not dissent within some part of the British Cabinet. I explained just a week ago in the course of a debate following an unstarred Question asked by the noble Lord, Lord Soames, that the Government had looked very, very closely at the details of this scheme because it is no good looking towards the distant blue mountains if you do not look down at the stones which lie at your feet. It was essential that we should look at the details and see whether or not the economics of the scheme made sense. The Government did that, and may I say that I think the House acknowledged on that occasion that the Government's approach, as evidenced by the Green Paper which was then published, was open, honest and clear to all and was certainly realistic.
I was asked particularly about that part of the Statement which referred to the lack of thorough preparation in relation to the concurrent studies. It is no secret, either to this House or to anywhere else, that the Prime Minister was the leader of those who laid great emphasis upon the need for effective steps to be taken within the Community to produce a convergence of economic performance and the proper transfer of

135
resources. It is not the fault of the British Government, which did as much as they could, that this work was not properly done. Indeed, evidence that it was not properly done can be seen in the serious disappointment suffered by the Italian Prime Minister and the Irish Prime Minister, when they arrived at Brussels and—I hesitate to say it—got the answer that they did in relation to this matter.
The Prime Minister has also led in relation to seeing the European Monetary System as being only part of a worldwide system, because, although a zone of monetary stability in Europe would be immensely valuable, worldwide problems will not be solved unless we come to terms with exchange rates with the dollar, with the yen and with other currencies.
I acknowledge what the noble Lord, Lord Banks, has said and thank him for it. The relative merits of the grid and the basket were indeed still discussed, and, as I told the House just a week ago, a compromise arrangement was put forward. It is a highly technical matter and your Lordships will find it fully described when the White Paper is published. It is in Chapter 3 of the document which is entitled The Resolution of the European Council, and your Lordships will see how a compromise arrangement emerged. But, in essence, my own judgment is that it was rather nearer to the grid than to the basket.
In relation to the difference between the approach of the Italians and the Irish, the position is this. They have reserved their position, and both the Italian Prime Minister and the Irish Prime Minister will go back to their respective Governments to discuss the outcome. I would expect their position to be announced in the course of next week, and the Council will hear the matter officially on, I think, 18th December. Our own position is absolutely clear and it is stated in the Green Paper. The Irish and the Italians obviously felt that if they joined the scheme, and if there was a generous transfer of resources to them, then they could live with the scheme, the Italians no doubt intending to take advantage of the rather wider band fluctuation which was permitted—the 6 per cent. band— and which it was thought they might have taken advantage of. We did not feel that the scheme which was agreed at Brussels
136
in relation to exchange rate mechanisms permitted us to join, and the difference is one which has been manifest all the time. Of course, there was nothing like any corresponding transfer of resources proposed in relation to the United Kingdom that the Irish in particular, and the Italians perhaps as well, thought they might get out of the Brussels meeting.
Baroness GAITSKELL: My Lords, may I ask the Minister whether we have not reached an absolutely ludicrous situation—leaving aside the specialists on this matter, and taking ordinary people like myself who are pro-European, but who occasionally have some reservations about the way things are going economically and even the way in which the whole concept of the Community is, in some ways, a rich man's club—if some of us who are still good Europeans, or Europeans anyhow, cannot state our reservations about what has happened, without being included in what has become, for bad Europeans, a new criminal class?
Lord McCLUSKEY: My Lords, I count myself among these ordinary people. I certainly do not want to enter into a general discussion about the character of the European Community, which has been described by my noble friend as a rich man's club. Of course, those who are enthusiastic about Europe may well have reservations about what has happened. But, really, you cannot construct a sound edifice without good plans and without sound work at the foundations, and that is what is required here. Until we get it, we shall not have a system that will be durable and effective.
Lord ROBERTHALL: My Lords, I think that the Government have come very well out of a situation in which the economy behind them was far from strong. I think that we have done the best we could. But may I ask the noble and learned Lord whether I am right in supposing, from what he said about the White Paper, that all the details which have to be settled before the scheme comes into operation have been settled and will be in the forthcoming White Paper?
Lord McCLUSKEY: My Lords, first, I thank the noble Lord, Lord Roberthall, for what he has said about the Government's stance here, and about how the

137
Government have come out of it. With regard to the details, I really am reluctant to pursue the matter of detail, because it is highly complicated, and, although I myself have had time, though not very much time, to read it and, I think, to digest it, it seems to me in a sense— although that is a non-economist's judgment—somewhat patchy. Some parts are much clearer than others. Some parts certainly have to be worked out and, indeed, there are calls in the resolution for legislation and for further discussions. What is clear—and I want to emphasise this to the House—is that we are participants in the scheme, but not in the exchange rate mechanism. We intend to play a part in the further consultations which will take place, in particular in relation to the increasing credit system and also in relation to the possible development of the ECUs.
Lord SHINWELL: My Lords, may I ask my noble and learned friend whether he will be kind enough to advise the Prime Minister, as coming from an old campaigner who has some idea of what public opinion is, to make this an issue at the next General Election and just watch for the result?
Lord McCLUSKEY: My Lords, that is an astonishing proposition coming from my noble friend Lord Shinwell. T recall that during the discussions on the Scotland Bill, he advised the House more than once that the people in Great Britain would not be able to understand that Act. If they cannot understand that Act, they will certainly not understand the European Monetary System, and I would hesitate to offer such advice to my right honourable friend. But I am quite certain that his advisers will draw his attention to what my noble friend has said.
Lord WIGG: My Lords, does the Minister realise that, while our fellow countrymen may not have the perception of the Scots in being able to understand everything that is put before them, they still have common sense enough to distinguish between a hook with bait on it and a hook with no bait on it? It is a matter of great rejoicing for me that the Government have shied away from the possibility of taking the hook with nothing on it, because it gives the British people an opportunity to accept the challenge of
138
meeting their own destiny through their own efforts. Indeed, perhaps it would be useful if the Minister used this occasion to remind our fellow countrymen that the weakness which the Tory Party are seeking to exploit stems from the fact that this country gave all in two world wars, and went from a position of absolute supremacy to great weakness in defence of Germany and France, who are both seeking to exploit us and drive us into the ground, and to pretend that it was they who won the war and we who lost it.
Lord McCLUSKEY: My Lords, if I may just follow my noble friend's analogy in one respect, there are too many people pretending that the European Monetary System is a bait with no hook on it.
Lord GLADWYN: My Lords, are the Government aware that the salary now proposed for British members of the European Parliament, much of which will presumably have to be spent abroad where the cost of living is very much higher, will, after deduction of tax, amount to perhaps rather less than that enjoyed by a competent shorthand typist? In those circumstances, do they think that they are acting in accordance with the Treaty in proposing to tax members of the directly elected European Parliament, and do they not fear in those circumstances that they may well be had up in the European Court?
Lord McCLUSKEY: My Lords, there has been a repeated expression of view, both in this House and in another place, that the pay of members of the European Assembly should not be excessive, and should not be disproportionate in relation to what the corresponding national Members of Parliament may earn. The result, therefore, will be that the salary for a member of the European Assembly will be the same as the salary for a Member of the House of Commons.
Viscount ECCLES: My Lords, although I think the House accepts that stable monetary arrangements are of enormous value and that we ought to do a great deal to secure them, is not the real lesson of this sad meeting that, without the Americans, we cannot get a stable international currency? Would it not be a good idea if the Prime Minister now asked the American Government to participate with Europe—

139
not as the great, superior dollar but as one with all of us—in making a really sensible monetary arrangement?
Lord McCLUSKEY: My Lord, I accept that the Prime Minister has always emphasised that one cannot, as it were, cut oneself off from the world currency situation. The Prime Minister has always seen the proposed zone of monetary stability in Europe as being a stepping stone, a support and a help towards arriving at a worldwide system which is stable. But that is not something which is directly under the control of the European Community, although, of course, discussions of that kind must continue.
Lord WIGG: My Lords, will the Minister note that the noble Lord, Lord Gladwyn——
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I hope the House will agree with me that it is always accepted that Statements are never made the subject of general debate. We have had 25 minutes on this Statement. There are to be a great many speakers in the debate. Therefore, we should proceed.
Lord WIGG: My Lords, as I was half way through my question——
Several noble Lords: Order, Order!

CHINA: RELATIONS WITH THE UNITED KINGDOM
4.1 p.m.
Debate resumed.
Lord MACKIE of BENSHIE: My Lords, I rise to speak in this debate, mainly because I was asked by the noble Lord, Lord Rhodes, to be a member of his delegation to China. I speak first from these Benches because my noble friend, who is our spokesman on foreign affairs, was a member of a delegation to China led by Lord Chalfont and, with his customary diffidence, my noble friend Lord Gladwyn does not wish to speak before Lord Chalfont.
I am very grateful to the noble Lord, Lord Rhodes, for asking me to go to China and also for initiating this debate,
140
because it gives me a chance to say how well he did and how suitable he was to lead a Parliamentary delegation. The Chinese adored the noble Lord, Lord Rhodes, because they respect great age and also because they respect warriors. The noble Lord is very much both. I remember the very interesting and impressive interview which we had with Li Hsien-nien, a Vice-Premier of China. We sat in the customary circle. The noble Lord, Lord Rhodes, was sitting beside the Vice-Premier, who is a man of 70—a young fellow who had been on the Long March and who is also a warrior. Looking at them, I found it very difficult to distinguish between them. They were obviously getting on like a house on fire. The more people like the noble Lord, Lord Rhodes, who go to China, the better chance we shall have of reaching an understanding which will lead to a more settled world and to prosperity for ourselves in association with China.
I intend to give a personal impression of our visit because it is relevant to the subject. There were four Peers and six Members of the House of Commons on that delegation. None of us had been to China before, and it hit us like a bludgeon. It was quite extraordinary. One knows that the figure of 900 million is an estimate of the number of Chinese, but you do not appreciate what this means until you see them all coming at you on bicycles in the streets of Peking.
There were various incidents during our stay which are illustrative of the size of their problems. We were taken to see the great bridge—which was finished about 10 years ago—over the Yangtze River, which separates the North China plain from South China. I was a little bored; I thought, "Looking at bridges is not very interesting". This enormous bridge carries both rail and road traffic. Everything about it was explained to us. In a rather bored manner, I asked how far up river was the next bridge, and our guide said that it was at Wu-han. So I asked him how far up river that was and received the electrifying answer that it was a thousand miles up river. That is more than the whole length of our country.
Incidents like this brought it home to us that enormous problems are being solved. Before the Chinese built this great bridge they had a train ferry;

141
18 trains a day went across that great waterway. When we were there, they were pushing over 160 trains a day at a speed which, frankly, horrified me. The whole bridge appeared to shake. However, 160 trains a day compared with 18 represents an enormous increase in traffic. To that has to be added a great amount of road traffic. One could see that the problem was being tackled, despite the fact that when they were in the middle of building the bridge the Russians withdrew their technical assistance and advice. Nevertheless, the Chinese carried on themselves and solved the problem.
We were taken, as all tourists are, to the Great Wall. We thought that it was a very fine wall. Then, all of a sudden, it hit us that it did not stretch, like Hadrian's Wall, for 60 or 70 miles but that it stretched for thousands of miles and that the people of China, without modern technological aid, had built this wall some thousands of years ago. All this made the required impression upon us. It made us aware that we were looking at a phenomenon which is very little understood in this country.
As this House knows, I am a farmer. I had read and heard a great deal about the agriculture of China. On our arrival, we boarded a train at Hong Kong, on the border, and went to Canton. Our journey took us through irrigated agricultural land the like of which I had never seen before. Every inch was cultivated. We looked at it all the way during a two hour journey, and we began to appreciate that the Chinese system of agriculture had been in existence for a great deal longer than the rather vaunted agricultural system, both here and in America, under which we produce a great deal per man. The Chinese, however, have been cultivating these river basins for something like 6,000 years, and the land is improving; it is not being turned into a desert. The Chinese have enormous numbers of people working on the land and they are self-sufficient in food. They buy some wheat—and very useful that is to us—but against that they export rice. The food we had was delicious, although I doubt whether it is the kind of food that the 800 million Chinese eat every day.
142
We were taken to see the communes. Again, they shook our concept of what agriculture means. We went first to a commune outside Peking, the Red Star Commune. I shall not bore noble Lords with figures, but 83,000 people live in this commune—that is, 18,000 families. The total hectarage of the commune is 10,800, which is over 20,000 acres. The 83,000 people living in that commune work in the small factories, the repair sections, the hospitals and so on. In another commune in Shanghai 18,000 people live and it covers 1,000 hectares. That commune includes 19 small factories.
We were very impressed by the way in which the communes are operated more or less as self-developing capitalist units, producing their own factory goods and improving their methods of agriculture. We have a great deal to contribute in order to help the Chinese to improve not their methods of agriculture but their productive efficiency. I hope that the Chinese are sensible about it. From my conversations on this matter I think that they will be, although I should like to have had many more technical conversations. They appear to be going for the right things. We were standing on this great bridge and we looked down on the peasants working in the fields below. I must say I was jolly thankful that I was a Scottish peasant and not a Chinese one! They were irrigating, running with buckets of water slung on a carrier over the shoulders. They were harvesting by hand with sickles and they were carrying home the bales of wheat on their backs, and all this alongside a tremendous bridge which they had built themselves.
This is part of the whole concept of China—the two developments going on together. Eighty-five per cent. of the 900 million people of China live on the land. If they only improve their efficiency enough to get 100 million off the land into industry that will make them the largest production unit in the world— larger than the Japanese or the Americans —and I think they can improve and adapt their agriculture. I hope they will not go to the lengths that we do—in fact they cannot—but they can improve it in a different way, and before the end of the century they can make available something

143
like 200 million people to work in industry. That is a terrifying but exciting prospect and one that we do well to consider.
I do not want to go on for too long because there are so many people who wish to speak. But I think it is important to say something about the cultural revolution, the Gang of Four and the 10 years before the present Government took power. Everywhere we went we were told about the mistakes of the Gang of Four. For example, we were taken round a very good library in a university. The librarian was very proud and he had a book out for each of us from our own part of the world. He actually had a copy of Burns to show me that they knew about Burns. It was all that a library should be, and then we went through to the reading room and there were 400 young Chinese of both sexes with their heads down and working jolly hard. We said it was very impressive and he said, "Yes, at the time of the Gang of Four there would have been five or six or maybe a dozen, and the rest would have been out waving little red books and annoying honest men who were trying to do a good job".
Then we went to a textile printing factory which, unfortunately, the noble Lord, Lord Rhodes, did not go to. That was extremely impressive and we asked how they got on during the time of the Gang of Four. The chairman of the revolutionary committee, who was the manager, said "Ah, well, when they tried to tell us that production freaks were bad we said, ' Well, if you do not produce you do not eat'. This appealed to our workers so we kept on producing." I think that private arrangements overcame many of his supply problems and certainly the Gang of Four were totally unable to influence the peasants of the country, who knew that food had to be grown, that seasons come and go, instead of peculiarities like this.
Another very impressive sign of the damage done to education and development during the last 10 years of the cultural revolution was given to us by the professors of medicine in a teaching hospital. When we asked them what were the political qualifications to get into the university, they replied, with grim determination, "Oh, yes, we accept that there must be political qualifications to come to this
144
medical school, but now before they get in they have to pass our entrance examination". My impression when going round was that all the people that we met—and we were privileged, of course, to meet a great many of the responsible people of the new China—did not want the nonsense of the last 10 years to recur; they wanted to go ahead and to get the country on to a proper footing, to produce and to get to a stage so that in the year 2000 they will be coming up level with the West.
The opportunities for us in China are great and the Chinese are wonderful people. It is important to look at how they feel today. As I have said, we had excellent young diplomats as our guides and we met and talked completely freely with a very large number of people throughout China. The impression that I have is that they are back happily in their old feeling of being superior people, for which they have a very large number of reasons, to wit their civilisation goes back at least 4,500 years and they have every right to look on us as barbarians, in a way. But the lesson of their technical inferiority in the last 100 years, which has led to a great number of humiliations, has been well learned. I think that now the young Chinese managers, diplomats and teachers who we met are regarding the humiliations of the last 150 years as a small hiccup in Chinese history. They now know that they are back on track and from now on they must be numbered among the great nations of this world, whose views and whose might must be considered. I am sure that we can deal with them and that we can be friends. It is very easy to be friends with people who are sure of themselves and sure of their position; it is very difficult to be friends with chaps who have a chip on their shoulder and an inferiority complex. The Chinese have not got that, and I am sure that if our experience is anything to go by we can be friends with the Chinese, which would be of immense benefit to ourselves and to the world at large.
4.17 p.m.
The Earl of SELKIRK: My Lords, the House is deeply indebted to the noble Lord, Lord Rhodes, for the presentation which he has given us today. There is something delightfully colourful about thinking of the noble Lord, Lord Rhodes,

145
the great realist, meeting the realists of China, and I believe that a great play could be written on that subject with advantage. He has made a most penetrating analysis of what he has seen and we are grateful to him for the picture he has given, just as we are to the noble Lord, Lord Mackie of Benshie, a distinguished agriculturist commenting on a totally different kind of agriculture. It has been most enlightening and valuable to us to hear it. I endorse entirely what he said: the great thing about the Chinese is that they have no chips on their shoulders at all.
I have not had the advantage of being in China, but I have been in most of the countries on the borders of China and I have lived in a Chinese population in Singapore for a period of four years. It may be worth noting just what the Chinese do in Singapore and in Hong Kong when the opportunities are open to them. However, I will look at this picture from a rather more objective angle than we have heard so far because I have not been there.
I believe that this is a moment of very real consequence in the history of China. It is today perhaps the greatest enigma of the international scene and I shall be fascinated to hear how far the noble Lord, Lord Goronwy-Roberts, will no doubt seek to explain just what is happening at the present time. Frankly, I find it confusing, but I am fairly certain that the Chinese have a great opportunity. We cannot judge much, but I think we can say that there will be a very real change in foreign policy.
In a sense, of course, the Chinese never had a foreign policy. They were the Middle Kingdom and the rest of the world was the outside world. They did not need a foreign policy, and when for the first time we tried to set up a mission there, going to immense trouble, we were eventually told that we could go back to our obscure and inaccessible island and stay there. Now they have changed this and they want relations, so far as one can see, with all countries in the world. It may be this is the first time this has happened in Chinese history. I think the previous opportunities they have had have to a great extent gone astray. They missed out entirely on the Industrial Revolution, and they did not miss out by accident: they missed out deliberately.
146
Their intensive education, going back 2,500 years to the classics, made them eschew anything to do with industry. It is interesting that basically our education at that time went back to a different set of writings 2,500 years ago. But we were not so narrowly based and we were able to take in the developments which were taking place.
From that came one of their troubles. The public utilities were provided by foreign countries with all that that meant, the extra-territorial courts, the control of customs, which left a legacy of much unhappiness to the Chinese. We thought of them early this century as very charming but highly ineffective people. Now that has changed. In fairness, the next stage was when the Empire fell. Sun Yat Sen, incidentally, seems to be the only figure universally accepted as of stature at the present time, but even his revolution with all the intentions of democracy did not get very far; wars, both internal and external, conflicts of Communism and nationalism, left a pretty unhappy period of Chinese history. I have very little doubt that this did much to assist the seizure of power by the Communists in 1949. The one thing they did leave, and it is one of major importance, is a common dialect, which I believe now is being learned and spoken virtually the whole length of China from one end to the other.
The extraordinary feature of the Communist régime, which, of course, came in with all the beastly brutality which invariably accompanies Communist régimes, is the instability of this period; they could not stay fixed on any one policy. The Russian period came, and very largely through the sheer clumsiness of the Russians it did not last very long. The 100 flowers period, the 100 schools of philosophy, was pretty short. The great leap forward does not seem to me to have achieved very much. As for the cultural revolution, except for its violence I do not know that anyone is clear about exactly what came out of it. In any case, we will listen to hear whether the noble Lord has anything particular to say. But it was, as Lord Mackie has said, a pretty unsatisfactory period of 10 years. Now they are coming out of it. It seems to me we are looking at this country, with its traditions, having imposed on it theories devised in

147
Highgate in this city and it is the impact of the one and the other which is going to determine what happens.
As has been said, it is the oldest continuous civilisation in the world, a highly educated body, and nowhere has education been sought more ardently than by Chinese students. I will not at this time elaborate on what is told but one hears of students of over 80 taking university degrees certainly in the earlier days. It is immensely proud of its high tradition. I do not believe that has been removed even by the last 10 years. But what I think is most significant to us is that it is united. Amidst the wars and other upheavals that have taken place there has been no separation movement; there has been no suggestion of Balkanisation, which, after all, we have had in Europe. In spite of the EEC, which may have the opposite effect, Europe has been greatly Balkanised this century. None of these sentiments exists in China at all.
I wonder whether we can be of mutual interest to China. This is, I think, the central point which we are discussing today. As has been said, they have a population three times that of the European Economic Community. Can we contribute to raising their standard of living? The dangers of a bad economy, the dangers which arise when people are widely and extensively dissatisfied, are great. I do not believe Hitler would ever have come to power if the German economy had been thriving in the early '30s. We can take that example in very many places all over the world at the present time. The question which I think we shall have to ask ourselves is, do we want to do this? Are we prepared to take the trouble? Are we going to do it in a thorough way? If we do, we must seek to understand China, understand that this country is different from other countries.
Its language is very difficult. I would like to ask how many people in the knowledge of the Foreign Office are learning Chinese. This is fundamental. It is all very well to have interpreters in Europe, but when you are dealing with a language which is wholly different in root and origin from anything in Europe I do not think you can ever hope to get the nuance of meanings and the basic sentiments of the people who are speaking. I believe that whether we take the trouble to learn the
148
language properly is going to be a fundamental question. After all, they know far more about this country than we know about China. The number of people speaking fairly competent English in China is probably much greater than the number of people in this country who speak Chinese. In my experience there are not very many people with the capacity to master both languages. I do not reflect on the ambassadors, men like, for instance, Sir John Addis, who was a great expert on China and one of our great ambassadors, and indeed our first ambassador in China. But are there many of those?
The second point I would make is on the question of living in China. If anyone is going to exercise influence, we want men of calibre who are prepared to stay there and live there from time to time over a long period of years. This applies equally to commerce as it does to official relations. I know it is not easy to persuade people to do this, but if we are going to understand the country that is essential. If I may venture to say so, far the best books on China, I believe, are written by missionaries, people who have lived there for a very long time. And indeed firms like Jardine Matheson, who have been there through thick and thin, are much more closely in touch with the realities of the country.
I am not arguing about going back to the early philosophies of Confucius any more than we go back to Plato and Aristotle in our discussions, though you can apparently still use the name of Confucius in China if you want to defeat a political opponent. Mao Tse-tung visited the tomb of Confucius, so I do not believe one can regard these as things departed from altogether. I would like to suggest this, if I may, particularly to the Foreign Office. They should not regard this as just another country. It is a quarter of the population of the world. It should really be regarded as a special case. Our relations with China must in the circumstances, I believe, always be, shall I say, sui generis, of its own kind. I do not think in any other way can we hope to meet the very wide and varied circumstances which that country will demand. I am not talking about preferences of any particular thing, but about the basic question of understanding the vastness and variety of the country.

149
I say this because I believe we have the qualities here to be able to provide something of value. We have ourselves standards of value, different, but respected, I am sure, by the Chinese. We have the knowledge of science, of technology, which they earnestly require and which they desparately need. I believe that we have the toughness. The Chinese are the toughest people in the world and they respect toughness in other people. I should like to add that in one of the more recent statements they speak of what they call "the four modernisations": industry, agriculture, science and technology, and defence.
Although the Chinese have taken certain actions through Communist channels before, I can see no sign of the Chinese wanting to extend beyond their Border at present—or should I say the Border as defined in the T'ang Empire. I must say that I believe that the anxieties which the Russians have in this respect, unless they are thinking of something like a preventive war, are wholly unjustified. In conclusion, there is a great opportunity here, and if we handle it well I believe that we can be of great benefit to future generations.
4.30 p.m.
Lord CHALFONT: My Lords, like other noble Lords, I am extremely grateful to the noble Lord, Lord Rhodes, for giving us the opportunity to debate briefly this evening the extremely important question of relations with the People's Republic of China. I should like if I may, and perhaps not surprisingly, to dwell on one specific aspect of those relations—namely, that complex of relations which involves international security and international strategy.
The noble Lord, Lord Mackie of Benshie, said in the course of his speech that the Chinese tend to see certain events in recent history as a hiccup in the broad sweep of history. It is important that we should realise that the Chinese have a different view of the rhythm of international affairs. They take a much longer view than we tend to take in the West.
I think that that was most vividly illustrated by a story which Dr. Henry Kissinger tells of an experience which he had in Paris at the time of the negotiations
150
about the Vietnam war. One evening after a long and hard day's negotiating, he and the other diplomats and politicians were sitting around in the home of their French host. They were discussing the events of the day when the French ambassador, the host, wishing to lift the level of conversation somewhat, asked whether they could have a short conversation about what had been the effect of the French Revolution on the political development of the world. He turned first to Henry Kissinger and said: "Secretary of State, could you say a word about the effects of the French Revolution on the political development of the United States?" Henry Kissinger, being an expert in this kind of thing, delivered a beautifully rounded lecture mentioning such names as de Tocqucville and Lafayette and reviewing all the political developments in the United States. It was an enormous success; indeed, so much so that the French ambassador, much emboldened, turned to the Chinese representative, a very wise and ancient gentleman, sitting next to Henry Kissinger. He said: "Tell me your Excellency, what has been the effect of the French Revolution on the development of your country?" After a brief pause the Chinese gentleman said: "It is too early yet to say."
I think that that example makes a real point, which is that the Chinese feel themselves to be part of a great historical development. They believe, as I believe also, that we are at present seeing a great and fundamental change in the balance of power in the world. I use the phrase "balance of power" not in the 19th century realpolitik sense, but in a much more practical sense. We are seeing real political and military power shifting fundamentally and we are seeing it, in my view, shifting away from the West. When I say that, I am not making some academic, analytical statement but saying that the safety of this country, the security of the Western world and the survival of our freedom are becoming increasingly at risk. That is what I mean by a shift in the balance of power.
We have only to look around the world at present to see all the evidence of that— it is clear and unmistakable for everyone to read. We can see it if we look at the changing military balance, in strategic nuclear weapons, in the land forces in

151
Europe, and in the maritime strength of the West and the Soviet Union. We can see it if we look at comparatively small changes—or so they may appear to be on the surface—like the shift of the ideological climate in Afghanistan. We can see it if we look for a moment at what is happening and what might happen— unless we are all very much more imaginative and careful than we have been up to now—in Iran, which incidentally has been the subject of the most extraordinary campaign of misinformation and disinformation and sheer misleading rhetoric in the Press and media of this country that has been seen in recent years. We can see if it we look at what is happening in Southern Africa and what might happen there if, again, we are not more courageous and more imaginative. If we cast our eyes to the Middle East, to the Horn of Africa and to almost everywhere in the world there is, for those who want to see it, evidence that the long-term security of the political systems to which we are committed and in which we believe is increasingly under threat. It is in that context that I believe we should contemplate our relations with the People's Republic of China.
In a few week's time I shall pay my fourth visit to the People's Republic in the course of the last three years. There has been a change of a fundamental and dramatic character in the attitudes of the Chinese to the outside world and I believe most sincerely that that should be matched by a fundamental change in our attitudes towards the Chinese. When I visited that country for the first time, the Chief of the Defence Staff of this country, Sir Neil Cameron, had just made a speech in which he referred to the "common enemy at the door of China and the West" and he said that the home of that common enemy was in Moscow. That seemed to me to be no more than a soldierly and accurate analysis of the current state of affairs and it caused a certain amount of uproar in this country; but shortly afterwards I had the opportunity of having a long and detailed conversation lasting several hours with General Wu, the Vice-Chief of the Chinese General Staff. I was enormously impressed by the breadth and depth of his knowledge, by the sophisticated nature of his discussion of the balance of power and the strategic factors that go to
152
influence it. He said "We may not necessarily have a common enemy, but we have common fears. You fear that your freedom and your political system may be threatened by the social imperialists of the Soviet Union: we fear the same thing. So, whether we have common enemies or not, we have common fears." He went on to say in a phrase of typical Chinese irrefutability "Therefore, as fear begins in the heart, we are allies in our hearts."
That was at the end of a long, complicated and sophisticated analysis of the strategic situation as he saw it. It seemed to me that it contained more than a grain of truth. Whatever is happening to the balance of power in the world, there is a very clearly defined and clearly identifiable common interest between us and the Chinese, but that is not to say that we regard their Communism as being any more admirable than the Communism of the Soviet Union. That is not the point in this case. The point is: whence does the threat come? As the noble Earl, Lord Selkirk, was saying a moment ago, there is no evidence of any kind that the Soviet Union poses a threat to anyone else in the world now or, in my view, in the foreseeable future.
The Earl of SELKIRK: My Lords, does the noble Lord mean the Soviet Union or China?
Lord CHALFONT: My Lords, I made a slip which can hardly even be called Freudian. I am grateful to the noble Earl. There is no evidence of any kind that the Peoples Republic of China—and I emphasise that—poses a threat, now or in the foreseeable future, to the rest of the world. I think that those who are familiar with the articles that I sometimes used to write in The Times—if anyone can remember that newspaper—will realise that that was only a slip of the tongue.
I have had an opportunity, perhaps more favourable than that of many people, to study the military forces of the Peoples' Republic of China. I am convinced that their equipment, their training, their tactical doctrine, their strategic doctrine, their deployment and everything about them indicates that they are entirely devoted to the business of defending the territory of the Peoples' Republic of China. In my view, not only do they not

153
have any intention of operating outside the boundary of China, but I do not believe they would be able to do so effectively for any length of time.
Therefore, it seems to me that, when we consider the possibility of closer relations in the military sphere with the Peoples' Republic of China, we should not be too influenced by those who say that if we arm the People's Republic of China now, we may be producing a stick with which we ourselves will be beaten before too long. In my view, it is a possibility so remote as to be almost non-existent that, even if the People's Republic of China modernises its defence forces at the speeds it intends, it could pose a threat to anybody within the kind of time scale that makes any sense of reality in international politics.
So I would simply ask Her Majesty's Government to look at the possibility of our relations with the Soviet Union——
Baroness DENINGTON: My Lords, the People's Republic of China——
Lord CHALFONT: My Lords, yes, with the Soviet Union and China. We should look at our relations in a much broader context than simply that of commercial advantage or the economic balance of power in the world: we should look at them in the context of the balance of power and the broad context of international security. I hope that the noble Lord, Lord Goronwy-Roberts, will assure the House that Her Majesty's Government have no intention whatever of being bullied by the public statements of Mr. Brezhnev. Quite clearly, Mr. Brezhnev is worried lest, for example, this country should sell the Harrier aircraft to the Chinese. Yet I think it is true to say that, if it is ever possible to distinguish between weapons designed for defence and weapons designed for aggression and offensive action, the Harrier—the Jump Jet as it is sometimes called—certainly falls in the category of a weapon designed for defence rather than for any kind of organised aggression outside one's own frontiers. I ask the noble Lord to assure us that the bullying pronouncements of the leaders of the Soviet Union will not in any way be a decisive factor when Her Majesty's Government come to make the important policy decision about whether to sell to
154
the People's Republic of China, either the Harrier or any of the other pieces of military equipment which they say they need and which I believe they need for the defence of their own country.
I also hope that Her Majesty's Government will not be too heavily influenced by the friends of the Soviet Union in this country, who, I am sure, will be lending their weight to the opposition to this kind of co-operation with the Soviet Union. In addition, I hope that whatever may be the views of Her Majesty's Government regarding the strategic arms limitation talks between the Soviet Union and the United States, they will not be too much influenced by those negotiations either. If it is suggested—as I have reason to believe it has been—to Her Majesty's Government that to engage in military co-operation with the Soviet Union might endanger the outcome of the SALT talks——
Lord BOWDEN: My Lords, the noble Lord means China.
Lord CHALFONT: My Lords, I am sorry. I have done it again.
The Earl of SELKIRK: My Lords, that is three times.
Lord CHALFONT: My Lords, I would hesitate to suggest that for "China" one should read "the Soviet Union". I hope that if this should happen Her Majesty's Government will consider what will be the advantages to this country of the Strategic Arms Limitation Agreement between the Soviet Union and the United States and what would be the comparable advantages of co-operation with the People's Republic of China.
Clearly, what is needed here, of course, is a combination of realism and prudence. No one suggests that the attitudes and policies of the People's Republic are immutable. They have changed before and they might change again. I should be the very last to suggest that we should engage in the extremely dangerous policy of playing one great Communist power off against another. Clearly, that would be the most profound folly on the part of the West; indeed, it is a policy that would be rejected out of hand by the Chinese Government themselves. They do not want that kind of relationship with the

155
West. However, they want a recognition that there is a common fear and a common threat.
In the course of my conversations with General Wu, he made one extremely interesting comment which I thought was typical of the kind of imagery that the Chinese leaders like to use, when he said "We and you are faced with a dangerous and rampaging bear". He then said "I think that we should get together; that you in the West should look after the head and we in China, should look after the tail". I pointed out to General Wu that I thought this was a somewhat unfair distribution of labour, but at least he had made his point.
I think there is a common interest and a common threat and I shall simply conclude by expressing the hope that Her Majesty's Government will regard relations with the People's Republic of China not in the narrow context of commercial relations or economic advantage, not in the narrow context of pursuing some policy of detente with the Soviet Union, and certainly not in any narrow appreciation of the Chinese as a potential threat to the rest of the world, because I do not believe they are. I believe that the threat comes from elsewhere. I hope that in the context of that threat, Her Majesty's Government will conduct relations with the People's Republic of China with a careful appreciation of the threat which now exists to the political systems of the West and, therefore, in the long term, to the safety of this country itself.
4.48 p.m.
Lord SOPER: My Lords, the House will be under an obligation on two counts to the noble Lord, Lord Rhodes, for initiating this debate. First, because it has given many of us the opportunity better to acquaint ourselves with what, in fact, is happening in the changed circumstances of China. I have no specific information at first hand to add to what has already been said, although I have tarried somewhat on the Borders of China, looked over the Wall and have taken the precaution of having a brother-in-law as a director of Matheson's. However, I am satisfied that there are facts behind the proposition that we should look at the importance of what is happening in China, and those facts are indisputable.
156
It is their importance which enables me to delay your Lordships somewhat by taking a little wider view of some of the implications which appear to me to be valid as we think of what these changes portend and what, in fact, they reflect. I heartily agree with those who have spoken in admiration of the Chinese people. It has sometimes occurred to me, ecclesiastically or theologically, that the Chinese people seem to be infected with a rather milder form of original sin than the rest of us. Indeed, noble Lords may remember that on one occasion in your Lordships' House the late Lord Montgomery, who had been visiting China, brought back with him evidence to that effect, which he shared with your Lordships.
The evidence that has been put before us this afternoon represents, I think, the fulfilment of what many of us have hoped for, and what I think is evidentially now apparent. In these 900 million people there are virtues and qualities which can fertilise the whole world; and we are necessarily the better that they have shared, or are beginning to share, most of these qualities in a larger context than that which surrounds their own enormous Cathay. Therefore, the importance of these changes, if they release into a wider sphere the qualities and the achievements of the Chinese people, whether under Communism or any other régime, is itself a virtue to be regarded and a blessing for which to be grateful.
The second importance seems to me to lie in the field of the ideological content of this change. I was brought up in the day of the great battle for the mind as between those who embraced a Christian view of life and those who accepted in broad outline the Marxist interpretation. I remember how difficult it was to contradict the monolithic idea of the Communist argument as represented by Marx—or perhaps more accurately by what Engels thought Marx had said. I was impressed by the argument, the analysis of what had happened, and I was attracted by the prophetic nature of what inevitably, also scientifically, was sure to occur.
This latest development in China is perhaps the final and necessary nail in the coffin of that monolithic concern with dialectical materialism as a scientific evaluation of the past, and as a completely

157
inherent prospect and prognosis of the future. With Berlinguer advocating something in Italy of what he is pleased to call a democratic Marxism; with Marchais in France talking in terms of accommodation with the bourgeois, and indeed the Vice-Premier of China, if that is his correct title, Mr. Teng Hsiao-ping, in a conversation with an American journalist only the other day, proclaiming quite categorically that the bourgeois had a necessary part to play in the future conduct of affairs in China and were to be lauded in so much as they played it correctly; the kind of Communism as represented by Allende—the late lamented Allende—to say nothing of the changes which have taken place within that small group, the Communist Party in this country; I take no particular comfort in saying how fissiparous is that process, but it represents in the latest events in China the total repudiation of the idea that prophetically the Communist argument is unanswerable. This is no longer so, and the Chinese people have been wise to see it to be no longer so, and are acting accordingly.
But to me far and away the most impressive and important element in this debate today is that to which the noble Lord, Lord Chalfont, has just referred. Let me introduce what I feel I must say on this particular count by reflecting that I could not find anybody in Australia, or Singapore, or Hong Kong, who entertained any hope that finally war as between China and the Soviet Union was avoidable. It was an appalling experience to find that even those who are most optimistic in other fields were calculating on an eventual conflict. For instance, the other day comment was made upon the treaty organised as between Japan and China.
Perhaps it will be of interest to your Lordships, if you are not already aware of the significance of that treaty of friendship, that in 1976 it was Mr. Gromyko who went from Moscow to Tokyo and there proposed a Treaty of Friendship and Co-operation which the Japanese were not prepared to sign unless they had returned to them the Kurile Islands, which the Russians had grabbed in the last days of the last war. That completely broke down. Thereafter, the Chinese and Japanese came together and consequently, as Joseph Harsch says in the New York Times, and I think it is un-
158
answerable, instead of Japanese technological capability being applied to the industrialisation of Siberia, that immense capability will now be applied to the industrialisation of China. And, said the Vice-Premier, "This is one of our ways of opposing on equal terms the hegemony", as he called it, "of the Russian menace".
I entertain very little confidence that that final catastrophe—and it may well be a final catastrophe—can be avoided. I take no comfort whatsoever from the conjectures offered so clearly by the noble Lord, Lord Chalfont. I have meditated on this somewhat, and I intend to say that I believe that the present situation in China calls for a reappraisal on the part of all people of the pacifist argument. I do not necessarily agree with Arthur Koestler, who may be regarded on the one hand as a polymath and on the other as a man educated rather above his intelligence. I prefer the first of those opinions. I think you disagree with Arthur Koestler, particularly in his latest book, Janus, at your peril, but I am not competent to enter into the almost metaphysical arguments which he presents. However, I find substantially formidable, and almost convincing, his argument that the human species contains within itself a fatal flaw which can be as finally damaging and lethal as was the flaw that caused the end of the brontosaurus and the sabre-toothed tiger.
He believes it is our incurable practice of violence; and that we as a human species have a characteristic in our violence which is not shared even by the most predatory of what we are pleased to call the lower creation. An army of locusts will eat almost anything except another army of locusts. Human armies consume one another. Furthermore, I remember in your Lordships' House that it was none other than the noble Lord, Lord Snow, who presented the argument that with the increase of armaments and the present "overkill" of eight times, and the fact that within the next two years 12 more countries will have acquired the nuclear capability, the prospect, nay the certainty, of an accident with incalculable consequences is almost as certain as any calculation can possibly be.
I therefore believe that we are set upon a course which, unless it is varied and radically changed, may well prove both

159
Arthur Koestler, and the noble Lord, Lord Snow, as correct. I have no enjoyment in saying these things. I believe that the proliferation of arms and the execrable business of selling them is part of a fundamental process in our human make-up, of which the arguments so admirably presented by the noble Lord, Lord Chalfont, are a confirmation, and lead me to the conviction that in any discussion of these matters on such an occasion as this it would be totally improper to leave out that which is unquestionably a minority movement, and perhaps a very small one. I believe that the world is waiting for some community voluntarily to reduce to the point of non-existence its capacity to kill. If you say to me that this is crackbrained and Cloud Cuckoo-Land, I find no comfort in what is called the realism of the present situation.
I find that situation increasingly dangerous, and I just make my own statement of belief that we, who have been prepared in the past, to take such inordinate risks in the field of violence, depend for our future on our readiness to take appropriate and comparable risks, which might indeed produce immediate results of a very unfortunate and unpleasant nature. It could redeem this world from a process of inevitable catastrophy of which, it seems to me, the Chinese people at the moment are increasingly aware and are at their wits end to know how they can postpone this, though they cannot prevent it.
They believe—here I heartily agree with the noble Lord, Lord Chalfont—that there is a balance of power which can be achieved as between an emergent China and a more or less, from the point of view of arms, fulfilled United States. I believe this polarisation is lethal and mortal and, whatever may be the reaction of your Lordships, I cannot forbear to say that in my view the hope of the future is for human beings in China, America and the Soviet Union to say to themselves, "We have embarked on processes which are finally disastrous. We must at all costs abandon those processes". I have the cherished and perhaps foolish opinion, but nevertheless the real and sincere one, that in our reactions now to a changing China nothing could be more helpful and fruitful than to set an example which these
160
magnificent and wonderful people could follow and, in following, might well persuade even the most violent to follow in their stead.
That is my belief, and I think it should be included in any conversation on the emergent situation in China, of which China is the representative of a revolutionary situation in the whole world; and the pacifist attitude, difficult to understand, even more difficult to practice, seems to me to coincide particularly with the Advent season on which we have now entered.
5.2 p.m.
Baroness VICKERS: My Lords, I am sure all will sympathise with me in having to speak following two such great orators as the noble Lords, Lord Chalfont and Lord Soper. I am tempted to join in this debate first because I wish to congratulate the noble Lord, Lord Rhodes, on his excellent report and, secondly, because I have had the opportunity of visiting China on two occasions, once in 1961 and again in 1973. I had the opportunity in 1961 to go entirely alone, which was advantageous because one sees far more in that way. In 1973 I led a Parliamentary delegation and we were very grateful to the ARIEL Foundation for their financial support.
I wish therefore to take this opportunity to thank my Chinese hosts for their hospitality and to say what a tremendous change I found between 1961 and 1973. There was greater prosperity, an increase in consumer goods, a healthier population; even the schoolchildren seemed to be taller, because they had been better fed, and the economy had improved. I also found an enormous difference in the approach of the Chinese people. For example, in 1961 one always had to interpret through a Party official. On the later occasion they were much freer and we are delighted to see from reading our Press that British correspondents can now tell us directly what is happening in China; in other words, the Press is much more open.
The fact that Lui Shao-chi and Teng Hsiao-ping are freely mentioned by name is very interesting, especially now that the latter is the Vice-Premier, Deputy Party Leader and Deputy Chairman. I suggest that in coping with this moderation programme, it appears that China is

161
concerned with the problem of devolution without impairing the strength of the communal cohesion and participation which has been painstakingly built up since the foundation of the New China in 1949, and it is important that these two should go side by side.
I understand that Mr. Eric Varley expects to visit China in the New Year to discuss projects which will carry forward economic co-operation between Britain and China, and the draft agreement reached during the visit of the Vice-Premier, Wang Chen, during November whereby both countries aim to achieve at the end of 1985 a level of trade in both directions which will, I gather, total between 8 and 10 billion dollars should be helpful to both countries; and when one discusses the question of defence—and, as Lord Soper did, the future—one must think what the present will be for the people, and we want to try to help to raise their standard.
I notice that both France and China have succeeded in getting large contracts to help the people of China. A particular point I wish to raise with the Minister is the lack of good reception we give to Chinese officials when they come here. When, for example, their Ministers go to Belgium they are met by the King and Prime Minister; in other words, they get the red carpet treatment. In France they are met by the President. Regrettably, we do not give them the red carpet treatment when they come here, and I would suggest that a Minister, the Marshal of the Diplomatic Corps or somebody similar, should undertake to receive them because the Chinese are a very proud people and they have been received so much better elsewhere in Europe than has been the case in this country.
I should also be grateful if the Minister would comment on the controversial issue of arms sales to China. Was this matter raised at the European summit? I gather that President Brezhnev warned France and Italy about what he called the dangers of selling arms to China, and, following what Lord Soper said, I should like to know whether this matter has been raised and what has been the outcome.
It might be advantageous to mention what is happening in this country—what action we are taking here—because there
162
have been a great many outgoing organisations. I believe the noble Earl, Lord Selkirk, mentioned the learning of Chinese. He will be pleased to know that recently 22 British postgraduates, 20 on scholarships, and six undergraduates have gone to China for over a year in connection with the language question. In addition, five English language teachers and eight delegations have come here to discuss this question. I understand we are to have the pleasure of receiving 14 incoming delegations, including the Foreign Minister, Mr. Huang Hua, and Mr. Wang Chen, the Vice-Premier. Also, at the invitation of the Minister of Education, it is anticipated that Mr. Lui Hsi-yao will be coming this year. One matter which the delegations have particularly asked us to deal with is the question of librarians, because they say—as we have heard the Russians are doing—they are still reading Dickens and they want to know something about more modern books. Accordingly, they have invited a number of writers to go to their country to give lectures, and I believe that will make for a better understanding between our two countries.
Another organisation, the Chinese People's Association for Friendship Countries, has recently visited here and Europe. The Arts Delegation, which produced six members whom I had the pleasure of meeting, was sponsored by the Chinese Ministry of Culture and they were received in Britain by the Great Britain-China Centre. I had the pleasure of seeing an excellent film of young people playing modern music, European music with one exception, and a charming boy aged eight playing the violin. While we may not be able to speak the language, we can get a lot of understanding by means of these musical entertainments because we both understand the same musical language. I gather that about 1,000 students will be coming for science, language and the humanities. I am sure that will be very popular here with us; we will entertain them and interest them, particularly in the humanities, as I am sure Lord Soper would agree. Furthermore, delegations are now going out to see about hotels—Wimpey in particular— and agricultural machinery.
It is interesting to note that the Chinese are being asked in their own country to achieve a degree of industrialisation in

163
22 years which took the nations of Europe more than 100 years to achieve. This will require unique working arrangements and the setting up of institutions. There will be far-reaching effects on the Chinese economy resulting from large-scale introduction of foreign technology and industrial plant. I understand that there are some 10,000 Chinese scientists and engineers already training in Western countries. It has been estimated that China will have to invest about 30 billion dollars for each 10 billion dollars spent on industrial plant. The burden will be enormous, and we wish her success.
As Britain is still a member of the EEC, I should like to refer to joint action with EEC countries. There is now an ambassador from China, Mr. Li Lien-pi, in the Community, and Sir Christopher Soames (as he then was) visited China in 1975. As a result of that, in 1978 there was a trade agreement between the EEC and the People's Republic of China. Getting together is of very great advantage, and I understand that this may mean that there will be a joint trade commission which will provide the right type of mechanism for future trade.
China is estimated to possess 30 per cent. of the world's main mineral resources, and Mr. Wang Jun-sheng, who visited Europe in 1977, stated that the Chinese Government would welcome proposals from European firms in particular for the exploitation and marketing of these raw materials. I consider that the EEC might, like Japan, have a barter agreement, exchanging plant and capital goods for raw materials. The possibility of an EEC consortium of equal partners doing business with China would be preferable.
I turn now to the question of technical needs. China is intending to triple her steel output to 60 million tons, to develop 10 iron and steel complexes, eight coal mines, 10 oil and gas fields, 30 power stations, six trunk railways and five harbours by 1985. This will mean tremendous activity on her behalf and, I hope, considerable help from Europe as a whole.
New market situations require new marketing concepts, and the EEC-China agreement should help both China and the EEC. The Europe China Association
164
has been formed, and I have just been told that I am to be the future president of this organisation. My contact began with a dinner party in the House of Lords and the annual general meeting held in London. I am sure that your Lordships will be delighted to know that now there is an international summer school which meets in Lady Margaret Hall, Oxford. Last year the theme was Ideology in China, Past and Present. I am sure that the noble Lord, Lord Soper, will be pleased to hear that one of the lecturers was on Christians in China, and other topics included Chinese communism and traditions, and China past and present. This year's meeting of the school will discuss China, medicine and the West. So I believe that we are trying in this country to gain better contacts. I should add that at the seminar there will be German-speaking Chinese, French-speaking Chinese, and English-speaking Chinese who will give classes in learning Chinese, a point which was raised by the noble Earl, Lord Selkirk, and which I agree is very important.
I should like to end my speech by quoting what the noble Earl, Lord Bess-borough, said in a debate in this House on 30th November, 1977; as reported at column 1296 of the Official Report:
"The leaders of China are looking for a response from Europe … It is fundamental that in defining the European response the efforts of Community firms should not be stymied by political hesitation … that a political impulse should be given to Europe's relationship with China that engenders confidence, encourages initiatives, results in increased understanding and reaches for mutual esteem".
I am sure that everyone will agree with those last two words, that we all want to have mutual esteem, and I am quite sure that that is something we have in this House.
5.15 p.m.
Lord BOWDEN: My Lords, the only possible reason that would justify my intervening in the debate is that I was a member of the small group of people led by Lord Rhodes on our excursion in the month of June. I must begin by paying a tribute to him, our leader. He was immensely impressive. He organised the whole affair himself, and on more than one occasion when we met some of the senior Ministers—men whom I would regard as being as tough, as hard-hitting, and as fearless as any statesmen in the world

165
—he was able to hold his own, and in some cases give them rather more than they had expected. We were enormously proud of Lord Rhodes as an ancient warrior who knew from personal experience what it is like to be a trader, a warrior, and a statesman. We were most indebted to him.
It was for all of us a quite extraordinary experience, and as the noble Lord, Lord Mackie of Benshie, has said, it is only when one actually goes there and sees the place that one realises how enormous it is. The most striking single figure I can recall is that in the age group 20 to 50, which is reckoned to be the productive age group, the number in China exceeds the number in Russia, in Europe, in the United States, and in Japan put together. Furthermore, not only is there an enormous number of them, but those whom we met were acutely intelligent, diligent, and, what is more, in a very fundamental sense, disciplined and enterprising in a way which seems to have been forgotten in England since the end of the last century. They had supreme self-confidence. They knew what they wanted, and they had every confidence that they would achieve it. They seemed to be the most extraordinary workforce that this world has ever seen, and there is no doubt at all that whatever happens they will find a way to employ their talents and achieve great things. This is a most important first observation to have made.
There is no doubt at all that the whole economy of China is beginning to burgeon, but at the same time it is equally obvious that it is still in a rather primitive condition. For example, they desperately need to extend their irrigation works. Only about a year ago they finished a system of irrigation on a river which was first tamed by a man who has now become almost a saint and who started work about 2,000 year ago. However, they still need to invest greatly in irrigation, in the building of factories, in the improvement of agriculture, in the construction of coal mines, and in the development of airlines, railways and roads. In other words, they have an enormous problem to increase the effectiveness of their infrastructure before their manufacture can really begin. This seemed to me to be the most important single lesson we learnt. There is an enormous number of men and women
166
anxious to start work on the modernisation of their great country. Since 80 per cent. of the population work on communes, they are acutely aware of the dangers that would come from too speedy a mechanisation of agriculture which led to the possibility of 100 million unemployable Chinese in shanty towns all over China. No such thing has happened yet, and they have adopted a. rigorous policy for controlling the mobility of labour so that a man can hardly leave his commune until he has an assured position to which to go in a town.
Thus they are aware of the dangers of too rapid mechanisation. They have seen the effects that this has produced in other parts of the world, and they have learnt as best they can from the mistakes of the whole of the rest of the world, including in particular the mistakes of Russia. They know that Russia based its revolution on the assumption that the industrial proletariat must be the pacemakers, and they saw what happened to the agriculture of Russia as a result. They themselves have based their revolution on the supremacy of the farmers because they know perfectly well that the whole of the efforts of the rest of the world would not suffice to feed China were they unable to feed themselves.
Their agriculture is improving its efficiency, but it could be much better. More irrigation, more fertilisers and a certain amount of mechanisation would doubtless do wonders for it; but for many years to come the majority of Chinese will inevitably have to work on the land, as their ancestors have done for the last 3,000 years. They are aware of the fact that although, as they realise, theirs is the oldest of all civilisations, they have been surpassed by some countries of the West in productivity, and they are most anxious to make up the arrears.
When I was a young student I met an elderly Chinese physicist who told me that in the history of the world China had been the pre-eminent Power in armaments, in science, in the arts and in the fine arts except for brief periods of 100 or 200 years, during which other countries had temporarily taken the lead. He said, "We are in such a period today, but it will not last. If you do not see it, your children will—the day when China is again the greatest Power in the world". Having

167
seen the country and seen the rate at which it is developing itself, I am inclined to think that he was right. The Central Kingdom was to the Chinese the centre of the earth, and all other countries came to pay tribute to it.
Their ways are not our ways—we must accept this. For example, in Peking I was in a room almost the size of this Chamber, and I was told that it was a very historic room in which the final examination for the mandarinate took place. For more than a thousand years the Chinese chose their governors by a series of competitive written examinations. The particular point of this room was that the top dozen men in the final examination were brought in here to be examined again; they were put in order; and from the best candidates the Emperor chose the men who were to marry his daughters. In those days, Chinese Emperors were very much married men and every year they tended to produce a crop of marriageable daughters, and they were married off to their senior civil servants.
I asked our guide what happened if a particular couple had got together and the man who came out top wanted to marry the second daughter in order of age. He said that so far as he was aware this problem had never arisen in the whole of the history of China, because as far as he was concerned a civil servant who was offered the opportunity to marry the daughter of the Emperor married the daughter of the Emperor and did not argue about which daughter of the Emperor he married. This is perhaps evidence of a rather different attitude to life from the one which we have in the West, but they thought it perfectly normal and undoubtedly it worked for them. So I say that their ways are not our ways. They have selected their civil servants for a thousand years by requiring them to write what I can best describe in modern equivalents as essays, let us say on the quantum theory, in sonnet form—an extraordinarily taxing problem which they thought chose men able to go out and govern a Province. But I stress the point that, although some of their ways seem to us to be odd, they are the most numerous and the most industrious workforce in the whole world.
168
That brings me to the problem which was raised by the noble Lord, Lord Chalfont, and the noble Lord, Lord Soper—the fear that the Chinese have of Russia. It seemed to me to be terrifying that they were prepared to contemplate an almost inevitable conflict, and they thought of it in terms of a battle in which the Chinese would defend themselves against Russia to the last Englishman and the last Frenchman. They felt, in fact, that they must ally themselves to Europe in order to contain Russia. I wondered very much whether in fact they had developed this almost hysterical fear of Russia because of a belief as a nation that at this particular stage in their development they had to have an external enemy, or an internal enemy like the Gang of Four, against whom to unite the people. They contemplated the possibility, they said, in case of war, that not only the populations of Western Europe but perhaps 400 or 500 million Chinese might be killed; and they thought that if that happened the survivors would be able to recreate the civilisation of China, which they felt to be the best in the world.
I feel that the argument that we should be prepared to let them have Harriers may perhaps have justification, but far more important is it, in my view, to help them to develop their industries, to help them to become rich, to help them relieve themselves of the fear that they are going to fight someone else merely to survive. They have, I think, an immense potential to become rich. They are a very cheerful people, and they are very willing to be friendly with us. I found in talking to them that in many ways they are, of all the oriental people I have ever met, the most like us in understanding, in background and in the way they think. I hope so much that we shall be able to exploit this fact to our mutual advantage, and that we shall not allow ourselves to be totally overwhelmed by this terrible fear they have of Russia and this desire they may have to destroy Russia even at the cost of the destruction of Western Europe as well as themselves.
Now, I should like to pass to one or two other points which became very obvious to us. The first is that, anxious though they may be to buy from us the best that our technology can give them in

169
the form of, let us say, new equipment for coalmines, new equipment for diesel engine factories and, most particularly, new equipment for their armament factories, much more than that do they want the ability to build these things for themselves. They would not in any circumstances contemplate a situation in which, in the long-term, they were wholly dependent on the Western World for what they regard as essential commodities or essential tools with which to create commodities. They need—desperately they need—to learn how to do it. That is why they are so terribly anxious to develop the contact—about which the noble Baroness, Lady Vickers, spoke a moment ago—with our universities. They want to educate their people in the technologies in which we, really rather to their surprise, have the advantage over them at the moment.
They want us to help to educate their students, and they are prepared to send their students over here. But, to me, one of the most encouraging things of all concerns their universities. Their university system (I can perhaps be rather crude) is, I should say, about as big as ours, their population being perhaps 20 times as big as ours. Their universities, such as we saw—we saw very few—are perhaps as well equipped as ours were 20 years ago, but not so well equipped by any means as ours are today; so they know that they have a long way to go in developing their universities.
They therefore feel that there is much to be gained by collaboration with our own Open University. Three of their delegations have been over to see it already, a couple of ours have been out there, and I think about half a million Chinese have already been exposed to some of the text books which the Open University has at its disposal. Here, I think, is a wonderful opportunity for collaboration to educate men who can create the great industries which China will undoubtedly have before long.
We saw—and we were extremely fortunate in this—several of their schools for young children. I was absolutely amazed at the vigour, the skill and the charm of the little children who sang songs for us, who danced for us and so on. It was extraordinary to find a small girl
170
of about five years of age who came in and, with an enormously loud, clear voice which would carry right through the Albert Hall, announced that the children were going to sing. I wondered then, when I saw them, how they would ever be able to go and work in a paddy field or in a textile mill with this wonderful ability in the arts. I discussed this and they said, "We like to let them do this sort of thing now and we hope that, however long they live, they will continue to do it, as a hobby." They are capable of changing themselves and of rising above the enormously laborious work which they have had to engage in for so many thousands of years. They are capable of mass efforts which are sometimes extraordinary.
Perhaps I may give your Lordships one example. As you know, much of Chinese farming depends totally on irrigation; the dreadful disease of bilharzia spread all over China. It depends on a snail which haunts these irrigation ditches and which carries the parasite which produces the disease. About five years ago, one small county in China discovered that it was possible for them to exterminate the snails in their own ditches—and, therefore, to kill bilharzia. They triumphantly announced this to Chairman Mao. He said that he was so moved and excited by this information that he could not sleep. He rose at three in the morning and wrote a poem. You may think this a rather unimportant consequence; but six months later nearly 700 million Chinese were in the ditches, up to their knees in mud, exterminating snails—and bilharzia, apparently, has now been virtually eliminated, as have many other of the diseases which used to afflict the population; and to such an extent that one of our hosts at the hospital told me that they had the greatest difficulty in showing to their medical students cases of such diseases as tuberculosis, malaria, bilharzia and smallpox which had been destroying the population only 20 or 30 years ago.
They have made enormous strides forward. They are, potentially, the greatest nation in the world and we, as a small island off the shores of what is a small peninsula of the great landmass of which China forms part, must take note of them, help them all we can and hope to join with them in the prosperity which can be theirs. And we must—and this is

171
more important—do all that we can to try to prevent the holocaust which otherwise is held to be inevitable.
5.33 p.m.
Lord ENERGLYN: My Lords, on the 19th day of May, 1906, the San Andreas fault quivered and 700 Americans lost their lives in San Francisco. That became the most dramatised and publicised earthquake of the world. In 1920, an earthquake shattered the province of Kan Su and annihilated 200,000 Chinese. Seven years later, the same province was shattered by another earthquake which eliminated another 100,000 Chinese. And yet that province is as densely populated today as it was then. That anecdote, I suggest, illustrates the indifference of the English-speaking world to China; because scarcely a mention will you find in the Press of those Kan Su earthquakes. There was one in the 16th century which is alleged to have destroyed 800,000 Chinese. That is the kind of environment in which China has built up its culture and its philosophies over thousands of years. As the noble Lord, Lord Bowden, has said and emphasised with great clarity, they are people we must learn to live with but, above all, as the noble Lord, Lord Mackie, said, we must learn to respect and to acknowledge them never as inferiors but at the very least as equals. Certainly, culturally, they have a greater claim to fame than ourselves.
To me, China has always been one of the wonders of history, a part of the world that has always been on the defensive. It has never been really aggressive; it has been invaded but never destroyed and never really conquered. The whole history of China, as the noble Lord, Lord Chalfont, has been at pains to point out, has been one of defence, defence against intrusion. And it is really vitally important, as all speakers have pointed out, to recognise that China is not a threat to the peace of the world but that her peace has been threatened by the world. It would seem to me that we must be careful not in any way to approach China with any idea of hope that we can exploit them. That should be furthest from our minds. As the noble Lord, Lord Bowden, pointed out, we have certain things to offer which may accelerate the industrial development of China and, as Lord Chalfont has
172
assured us, this development will not be a threat to the peace of the world.
If I may be permitted to enlarge on that theme, I would make one or two other comments. The first is that my long association with Chinese geologists has always left me with a deep sense of gratitude and humility. I have always found greater ease in talking philosophically with Chinese geologists than I have had in talking to German geologists. It is, therefore, clear to me that any suggestion that we who talk about the natural resources of the earth from either a cultural or a practical point of view will receive great understanding from the Chinese. They think as we do. Therefore, I have no hesitation in making, through your Lordships' House, one or two suggestions. The first is that they would understand such a comment as this: that we of the West who invented the methods of mass production of iron and steel—Bessemer and all that—have come to realise that these techniques have come to the end of their day. They are too dependent upon natural resources like metallurgical coke which have rapidly become wasting assets; and we must move into a new field of metal extraction which employs the use of electrical furnaces. Conjoined with these, you must have cheap, abundant and reliable electricity, and, in addition, an understanding of how metals are being created in the earth's crust and which can be simulated in an electric furnace.
It is this kind of technology which, happily, we in Britain have at our disposal. In fact, we are its originators. It is a new form of metal chemistry which involves metals and organic matter and, in particular, waste organic matter, even town refuse. Utilising this biochemical knowledge, we are now able to demonstrate exactly the same processes that produce pure metals in meteorites. I shall not give a lecture on meteorites; I merely mention them because our Chinese counterparts will understand this philosophical approach to a whole new area of industrial development. The noble Lord, Lord Bowden, says that they will get there anyway in the end. Why should we not accelerate their progress by placing at their disposal all the advantages that we have in this country? We know of various ideas—yet we cannot develop them in this small island—such as the

173
conversion of coal into fertilisers, the release of biogenics from coal which accelerates plant growth several times, the release of trace elements on a balanced form in coal to create fertilisers. Why should we not give to the Chinese all this academic information which they can use, although we cannot do so? There would be no better way of cementing friendship without any trace of political influence involved by giving to them the products of our developments in this country and in Europe as a whole.
This brings me to another important point which is their sad belief that they are going to be invaded again, and they will need more food and more iron and steel for defence. I have mentioned new methods of accelerating the production of iron and steel and the creation of iron and steel furnaces which are different from things one sees bandied about in the Press today. They do not want another disastrous type of steel plant such as we have in South Wales, shockingly out of date and of limited life. What they want are the arc smelters which we can produce almost overnight for them.
When one looks at China as a vast exposed area of the earth, one has to remember that the great divide between China and Russia is the Himalayas. This is not without significance because the southward push of the crust which created the Himalayas has engendered into the rocks of China a tremendous network of minerals of great variety, far greater than is to be found in the more placid areas of the crust of Russia or America—a little like what happened in Cornwall but magnified a million times. So one can see in China the potential of all kinds of mineral resources. China need not be short of one single metal, it has the lot.
One may ask: "Does Russia know this?" It may come as a surprise to your Lordships that the geological maps of China are far better than the geological maps of America. They know where everything is; and the kindest thing that we can do for them is to go out there and accelerate what they will eventually get to know anyway. I was delighted that the delegation to China was led by the noble Lord, Lord Rhodes, because he symbolises everything that is British. I am not surprised at the success of this delegation. Those who have not read the report should
174
do so because it is a remarkable one. In conclusion, I am delighted that the noble Lord, Lord Goronwy-Roberts, is to reply. He too symbolises to the Chinese all the best that we know as British.
5.44 p.m.
Earl DE LA WARR: My Lords, before I begin my speech I must declare an interest. My company sells flight simulators to China. Why this interest has to be declared will emerge during the course of my speech. I should like to join others in thanking the noble Lord, Lord Rhodes, for his splendid initiative which comes at such a timely moment. The history of alliances throughout the ages has been one, whether between nation States or great empires, of kaleidoscopic shifts. History tells us that normally these shifts in alliances have not been brought about by a community of ideologies; they have been brought about by mutual convenience and mutual self-interest. Some of them have been warlike and some defensive.
We are privileged to be watching the start of one of the great shifts of interest in history, something that will be a watershed, something that can alter the face of the whole world if only we in the West are astute enough and sympathetic enough to grasp the hand that has been held out to us. The context of this shift of opinion on both sides is the massive Russian imperialism with which we are faced. I do not think that this is the opportunity to go into this in detail. I shall content myself with reminding your Lordships that the Russians have in the field the largest land army that has ever been known in peacetime in the history of the world. I will remind the House, too, that at the rate they are producing submarines they bid fair within a short time to be in a position to control nearly absolutely the sea-lanes of the world by which we conduct our international trade. In these terms, the Western anxieties, the Western fears, have exactly the same quality as those of China. They are simply this: Both of us fear a land invasion by the Russians and at the same time a devastating sea blockade.
The only difference in our outlook is one of geography and not of ideology. For the reasons which the noble Lord, Lord Chalfont, gave so lucidly and so

175
admirably, I believe that the case in terms of Realpolitik for helping China to at least defensive parity is unanswerable, if that is a phrase—defensive parity—which the strategists would allow. Defencewise, the Chinese want from us just one thing: they want the Harrier. Your Lordships will now realise why I felt it proper to declare an interest. I beg the Prime Minister to hurry up with making up his own mind and that of his Cabinet. I beg him that he will not attach to our agreement to supply them terms that are too onerous for the Chinese to accept—terms either commercial or which will cause loss of face. We cannot afford to wait very long for this decision to be taken.
Before I leave the strategic aspect, I should like to ask the noble Lord, Lord Goronwy-Roberts, whether he can help us over one matter which is bound to arise; that is, the running of the COCOM list. We all know that this list is an integral part of the Atlantic Alliance and that it is directed against the Communist countries. I know it will be difficult for the noble Lord to answer at this stage because there is a hypothetical element; but, if he could give us some indication of how the Government could deal with this not uncomplicated situation, I think we should all find it very interesting.
If the supply of arms represents the bricks of a defensive alliance, then surely trade is its cement—the thing that binds it together and gives it a lasting life— but I think we must remember that the Chinese trade approach has not been to the United Kingdom alone. We already know that they have an agreement with Japan. They have been to the whole of the West. We are not regarded, as I think the noble Lord, Lord Rhodes, advised us, as number one in terms of suppliers. I believe it was only two or three weeks ago that a trade agreement was concluded by the Chinese with the French, who are very adept over the supply of goods and know-how, and also sometimes at forms of undercutting, of which we do not always approve. So, my Lords, in short we have to pull our socks up if we are to get our share of trade, our share of the export of goods and, perhaps more importantly, our share of the export of know-how of which we have so much.
176
I hope that your Lordships will not think it immodest of me if I tell you something of my own company's experience. We have been trading with China for some eight years and have been selling them flight simulators for their civil airlines. We had to find out for ourselves the mechanics of trading with the Chinese Government. We are now dealing with one of their Government buying agencies —specifically the engineering agency— and we have found that now we know the ropes it is all quite simple. We send our high-level salesmen and service engineers to look at our machines and see that they are looked at very regularly. We are discussing with them at this moment the supply of simulators for rather more modern aircraft; up till now it has been the 707 and the Trident.
We heard from the noble Earl, Lord Selkirk, and from another noble Lord— I have mentioned this myself —something about the importance of the supply of know-how. It may interest your Lordships to know that our nearly wholly-British-owned television station in Hong Kong is during the next few weeks sending a delegation, led by its managing director and top engineers, at the request of the Peking Government to a number of big cities all over China, some of which are not normally visited, in order to see what they are doing and, I believe, to give them advice on how they may expand and improve their service. I believe that this is a very real thing which is being done now in supplying in the field of communications a form of know-how to China.
This leads me to devote just a few minutes to Hong Kong, about which, if I might say so, too little has been said in this debate. Legally, Hong Kong is a British Crown Colony, but in fact it is something pretty different. It is a sophisticated financial and trading centre. I am sorry that the noble Lord, Lord Rhodes, called it "an anachronism", for I do assure him it is no such thing. During the course of his speech I noted he said he had come to admire it, but it seemed to me that his admiration had a certain amount of reluctance about it, if I may say so——
Lord RHODES: My Lords, let me squash that straight away. I am an enthusiast. I have been there 12 times.

177
I admire them for their initiative and their enterprise. With regard to the word "anachronism", I think that most colonies are anachronisms nowadays.
Earl DE LA WARR: My Lords, I am delighted to hear that I am largely wrong, but perhaps I could confine my comment to noting with regret that he should have used the word "anachronism". However, the noble Lord did say—and I should like to repeat this because it was a phrase told to me for the first time while having lunch in your Lordships' House with that great man, Sir Lawrence Kadourie—that in Hong Kong they regard themselves less and less as a colony and far more as what has now come to be known as "the free zone of mainland China". If your Lordships will think out that phrase, there is indeed a wealth of meaning behind it.
On their own account, by themselves and without any encouragement from this country, in the last few years Hong Kong has been growing very much closer to the Chinese. As some of your Lordships may know, the Chinese—that is, Communist China—have over 100 department stores in Hong Kong. Some of your Lordships may know already that the Bank of China has nearly as many branches in Hong Kong as does the Hong Kong Shanghai bank. They have a machine tool factory and they are just about to build a ship-repair yard. On the other side of the penny, Hong Kong is becoming a rapidly increasing outlet for China's exports. It is becoming a rapidly growing provider of finance for internal Chinese products. Indeed, there is at this moment a big project being looked at for the provision of a chain of luxury hotels in all the main cities in China. This is all coming from Hong Kong.
Finally, I should like to refer to something mentioned by the noble Lord, Lord Rhodes; that is, the magnificent deal which is just on the point of being signed, which has been the dream for 30 years of that great man Sir Lawrence Kadourie, who is the chairman of China Light and Power, by which China Light and Power will build a power station in Hong Kong which will get its coal from mainland China and in return will probably supply electricity for nearly the
178
whole of the Kwantung Province. It is to be hoped that much of the equipment for this station will come from the United Kingdom. The Hong Kong Standard reported today that this agreement was just about to be signed, and there is a quotation from Sir Sidney Gordon, the deputy chairman, who is also my own chairman in Hong Kong, in which he confirms that this is about to happen.
What a great exercise in tripartite effort! Hong Kong is highly crientated towards the United Kingdom. Believe me, my Lords, it will play an enormous part in the expansion of trade with China, which has been the subject of this debate. But we can rely on the British connection only if our products, our services and our know-how are at least as good as those of our Western competitors, and I hope that this lesson may not be readily forgotten. So let us ensure that, both politically and commercially, we in the United Kingdom take the fullest possible part in this great new twist in the affairs of the world.
6.1 p.m.
Lord DAVIES of LEEK: My Lords, I apologise to the House for having to leave. My usual custom, if I take part in a debate, is to pay courtesy to the other speakers and sit through it, but I had a special meeting of the Procedure Committee which I had to attend. Hence, having made my apology, I shall not feel guilty for having missed some of the excellent speeches.
After listening to the noble Earl, may I say that his contribution has been constructive and full of realism. I suggest to noble Lords that they pop into the Library and pick up a copy of Le Figaro, and read the article by M. Robert Lacontre "La revanche de Teng", But what is happening? At the end of the article, M. Lacontre writes "It is one of the great mystifications of the century".
The noble Earl asked a pregnant question. He asked: What will now happen to COCOM? It is a long time since I tried to get Tridents sold to China. It is a long time since I had a discussion at the Foreign Office. Having knocked around that part of the world, I was often told to take a slow boat there and stay with those little yellow men. Suddenly, everybody is on the bandwagon, and I hope that a

179
wheel does not come off. We could not sell the Tridents because I suggested that they get a second-hand Trident from Pakistan, which they did. I never made money out of East/West trade, and I did my job full-time as a Member of Parliament. But there were opportunities to sell motor boats. "No" said COCOM. "No", said the United States of America. "You can only sell a motor boat with a forward screw. It must not be able to reverse". So we lost the opportunity of snuggling up to this mighty nation during its great Marxist period. Probably, we are all Marxists now.
Lord O'HAGAN: No.
Lord DAVIES of LEEK: My Lords I did not ask for any contradiction. I asked for acceptance of the reality that we are snuggling up to the Marxists now. That is a fact, so do not say "No", unless you are going to agree that we have an open door. It has been pointed out by the noble Earl, who has experience, that China is trading with other nations. There are 150 other nations which are now on the Chinese bandwagon, and the British public, the British trade union and Labour movement, British capital and the bankers must realise that there is no sunshine movement into China for our goods, unless they are the tops, of first-class specification and delivered on time. If the British trade union movement and British capital want this market, they must honour contracts on time. We are not playing with a nation that is half soaked. It is a nation of the most shrewed people in the world.
I have had the opportunity over the years of knocking all round China from Outer Mongolia to the borders of Tibet, and seeing these people and admiring them, though not agreeing with all. They, too, can be cruel, just as we accuse the Russians of being cruel. Their prisons, too, have had political prisoners. Now those prisoners are being released. So the first thing, if we are doing this, is to have a conference of COCOM. It is no good blinking.
When we had a Question last week about selling a sophisticated piece of a computer to Russia, I wriggled in my seat behind the Front Bench when I found that the Answer was that we could not sell it.
180
Yet only a couple of weeks earlier, Russian airmen and American airmen were fraternising 1,000 miles up in space in the most sophisticated machinery in the world. Come on, come off it, unless we still want to walk about in the cold. If we do not sell to them, West Germany will. Let me give your Lordships a concrete example. We lost the penicillin market because it was considered strategic: the Chinese ultimately manufactured it themselves. We lost the ballbearing market, because we would not sell them ballbearings. They were strategic.
Foster Dulles and his ilk helped to keep this alive when he composed the domino theory. What has happened to the domino theory, under which all the Chinese were going to swarm, in hordes —those were the words then, not a great race—into Malaya and Indonesia. What has gone wrong? It is history . It is one of the quirks of civilisation that the friends of the last war are the enemies of the next. That is what seems to happen in the history of mankind. Man is a strange creature one of the nastiest animals on earth, which fouls its nest and destroys beauty. It is time that mankind steadied up, before we destroy this race of human beings.
Lord GLADWYN: My Lords, is the noble Lord really correct in his explanation of the domino theory? As I understand it, the domino theory was not the idea that the Chinese would invade all the surrounding States, but rather that, one by one, the neighbouring States would become Communist.
Lord DAVIES of LEEK: That is right, my Lords. That was the domino theory. The finger that pushed the dominoes belonged to the Chinese, so that they all fell down from the impetus of the Chinese. Thank heavens! for the then Sir Anthony Eden. I remember the Geneva Conference only too well, where there was a civilised Chinese leader, Chou En-lai. We had an agreement on peace. It is in Sir Anthony Eden's book Full Circle, on I think, page 113, which tells how he dealt with Dulles whom I called the Flying Bedstead of the Pacific. Every time he visited somewhere, he wrote a book about it after 48 hours there. This was a bad period and the advice from the Foreign Office and from the French was bad.

181
But having said that, I will pay tribute to the Foreign Office. Let us remember that during all that we put the steadying brake on the worst of America's financial approach to Asia. It was Ernest Bevin who, despite all the others, recognised the Chinese and we had a chargé d'affaires here in London when most of the Western world had not done it. That was a period in the Foreign Office when there was a common-sense approach. I shall not go into retribution, although I could. Now we have changed, thank God! But where are we to go from here? I am delighted with these improved relations, and I am more than delighted that my noble friend took the initiative. But I will tell your Lordships what worries me. If they did not want the IPU to back a visit to China, because the Russians are members of the IPU, let us make it clear that we cannot sever all our relationships with the mighty Soviet Union just because we are going to sell a few jump jets to China, unless we find that they are completely daft. There would have been no Europe as we understand it today but for 20 million dead Russians after Stalingrad and 35 million injured. Do not, in all the euphoria, forget that the Russians got the Jews out of Buchenwald.
Let us get the balance right. The Russians are no angels, nor are the Chinese; and the British are certainly no angels. Let us adopt a manly approach to the problem. Let us sell the jets. Let us get rid of these silly, so-called strategic limitations on sales. Let us improve our labour and capital relations. I do not want to name barks, but there is a magnificent opportunity for banks with courage—Warburg, Lloyds and others— to give trade credit to the Chinese nation. The noble Lord spoke of the imbalance in trade. The answer is easy. The Chinese do not have the currency. They need currency. Therefore, I pay a tribute to humble traders like Mr. Timberlake, with his monthly letter—which has been going on for years—on trade with China. Nobody has taken much notice of these traders, but they have courageously gone on building up little bits of trade and large amounts of trade and getting a foot into this market.
However, we should have no illusions. Britain is no longer a great Empire. Our goods will sell only on their quality and
182
merit. There have been great changes since the death of Mao in 1976 and the death of Chou En-lai in 1976, and also since the Nixon period. Whatever I may think of that gentleman, I do not intend to make any derogatory remarks about him, or to go into other issues. However, that was a vital leap forward which enabled the West to make new contacts with China. I should be a fool if I were not prepared to admit the greatness of that piece of diplomatic—not expediency, but greatness at that moment in history. Whatever else may be said of President Nixon, that is a medal which he can worthily wear on his chest.
We would not sell rolling stock to China, and that makes me laugh. I went by train from Peking nearly to Hanoi in a first class carriage. We could have sold China rolling-stock from Crewe, but, no, it was strategic. Therefore I travelled in comfort from Peking right to the borders of Hanoi, a four and a half days' journey——
Lord BROWN: My Lords, railway carriages have never been listed as strategic by COCOM.
Lord DAVIES of LEEK: My Lords, my noble friend should not argue with me. Rolling stock—must I repeat it?— was on the strategic list.
Lord BROWN: No, my Lords.
Lord DAVIES of LEEK: My Lords, we would not sell rolling stock to China, but the Hungarians did. What point is my noble friend trying to make?
Lord BROWN: My Lords, I am correcting a mis-statement.
Lord DAVIES of LEEK: My Lords, if my noble friend believes that, we are both making mis-statements. Why was this? It was the same bad period. We missed the opportunity to go and see what they wanted. We could have sold millions of 2¼ horsepower pumps to save women carrying baskets with water in them from the rivers. We sold a few of these pumps in Laos, and I watched them working. They had a couple of soldiers guarding one. It was beautiful but pathetic. Those pumps would take that kind of labour out of village life. We could have sold

183
millions of them, but they too were on the strategic list. We had to argue with COCOM. But let us skip that, since I am skipping three-quarters of my speech to please noble Lords.
Let us get a few facts about the EEC on the record. I want to pay a tribute to the noble Lord, Lord Soames, although he is not in the Chamber, for the efforts which he made. The EEC does not, however, mean something for nothing. Conditions are made and they have to be kept. Since the cold war we have moved from table tennis diplomacy to across-the-office-floor diplomacy, which is a much more peaceful and hopeful sign for the world. Let us hope, therefore, that the sale of the vertical take-off fighters will not upset the Vienna talks and the movement towards peace in the Western world.
We cannot sacrifice the whole of the Western world to make a success of an attack on Russian Communism. What kind of civilisation do noble Lords think would be left in the world if there were a war in which 400 million people could be pushed into the earth? For Heaven's sake! wake up. Do not adopt that philosophy. According to an article in Le Figaro, Robert Lacontre says that Teng Hsiao-ping thought that Mao had become metaphysical. We have de-Stalinised Mao, and now we are forming a system of society that socialises the losses and privatises the profits in China, too. Think that sentence out! The Chinese businessman is one of the most honest of his kind in the world when it comes to paying his debts. So are the Russians. The old Manchester Guardian always used to say that Russian debts were paid on the nail. Chinese debts are also paid on the nail. We are dealing with a nation that is sophisticated when it comes to making payments. It is a nation of merchants. Therefore we must pull up our socks.
If I may speak about the EMS, there is a mythology regarding money which we have had since the 1930s. I have studied the May report for that year. One can pick it up today and read the same facts about imports and exports. The value of money depends upon the honesty of the workers, people and capitalists in the country in which they live, and nothing else. "A good day's work for a good day's pay" is an old-fashioned phrase,
184
but it is the basis of the security and soundness of our monetary system. We can disregard crawling pegs, snakes and all the marvellous expressions that the theorists put forward. That phrase is the basis of our security, and we can achieve it by means of trade in the Oriental parts of the world.
I shall end by saying this. The Chinese are poets, and their invective is wonderful. The very phrase "The Gang of Four" makes your back bristle straight away. The radical leaders—Chiang Ch'ing, who is the widow of Mao, Wang Hung-wen, the Vice-Chairman of the Communist Party, Chang Ch'un-ch'aio, a Vice-Premier and Yao Wen-yuan, a member of the politburo—were all in the Gang of Four. I hear people running around the Lobbies here shouting "The Gang of Four", but I do not think that three-quarters of them know who the devil they were, or what they did, or why they got into trouble. Let us skip all the euphoria, all the expressions. Despite everything, Mao will always be thought of with other great leaders as one of the leaders of mankind who changed world history and helped to topple the American, British, French, Portuguese, Spanish and other imperialism in South-East Asia.
A tribute was paid to China by Sir Harold Thompson, a Fellow of the Royal Society and Professor Emeritus of Chemistry at Oxford, and by Lord Bessborough, in excellent lectures to the Royal Society of Arts at which I think my noble friend was the chairman. They were excellent lectures. In his lecture Sir Harold said:
"A struggle developed in the Academy of Sciences between those who supported Mao and those led by Liu Shao-chi whose arguments were that scientific research was not in line with the country's needs".
That period has now gone. Sir Harold also paid a tribute, as did my noble friend, to the improving standards in the universities and of course Truman had the last word. There was a time when Chiang Kai-Shek was a friend of Britain and Truman said what he thought—we can read his life and his book. He said:
"I never changed my mind about Chiang and his gang. Every damn one of them ought to be in jail, and I'd like to live to see the day they are …"
That is rough talking for an American President and if we had not listened to

185
MacArthur we might not have had the same Chinese Communist trouble and we might not have had the dead in Korea. I stood in Korea with my hat off one evening when the sun was sinking in the West over the graves of the Gloucesters and the others: what did they die for? MacArthur was going over the Yellow River and then it was through Clement Attlee and the great Winston Churchill who flew out to stop the dropping of the bomb over the Yellow River. After that MacArthur was sacked and this is what Truman said about it. MacArthur, the General, dominated all thinking and Truman said:
"I fired him because he wouldn't respect the authority of the President. That's the answer to that. I didn't fire him because he was the dumb son of a bitch, although he was, but that's not against the law for generals. If it was, half to three-quarters of them would be in jail. That's why when a good one comes along like General Marshall—why you've got to hang on to them and I did …".
We do not talk like that about our Generals or our Admirals—God bless them!—but the Americans have a different idea. They allow the Generals and the Admirals to dominate their thinking. Do not let euphoria dominate our thinking about China. China is a great nation, she will need our help but she has 150 other nations who are willing to help her if we do not. If we want to help her, work well and do well, because you will get nothing for nothing.
6.23 p.m.
Lord GLADWYN: My Lords, I could not agree more with the noble Lord, Lord Davies of Leek, in regard to what he said about President Truman. I always thought he was the greatest American President, far better even than his predecessor, and I had personal experience of some of the things that he said and did.
I should have liked very much to take up what the noble Lord, Lord Soper, said about the necessity "or pacifism. I think that one day we ought to have a debate on that—whether the theory of absolute pascifism is valid or not, and if not, why not—and perhaps on that occasion there might be more of the right reverend Prelates on the Bishops' Bench to explain the view of the Church. I do not myself altogether share the pessimism of the noble Lord, Lord Soper. I think that the theory of Arthur Koestler, that there
186
is something inherently vicious and aggressive and violent in human nature which will actually lead it to destroy itself, like the brontosaurus, is derived from Oswald Spengler, who said that man is a beast of prey, a Raublier, rather deriving in its turn, I think, from Nietsche. It is a philosophical conception, but I do not myself believe that it is true. If it were true, then of course there would be no use being a pacifist because everybody would be eaten up by the aggressive human beasts irrespective of whether they were pacifists or not! So I do not believe in that, nor do I believe that the nuclear war is inevitable. I think it is quite possible that the horror of dropping the bomb—although of course one might be dropped by mistake—will probably put people off it or at any rate the great Powers, and they will never employ this horrible weapon. I think therefore that it is something that will ensure, if not peace, at least nuclear peace.
Having said that, I should like to thank the noble Lord, Lord Rhodes, for initiating this debate. I read his report, to which my noble friend Lord Mackie of Benshie contributed. In fact all the members of the delegation expressed their view and I found it immensely interesting and stimulating. Indeed, I believe the impressions gained by that delegation were not very dissimilar from those of the mission with which I was associated, namely, that led by the noble Lord, Lord Chalfont, when we arrived on the scene a little later. Anyhow, since I was never in China before, your Lordships might, for the next 10 minutes or so, bear with the first impressions of a complete non-expert. It is said sometimes that first impressions are the best! Let us hope so.
Well, the first and the chief impression that I received was the absolute, or apparently absolute, sincerity with which nearly all the people we met—and of course they were either people who were attached to our mission or officials of one kind or another—violently criticised the cultural revolution, which was usually associated, for fairly obvious reasons, with the activities of the Gang of Four. From what they said, and indeed from what I have read elsewhere, and notably in the highly interesting and brilliant book entitled Chinese Shadows by a Belgian sinologue called Simon Leys, the cultural

187
revolution was a national disaster amounting in certain districts almost to a kind of civil war. Very little was heard about this disaster in the West, and indeed I think many outside Chinese specialists were often led to believe, and possibly from ideological motives, that all was well and that the new China was going from strength to strength. If they thought that they were certainly wrong.
Basically, the cultural revolution seems to have represented a continuing effort, especially after Chairman Mao had been, as it were, affected by his age, to impose an ideological straitjacket on the whole Chinese nation which it was not willing to accept, and for some time that rigidly Marxist philosophy was reinforced by a sort of "emperor worship" or a reversion to the most ancient Chinese concepts. But after the death of Mao that magic obviously could no longer work. In any case, the totalitarian and levelling prejudices, if they may be so described, of the leaders of the cultural revolution evidently led to increasing discontent in all sections of the people, especially among the intellectuals. Perhaps this first impression was wrong, but the main thing I noticed was literally the passion with which the critics of the old order expressed their views.
Naturally, it cannot be denied that under the Maoist régime, whatever its failings, there were considerable successes, and the rigorous Marxist policy was in fact tempered from time to time, particularly perhaps under the influence of the still discredited Liu Shao-chi. In particular, of course, food was produced in sufficient quantities to feed the population, the health of the people also seems to have been excellent on the whole, fairly successful efforts were made to keep the birth rate down and some of the highly labour intensive public works were indeed remarkable. But it must be admitted that all this was at the expense of almost all the amenities of life and, above all, of every vestige of freedom. By all accounts too, industry was pretty inefficient and, as we know, the armed forces were deprived of all kinds of modern weapons and thus remained, and still remain, very largely out of date.
So the real question now seems to be whether the new and welcome emphasis on
188
freedom will be compatible with the huge new national industrialisation programme which is to be carried out, it would seem, largely with the aid of foreign money and no doubt also with the aid of foreign techniques or technicians. In theory there is no reason, surely, why this should not be so, even though we may have doubts that the progress will be as rapid as the present Government appear to think. It all will depend, presumably, on the general maintenance of order. We must all wait and see how the new political freedom, for such it is, is going to be translated into reality. There can be very little doubt, as I think has already been said this evening, that a kind of communism will continue, and the main question is, can it be Communism with a human face?
I think it was Napoleon who said that China was a sleeping giant and had better be allowed to go on sleeping. I believe his actual words were:
"C'est un géant qui dort; laisse le dormir".
I feel that, ever since the Communist victory in 1948, the Chinese have been such a giant, not wishing to have any contact, if possible, with the wicked outside world and only asking to be let alone to work out their own salvation. During the 19th century and right up to the end of the Second World War foreign Powers did their best to, as it were, drag China into some form of industrialisation on their own terms; that only produced, as we all know, misery and chaos. China then went once again for 20 to 30 years into isolation; and now, after about 30 years introspection, she is certainly striding on to the world stage, with what actual result nobody can possibly say. It seems that she is looking for help to Japan and to Europe. I should hope that there will be general agreement in this House, at any rate, that we for our part should do anything we can to help her in her forward march.
The second impression I had, and it was a very definite one, was the immense fear which all Chinese seem to have of, I will not say the Soviet Union, rather of the Russians. They all said that, of course, World War III was inevitable, but after considerable arguments General Wu, to whom Lord Chalfont referred, said, "Well, it is inevitable, but it may be postponed", which comforted us to some extent. I said, "You really must not

189
say, even if you believe it, that World War III is 'inevitable' because that has a very counter-productive effect on your European friends. "They said perhaps they would modify that; but they did say, and what I think Wu's view is, was that although World War III will almost certainly come it will probably not be a nuclear but a conventional war. If you think that out there is a good deal to be said for the general's conception; anyhow, I would have thought that myself.
In any case, since they are obviously terrified of the Russians, one of the things they want is to be helped in the build-up—and they cannot build them up themselves very much because they have not enough money—of their armed forces; enough, shall we say, to slow up any possible conventional attack on them from the North, to slow it up before the main parts of the Yangtse Valley, and so on, can be occupied. Even if it is occupied their argument is that the Russians would eventually have to go back to Russia, but that is another matter. Clearly what they want to do is to slow up this potential conventional attack. One of the things they have set their hearts on for that purpose is the purchase from us, because we are the only people who produce it, of the Harrier so-called jump jet aircraft. This cannot possibly be described as an offensive weapon. It would be no good in the almost inconceivable event of China attacking Russia. It could only be of any use if the Russians conventionally attacked China, and that is why they want it.
No doubt we will have to get the formal agreement of our allies, notably the Americans, but I believe that the Americans are willing. Perhaps the noble Lord who is to reply will tell us if that is so or not. Possibly the West Germans may have objections on the grounds that such a sale might irritate or provoke the Russians; more particularly, as Mr. Brezhnev has said, our relations with the Soviet Union would suffer if the sale was effected. I hope and believe that the Government will not be influenced by such considerations. Harriers are a weapon which might be used in the event of some invasion of China, but not otherwise. So I hope that the Government will tell us tonight that there is nothing to prevent a sale as far as they know.
190
The idea that the Russians are suffering from a sort of claustrophobia and that if the Chinese are built up in any way they may one day feel bound to strike out, I find rather silly. How can you suffer from claustrophobia when you dominate the world from the Elbe to Vladivostok and have a very considerable chance of extending your influence right through the Middle East and then on to the middle of Africa? I hope when the Minister comes to reply he will tell us that the deal regarding Harriers is probable in the months to come, and that in any case aid to China in the difficult task of building up their armed forces is desirable, Soviet threats or no Soviet threats. Surely it is a good thing in principle for Europe to find firm friends somewhere, and I may say that any rebuff to the Chinese in regard to Harriers, which I think could very easily come about if we failed to sell them, would be a very serious matter. Why should we do it when this friendship is, so to speak, offered us on a plate?
I only add in conclusion that I, like my noble friend Lord Chalfont, very much appreciated the extreme friendliness with which we were greeted everywhere, even in places like Irumch the capital of Sinkiang where we saw the immense agricultural developments beside the Tienshan mountains and everybody working with sickles in apparent contentment. There, when we went into the stores, everybody flocked around and were interested and anxious to talk. There was enormous interest and friendship which I think was not just put about by the Government; it does exist and we ought to profit by it. We do not know, of course, what is really going on behind the scenes. What foreigner does? But that the largest, and in some way the most intelligent and most hardworking nation in the world, is now embarking on a new course seems, at any rate to us on these Benches, to be certain, and I believe that we in the West should do our best to help it on its way.
6.39 p.m.
Baroness WARD of NORTH TYNE-SIDE: My Lords, I can assure you that my contribution will be very brief, and I think a little odd. First, I should like to congratulate the noble Lord, Lord Rhodes, on his most excellent speech and all the

191
information that he gave us. The reason I put down my name to speak today was because during the war I was sent out to China to help them. I think I am right in saying that none of the people who have been out to China fairly recently or during the last few years were out there at the time of the war. I remember very well, indeed, when I was in another place that we sent a small Parliamentary delegation out to China. The Chiang Kai-Sheks were, of course, in power then, acting like warlords in their administration, and Madame Chiang Kai-Shek was asked whether she thought it was a good delegation. She said, Yes, it was a good enough delegation, but there was not a woman on it. So while I was in another place our Whips of that day rushed round, and they suddenly said to me, "You go!" Therefore, I was flown out and it was a very dangerous flight, because of course I and the passengers who were with me were chased by the German airforce; when we flew over the hump to Chungking, with the brilliant American pilots, there I was. Therefore, I reached there chased by Japanese planes and, on the whole, it was rather a frightening period.
However, like the noble Lord, Lord Rhodes, when I finally arrived I admired the Chinese. By that time, of course, Peking was in Japanese hands. They had great problems, but they remained extremely friendly towards us. I can remember so well the first speech which I made to them after my arrival. I explained to them how short of everything we were after fighting the Battle of Britain. They understood the situation so well. I have always been delighted to have been a friend of the Chinese and I hope that I shall be for a long time to come.
I am rather sorry that I am now too old to return to China because I should like to see the development that has taken place. During the debate mention was made of the immense new bridges that have been built over the Yangtze. I remember that when I was in China we used to travel about in a bus and the bridges were so fragile that we never dared let a bus cross them with the passengers inside. We always had to get out and walk over the bridges. However, the Chinese were beginning to learn and it must be remem-
192
bered that they had never really come into contact with all our technical developments.
I also remember that at that time they were just beginning their education system. I was asked to go to some of their universities which I was extremely delighted to do. However, the people who came did so not to listen to me, but to get food because the Chinese at that time were very short of food.
I have enjoyed listening to the debate and I am very glad that in the future we shall be able to help the Chinese in their magnificent development. We have had a very long debate and there is nothing more that I should like to say, except how much I admire their success and how much I am delighted to know that they will continue their friendship with us. It is a magnificent country and the Chinese will do much towards helping to bring about stability in the Far East. It is marvellous to have a friend like China. I am delighted to have been able to listen to the speeches that have been made this evening, and close by saying goodnight and God bless the Chinese.
6.43 p.m.
Baroness DENINGTON: My Lords, I am sure that we are all deeply grateful to the noble Lord, Lord Rhodes, for putting down this Motion provoking this interesting debate. Just a year ago, having always had great interest in Chinese matters, my husband and I were trying to understand from reading articles and newspapers what on earth was going on in China. During the ensuing year there has been a great deal more information, but at that time there was very little. We decided that there was nothing to do but join a study tour as a tourist and in that way try to have some kind of look for ourselves. It is because of that experience that I am on my feet now.
Noble Lords and the noble Baroness, Lady Ward of North Tyneside, have referred to the modern developments such as bridges, hydro-electric schemes and irrigation schemes which have taken place. They are all extremely wonderful, but basically China is still a peasant nation and that is something that we must never forget. The Chinese toil incredibly hard and they do so with their picks and their shovels, because there is no mechanisation

193
at all. The removal of mountainsides to transform tiny narrow terraces cannot be achieved mechanically, but only by human labour. Those narrow terraces are changed into vast open fields where they can, when they have the wealth, put a tractor. They move mountainsides, they channel water and they fill in gulleys. They are revolutionising and entirely changing even the face of nature to meet the needs of man. It is all incredibly impressive. They are planting mountainsides, which up to now have been barren, with fruit trees, mulberry trees and so on. I stood and I looked at all that they were doing and thought to myself: What motivates them to work so hard?
The answer is that for the first time for centuries they have been freed from poverty, depression and the oppression of the landlord who has taken most of their crops—crops being their wealth. They are free for the first time from the threat of hunger. We met a man who, as a young child, had eaten the bark of trees during the famine and had been sold by his parents. Parents sold their children and their wives to people who were able to feed them because that was the only way of keeping them alive. That man is now about 70 years old—but it is hard to judge the age of such people when they work so very hard. Those changes have taken place not in human memory but in the lifetime of one man.
Mao, of course, distributed the land to the peasants, and that is the spark of the motivation. They must provide from their crops a certain quota for the State to feed the city people and so on. But after that the surplus that arises from their labour can be sold for the benefit of their own commune and their personal benefit. We were very interested to learn that they had money in the bank, that by their standards, they are becoming wealthy, and that they receive interest on their money in the bank. That was a revelation to me because one could not find that out from anything that one read. Having changed the face of nature and provided these wide open fields, they can now, with the money that the commune makes, get a tractor. There may be only one for miles around, but there is a tractor relieving the people of terrible human toil day in and day out. That illustrates the changing face of China.
194
There is an absolute ferment of activity taking place in the countryside to the people's obvious great satisfaction and pride but they are still retaining their basic values. The rhythms and basic relationships between man and man and man and nature give satisfaction, balance and stability. Now this basically peasant nation is in a tremendous hurry to equal the living standards of the West, to mechanise and to be equal with any of us. For far too long they have been cut off from the world and that is not entirely their fault. I think that we in the West have a good deal of responsibility for the fact that the Chinese were inward-looking—for example, they were not allowed in the United Nations and so on. Now they are in a great hurry. My fear is that the haste with which they want to reach our standards is likely to bring with it, or could bring with it, not only the problems from which we suffer—the problems of unemployment, of greed and of the "I'm all right Jack" mentality—but also problems arising from a new and different way of life for them, a way of life quite different from anything that they have experienced in all the centuries of their civilisation.
The rapid change in their lifestyle may so undermine their natural standards of behaviour that many of the values on which their traditional patterns are based may be weakened, and even, I found myself wondering, destroyed temporarily. We saw the sort of behavioural madness —and I can only call it that—that swept over them in the so-called cultural revolution, when they smashed things up, and they now deeply regret doing so. I fervently hope that the traumatic changes which they are about to go through— because this new way of life has hardly started yet—will not lead to violent swings in one direction or another. I think that that would be temporary, because; so great is their tradition of civilisation that after a while they would return to normality. I am really trying to say that if we see them going off the deep end—if I may be allowed to use such an expression—in one direction or another, let us be tolerant, let us wait and let us watch, and I think that they will return to sanity, as they have now.
Of course, much will depend on their leadership. It will depend not only on the political leadership but on the officials who are in charge and who, as we all know, in

195
every society are extremely influential. I believe it was the noble Lord, Lord Bowden, who said that they seem to be aware of the problems, and I think that they are aware of the problems. Recently a delegation visited us in our new town of Stevenage and I spoke to them there. It was plain that they do see the problems. However, it is one thing to recognise the problems but another to be able to deal with them.
I see the problems facing them falling under two headings; namely, technical and social. I shall deal first with the technical side. As we have all said, we should and we can offer every help. As we have said in this House this afternoon, in helping them we help ourselves. I think that our technicians and our salesmen will need patience. Some I have met have said: "It is terrible, you go mad because you can never, never get an answer. You wait months when there are jobs waiting to be tackled, but you cannot get an answer from the top because everything has to be referred up and up". I mentioned this when the delegation visited Stevenage. They said: "Yes, we know. We are aware of it. It is a very difficult problem. It is a matter of education because we have not yet had time to educate enough people who can be given responsibility and who can take profound decisions in the localities. But we are aware of it". I think that they must be very aware of it and should move on it as fast as they can.
However, it is in relation to the social problems which I can see arising where we can also help. Many of them—in time, all of them—will move from excessive toil to very considerable leisure. I would remind noble Lords that we, who think that we have been civilised for quite some time and who think that we have been educated for quite some time, have not yet learned as a people to use our leisure well. We see far too much mindless violent and destructive behaviour all around, do we not? We hear youngsters saying that there is nothing to do—and we have educated them from the age of five to 18 or even beyond. From our experience of industrialised life I think that we can make the Chinese aware that damage can be done to society by industrial modernisation. For instance, the car is both a blessing and a curse, is it not? It can so easily destroy city life, and the Chinese
196
should control it before it does destroy city life. Industrial pollution has killed the cherry trees in Japan, has created smog and has polluted the rivers. The Chinese must control it before it overtakes them, I and be aware of it from the beginning.
The lifestyles and patterns of their civilisation must not suddenly be swept away by building Western-style housing, because it would not be suited to their family pattern at all. I do not want to see their people what I call "pigeonholed" in warehouses, as our people are here and on the Continent. I pray that they do not allow their cities—and I think that they already worry a great deal about Shanghai—to become too big and, therefore, teeming with urban poor who have lost their social values, their sense of neighbourliness, community and all the rest. Unless they are aware of it and unless they control it, that could happen. However, I think that they are aware of it.
My husband and I went to the old capital of Sian on the silk route. The Chinese did not know who I was and I was asked by the guide whether there was anything that interested me particularly about which I should like to know. I said that I was very interested in planning and they arranged an afternoon with the city planners in Sian. They did not know I was coming, but to my astonishment they talked most knowledgeably about the London plan for its eight satellite new towns, and even about the details of the Stevenage plan. That was quite fantastic. Therefore, let us not underrate their study and what they know.
In their progress into the 21st century I sincerely hope that we shall refrain from assuming that our patterns of government are necessarily right for them. Other noble Lords have made that point here this afternoon. Maybe they can develop a non-violent society—a controlled society—that can move ahead along an agreed path after open discussion. As I said before, much will depend on their leadership. I think it will help if we allow some of the antipathy that we have to Communism not to prejudice our evaluation of what happens in the coming years. I have sensed what to me is an extremely helpful and wonderful attitude on this subject in this House this afternoon. I feel deeply grateful to have

197
been present to understand it. As a nation let us keep an open mind and have sympathetic understanding of and give support to the struggles that lie ahead of the Chinese. Together with other speakers, I believe that China has a great part to play in the future development of mankind towards a real civilisation where violence is not a dominant ingredient. I hope that this small nation of ours will give every assistance, to our mutual benefit and our mutual honour.
7 p.m.
Lord FULTON: My Lords, I should like to say how grateful I am to be allowed to speak after the last speaker, the noble Baroness, Lady Denington, because I think that she said some things that I have felt to be missing in the course of the debate hitherto. I would be tempted to say let us call it a day: we have had a wonderful explosion of opinions and a very interesting debate, for which we have to thank the noble Lord, Lord Rhodes. But I put my name down to speak in the debate in large part out of deference to him. He conceived the project for a Parliamentary Mission to China; he raised the finance for it; he organised it, and, let me say, splendidly led it; winning the affectionate admiration of all its members and giving great and obvious pleasure to our Chinese hosts.
As your Lordships have had explained to you, one due that he firmly exacted from each member of the party was to write under a strict time limit a short piece giving his impressions of a first visit to China. Indeed, it was a request to which there was only one possible answer, and I think nobody defaulted. Although some of us—myself included—would, after three or four months, be tempted to change a good deal that one wrote at the time, I think Lord Rhodes is generous enough to be gratified by that because it is a sign that his initiative is still alive and fertile.
None of us had visited mainland China. Like the noble Lord, Lord Rhodes, I had been some 14 times to Hong Kong, but never onto mainland China. We saw only a part of its Western territories, so a proper humility is due from those of us who underwent this initiation: due as it would be from one who ventured to address your Lordships' House about the United States of America after a single visit which took
198
in only New England and the eastern seaboard, omitting altogether the deep South, the Middle West, and the Far West beyond the Rockies.
Of course one is not conscious of China only because one spent a week in it. It is one of the great issues of modern life. It is not new in modern international politics. We have disagreed with our American allies in our appreciation and explanation of the role of China in the world, and have put forward different suggestions for its incorporation into international machinery. But there is also, apart from its omnipresence in modern politics, a great wealth and a scholarly body of knowledge and writings about it.
I am not repeating idly the basic statistic that came from Lord Rhodes early in his speech: the population of China is variously estimated at around 900 million and one in five of the human race. It is variously estimated to rise by the mid-1980s to some 1,200 million plus or minus. It seems to me that the important fact to remember is that 83 per cent. of that population is rural, and engaged in agriculture or its ancillary occupations. The noble Lord, Lord Mackie of Benshie, our agricultural expert, has spoken from his special vantage point about the quality of the cultivation that we saw on our journeys, or were shown in the large communes we visited.
The great Chinese question of the future is the question of its agricultural industry and its organisation. I am not being critical but I think we have too readily assumed, in our discussion this evening that China is just like us but minus our industrial competence. China's agricultural background is its being, and I took away that impression not only from travel but from my talks with the young men with whom we had dinner and who opened their minds to us in a very frank and illuminating way.
What shall we see in the new China that we have talked about? Is it going to be a re-enactment of the history of agriculture in North America? The noble Lord, Lord Chalfont, did us a good turn by repeating the story of Henry Kissinger about the time-span of the Chinese. If you have lived and cultivated your civilisation for that number of thousands of years, being 20 years behind is not

199
awfully important, and that is what some people have said is the gap. We have to look forward and ask where this fifth of the human race is going in the next century. Look what has happened to America. Again I apologise for very brief statistics. There, a century ago, three-quarters of the population was rural and living on farms and now, by the application of modern technology, less than 30 per cent. of the population is rural and the farm residents comprise less than 5 per cent. of the total population of the Union.
If industrialisation is the objective—and America is a good enough example—is that what they are out for? Is that what they want to do in the course of the next century to the continent they inhabit? Do we really think that those who stood on board the ships going into New York and lifted their hands and saluted the Statue of Liberty, and all that that great nation stood for in the vision of the Founding Fathers, would feel that the exodus from the farms of the United States and the journey into California have been a realisation of that vision? Or have they not? I should be very much inclined to ask the question whether the Chinese—in my understanding of them, and I stand open to correction—really just want to go for industrialisation for industrialisation's sake.
Of course they know they have something they value, and feel that the rest of the world has not got, in their agricultural social organisation. I think they would be prepared—they said it; Lord Rhodes will confirm this—in the defence of what they have got (their Chinese nature, and Chinese history and civilisation) to lose 100 million, 200 million, 300 million, 400 million. But then there would be 400 million left not in order to become industrialised for the sake of industrialisation but for carrying on what China has stood for.
So that I think we cannot just suppose that they are saying, "Let us have industry. Help us to get industry." That is one scenario. It may be so. It may be that you have to take steps in order to defend yourself—and the Harriers may be part of them—which take you on a road from which there is no turning back. But I do not think I detected that they had
200
already given in to the idea that that was an inevitability, and that they were prepared to make that sacrifice, or would do it.
I was reminded, in listening to some of the earlier speeches, of a tea party that took place in Oxford when I was a young don there, with the noble Lord, Lord Redcliffe-Maud, and the noble and learned Lord, Lord Hailsham of Saint Marylebone. We gave a tea party to Mr. Gandhi. He had come to England for a round table conference and we felt very sure of ourselves. He explained that we had not treated India very well—that we had left it poor—and while my memory is rather defective now and I cannot remember precisely what the average wage there was, let us say it was 2p a day. He said it had to go up to 4p, to which we replied, like dons to a pupil, "Has the world not learned that if you go from 2p to 4p you will want then to go to 8p and from 8p to 16p, and so on?" Mr. Gandhi replied, "No, that will not happen to us," and we agreed to differ. Unfortunately, he did not explain how it would be done when he said, "We are going to stop the process at a certain point."
I want to know—I should still like to find out by further exploration of the literature and consultation with the Chinese—what they feel to be at the root of the civilisation they want to defend at all costs, and in regard to which they invoke our help to hold on to. It is just possible that they might give the answer; perhaps there is another scenario to the one we have presented to ourselves in this debate. Will China, by its own choice, offer a new example and remain a primarily agricultural society, practising and improving the world's oldest industry, perhaps marginally emerging into the competition of the world's markets in manufactured goods to satisfy, for its own needs and purposes, including its defence, the means by which it will defend them, but basically remaining a people satisfied with the life of the countryside and with the values and social relationships which go with that, enhancing the traditional skills built up and transmitted over the millenia?
We have talked a good deal about the commune. It seemed to me that perhaps the commune was the best existing guide as to what they are after. In almost the whole of the rest of the so-called develop-

201
ing world—I know Africa a great deal better than I know China—the attraction of the city is the enemy of building a sound agriculture. In China the life of the commune uniquely keeps a hold not only on the agricultural workers but on the teachers, doctors, engineers and on the other managerial and professional men and women in the satisfying use of their professional talents and skills.
It is true, and we must face it, that there are in force in the communes restrictions on the movement and choice of occupation reminiscent of our wartime restriction on engagements, orders and the direction of labour. The question is whether these are part and parcel of an underlying acceptance of the life they make possible or whether they would be rejected with increasing freedom and prosperity. The evidence of one's eyes in such a situation must be regarded with great caution. However, what I saw—I think I can say what we saw—suggested no surliness or resentment. If one offered a smile one got a warm and welcoming smile back. What seems clear beyond doubt is that Mao's Communism—this should be said with great force—is poles apart from the Marxist form of Communism in the USSR.
There can be no dictatorship of a city proletariat in today's China because no such city exists. The commune's property as the noble Baroness, Lady Denington, pointed out, is the property not of the State but of the members of the commune. Its prosperity is their prosperity. The individual may hold private property, as she said, and he may own his house and a proportion of his income may come from his own labours in his cultivation of the smaller animals and their products. There seems no room for doubt that Mao meant what he said when he proclaimed that no policy should be enforced on the communes that did not appear to them to be clearly in the interest of their members. That was a tremendously revolutionary statement which, so far as one can see, he lived up to to the letter. This is the sharp point of distinction from the organisation of the Soviet State.
Granted it was Mao's intention to intervene to prevent the new China drifting into a direction like that of Russia, what are the prospects in the
202
future for his successors? Lord Rhodes has worded his Motion well in referring to the warmth of our country's relationship with China. Let us ask ourselves what we would wish China's part to be in the world—not what we would wish to do to China—of the 21st century. I leave it to others to discuss the questions of military power and power politics. Equally important is her influence on men's ideas of how best they should live their lives.
What has a small country like ours in common with the world's colossus? We have been for a long time at the forefront of the world's stage. We have emerged from an experience of empire that was unlike any empire produced in the history of the world by any of our human predecessors. It had a lot to be said against it that has been said, but it was not there for the making of money, it was not there to stay and it was not there to hammer into uniformity people who were created different and diverse in their talents and purpose. We have emerged from that experience, by which we were largely moulded, with a strong feeling of being different from our neighbours, whether in Europe or across the Atlantic.
That is not an anti-EEC remark but, rather, a gift we might give to the EEC— that diversity can be maintained in a form of union. Thus we are perhaps able to look with understanding and sympathy on the prospects of a China persistently inward-looking, absorbed in itself, unwilling to surrender to the uniformity of modern industrial invasion of human activity, determined to resist interference from outside, but equally satisfied with its traditional way of life, and prepared for great sacrifice, if that was necessary, to maintain and improve it.
I must confess that I gained from the contacts that I made a sense of an underlying detachment from the values of the world outside China. If there were time I should say a few words about how that is reconciled with China's appearance in Africa, particularly in the role of giving a helping hand to Julius Nyerere in his particular endeavours, in which he has greatly relied upon their assistance. How China's emergence into the world's market place—with all the convulsions that would bring it about, all her maintenance of self-containment in international organisations

203
and international affairs—goes will be of profound importance for the rest of us. If they choose not the path of growth, like that of the super-Powers and of most of Europe, perhaps the world will be enriched in other respects by China's, and possibly India's, example. What is important, particularly for us in our present predicaments, is to learn to emulate her in the strength of her convictions that she has her own role and her own purpose.
The strongest impression left to me from so stimulating an experience is the envy—that is not the right word, but I must use it—of such a prevailing confidence. It may be that we shall take from the next phase of China, and our relationship with her, a recognition that beyond the importance of earning our living we have lessons worthy of being taught to others, which we learnt over the centuries of our own history.
7.22 p.m.
Lord POLWARTH: My Lords, we have had an extraordinarily good debate and an extremely important one; I think it has been one of the best that I can remember in this House for a long time. If I had any sense I would at this stage simply strike my name off the list of speakers. However, I do not intend to do so for two reasons: first, there is the simple point that I have come all the way from Scotland in order to speak, and it would be a great waste of the taxpayers' money if I were not to do so; and secondly, the voice of commerce and industry has been singularly silent in the debate, with the notable exception of the contribution of the noble Earl, Lord De La Warr, and I suspect of the contribution to come from the noble Lord who is to follow me.
A year and a half ago the deputy chairman of the Bank of China, Pu Ming, visited Europe and came to London. Some of your Lordships may have met him. He also visited Scotland, and I had the honour of being his host at lunch at the Bank of Scotland. It was an extremely friendly occasion. Nevertheless, at that time, so soon after the discrediting of the Gang of Four and the death of Chairman Mao, how little could we have foreseen the extraordinary opening up of China which has taken place in the 18 months since.
204
That visit of Pu Ming's was followed by an invitation to us to visit China, and I am glad to say that in June of this year the visit came about. In going there I had, I believe, two advantages. First, I was to go not as one of a large official mission, meeting large numbers of ministers and top officials, but in a group of only four, with therefore more time to look around and observe what was going on in general in the country. Secondly, my wife was able to go with me, which was an immense help in every respect, not least because she had spent some time living in China as a child 40 years previously, and had vivid memories of life there at that time, which she confirmed was in many respects not all that different from what she found upon going back. The visit was admirably organised in every detail, and our hosts and guides could not have been more helpful and courteous. Altogether it was a memorable and momentous experience.
Now, less than six months later, we have reached a milestone of very considerable significance on the road to closer trading relations between our two countries. When the noble Lord, Lord Rhodes, did us the great service of putting down this Motion for debate, I doubt whether, even with his prescience, he could have foreseen what was to take place here in London today. The noble Lord, Lord Davies of Leek, in a most refreshing contribution, asked, what about the banks and the opportunities for them? I can tell your Lordships that this morning there were signed here in London a series of agreements between the Bank of China and a group of the leading British banks, including, I am glad to say, my own and another Scottish bank, establishing lines of credit for 1,200 million dollars (that is over £600 million) in support of exports from this country to China. Technically, this credit is in the form of what we call deposit facilities. The British banks will deposit funds with the Bank of China here in London against specific contracts for the sale of capital goods and services. The repayment and funding of these deposits will be guaranteed by the Export Credits Guarantee Department. I believe it to be the first deal of its kind ever to be concluded with China with the support of an official credit insurance organisation.

205
Others have spoken of the great modernisation programme which China has set herself, and of the opportunities it gives us to increase our trade with her. Yet it was hard to see how China could import the capital equipment and the technology without which she could not possibly carry out this programme so long as she stuck to the principle that she would buy only what she could pay for by her exports and eschewed all borrowing overseas. Her fears were perhaps understandable, given the bitter experience of the burden of foreign loans in the past. I cannot resist quoting, as the noble Lord, Lord Roll of Ipsden, did to your Lordships in a debate not long ago, what one Minister said of them:
"He who has been bitten by a snake fears even a grass rope".
Even the grass rope now appears to have lost its terrors.
In the course of our talks there in June this year we saw the first signs that the Chinese might be prepared to consider forms of overseas borrowing, provided that they were clothed in suitable terminology. When the Dell mission was there a couple of months later things had moved quite a lot further. Now it seems clear that the Chinese are ready to become involved in almost any generally accepted form of financing, provided of course that the terms are right.
I believe that the deal signed today marks a very real step forward and that it reflects considerable credit on all involved. It reflects well on the Bank of China for its pragmatism and open-mindedness in reaching this solution; and I may say that I formed a very high respect for the skill and operations of its staff in London. It also reflects highly on the Export Credits Guarantee Department for its very vital part in the operation. Last but not least, if I may say so in all modesty, it reflects well upon the banks themselves for taking the lead on this occasion and having the finance ready in advance for those with the goods to sell; and I hope that Sir Harold Wilson's committee on the City will take notice of this.
For those with the goods, the opportunities are very great indeed. We have already seen some considerable deals in the last year; Rolls-Royce, with aircraft engines; John Brown Engineering, with
206
gas turbines; Dowty and Anderson Strathclyde, with mining equipment; and ICI in the general chemical field. Those are but a selection. However, we are only scratching the surface so far, and of course we are not alone in this vast market. Every advanced country is after it, and some countries, such as Germany, Japan and France, have a head start on us. Your Lordships will know of the enormous trade agreement signed with France the day before yesterday.
My Lords, the situation requires hard and continuous selling at a high level and constant personal contact, because it appears that the Chinese like to continue to deal with the same individual and get to know him. It requires prompt delivery, high quality and good service—we could not have had a better disciple of those than the noble Lord, Lord Davies of Leek—and the Chinese have made it quite clear that we have not always excelled in these respects. It is a highly competitive market, but I believe that the rewards can be great. Take the oil industry, particularly offshore. China has vast reserves of oil and gas which have hardly begun to be exploited, and is indeed at present exporting oil, although as she industrialises that may temporarily cease. She will certainly need to import skills, and probably equipment, too, to develop these resources, and here is a great opportunity for us to deploy what we have learned in the North Sea.
There is even now talk of accepting joint ventures with overseas companies—something that they declared completely unacceptable only a few months ago. There is the example of this deal, proposed by the American group Intercontinental, to build a chain of hotels in China, very much needed to cope with the growing number of business visitors and tourists; and, of course, the tourist trade is so important for them as an earner of foreign currency. Alongside this we are beginning to see other exchanges in the fields of education and students, as has been mentioned, of music and the arts. I believe that the BBC Symphony Orchestra is going to China next year. All of this will help to bring about a closer understanding with each other. At this point perhaps I could ask the noble Lord who is to reply whether he can tell us what progress the Government and British Airways are

207
making on securing rights for us to fly into China, because it is of very great importance that we should have this ability.
Provided that our industry can compete, I believe we are in a very strong position to benefit from China's modernisation. The Japanese, of course, have a considerable advantage—a highly industrialised nation right on their doorstep—but memories of the past are too fresh for the Chinese to want to rely totally on Japan. The United States, for all its industrial and technological strength, is still partly under the cloud of Taiwan. So it is to Europe, and to us as a European country, that China most naturally turns as an ally, not just in the military sense, to maintain the balance of power against what she sees as the menace of Big Brother next door—and we have heard from experts on this—but in the industrial sense, too. But do not let us fool ourselves into thinking that we can have the advantages of such an alliance if we do not behave as Europeans; and I am bound to say that I do not think our position will be helped by the decision, of which we heard today, to hold back from full involvement in the European Monetary System, because of the enormous desirability of a stable currency for trade. I hope sincerely that it will not be long before we find ourselves able to join fully.
My Lords, others have talked about the importance of defence equipment on the Chinese shopping list, and I will not follow them far. Frankly, I cannot see that the Harrier and similar weapons are going to disturb the balance of military power: I think they are more likely to stabilise it. And even if readiness to supply military equipment may not be an absolute prerequisite for gaining non-military orders (and I do not believe it will be) I am equally sure that such readiness will count considerably for good in where orders are placed for ordinary trade.
Finally, my Lords, what are the chances that China can achieve this enormous advance to parity with the other developed nations by the turn of the century? For a start, I do not think we should be deluded by all the recent excitement and publicity, by things like the poster campaign, into thinking that there has been a fundamental change in the Chinese character and way of thought. I believe they are very much
208
the same Chinese who, over the centuries, have survived the vicissitudes of dynasties, wars and political upheavals. Nor should we be under any illusions that their opening of the doors to us stems from anything other than what they see as their own best interests.
What we are seeing, I venture to suggest, is perhaps a return to a period of normality stemming from a realisation that, despite their own vastness, they can no longer remain in isolation from the rest of the world. So we have a touch on the tiller, a slight change of course towards becoming a modernised industrial nation. What the consequences will be for their system and their society, with all the implications of more material prosperity, better education and more contacts with the outside world, I think we would be rash to try to judge. But given a period of stability (and those with long and close experience of China to whom I have talked in the last six months seem agreed that there is a good prospect of this happening) I believe they could well achieve what they are setting out to do—not necessarily within their time-scale; but, then, as we have heard from others today, time is not so important a factor for the Chinese.
My Lords, if I may venture to say so, I believe that as a people the Chinese are highly intelligent, industrious, disciplined, inventive, thorough, businesslike, shrewd and civilised—and, what is more, they have a splendid sense of humour. Towards the end of the tour, when I was beginning to get the feel of the game, in the course of a visit which one is always taken on to one of their temples we saw lined up a row of four immense, ten feet high figures of fiercesome warriors with bulging eyes and brandishing large swords. I thought I would just risk it, and I said to our guide, "I suppose those are the Gang of Four!". At this they absolutely collapsed in peals of laughter, and they went on telling each other about it for the rest of the day.
Certainly on our visit we found ourselves very much at home with them on the personal level, and came away with a high respect for them. Admittedly, they do not enjoy personal freedom in the sense that we know it, but, then, they never have in their history, nor do I think they expect it. Nor, I am sure, would anything resembling our form of

209
Western democracy work with them. Certainly from what we saw, they did not give the impression of being oppressed or unhappy as they went about their activities; and, whatever else their rulers have done for them, they are adequately fed and clothed, even if somewhat simply; they have the basic but essential medical services, and they are increasingly widely and well educated.
Bearing in mind that with all this there are some 900 million of them, a quarter of the world's population—a statistic which we must have heard from almost every speaker this afternoon, but one which we would do well not to forget—I would be inclined to put my money on their achieving their aim. For us in this country this is an enormous opportunity and challenge, and one which I think we would be most foolish not to grasp with energy and enthusiasm. Indeed, I think we ignore it at our peril What is more, we must grasp it now. A close trading partnership and a close trading alliance between our two countries will benefit not just ourselves but the entire Free World. So I hope that Her Majesty's Government will give every encouragement to the development of our good relations with China, and will do so ungrudgingly, not looking over our shoulder unduly. The noble Lord, Lord Chalfont, I think, spoke of one of those he met saying that fear was a matter of the heart. I hope we will go into this relationship as a matter of the heart, too.
7.39 p.m.
Lord GEDDES: My Lords, my intervention in this debate starts not only (as has been the case with so many other noble Lords) with sincere thanks to the noble Lord, Lord Rhodes, for instigating what I think we all believe is a topic of very real importance to this country, but also with an apology to your Lordships' House that I have not spoken here for almost exactly three years. I suspect that those three years of silence have been welcome, but I should explain that the reason has perhaps some slight relevance to this debate, in that for the majority of that period I have lived and worked in Hong Kong. Hong Kong is unique in so many ways, not least in fulfilling a role as an entrepôt and, to use a useful Chinese term, a go-between
210
between the People's Republic and this country.
I am very grateful that the noble Earl, Lord De La Warr, has—I think, rightly— emphasised the role of Hong Kong, but I do not believe that this is the occasion to discuss Hong Kong other than as it affects our relations with China. I do not in any way assume or presume to be an expert on either Hong Kong or China, but, as I have said, I have lived in Hong Kong for over two years and, not entirely co-incidentally, I have had the very real privilege of two visits to the People's Republic in the last 15 months.
Many noble Lords have stressed the importance of China in terms of trade and international politics and defence. I would certainly emphasise most strongly that importance. In trade, particularly, we have trebled our imports and not quite doubled our exports in the period between 1970 and 1977. But, even so, the 1977 figures of £100 million and £77 million respectively are still lamentably small. It is therefore encouraging to anticipate the signing in Peking early next year of the draft trade agreement with China which foresees the expansion of trade to £4 million to £5 million between now and 1985. However, there are those who have already spoken in this debate—and I am particularly grateful to the noble Lord, Lord Polwarth, for his contribution—who are infinitely more qualified than I to discuss these topics, and I defer to their expertise.
Rather, I should like to highlight three other points: first, to emphasise the point raised by the noble Lord, Lord O'Hagan, in stressing the importance of cultural links, in which context I would rather sweepingly include the arts, education and sport; secondly, to dwell briefly—as did the noble Earl, Lord De La Warr—on Hong Kong's role relative to this context; and, thirdly, like the noble Lord, Lord Mackie, to give the personal impressions that I gained through my own visits. While cultural links will not directly contribute significantly to the most important balance of trade, I believe very strongly that they do now, and will increasingly, play just as important a role in enabling each country to gain that crucial element of trust and understanding in which trade can and will be

211
conducted to the mutual benefit of each party.
The record of cultural exchanges between the People's Republic and the United Kingdom is certainly improving, but it has still, surely, a very long way to go before it is adequate. I do not for a moment think that my statistics are—or are intended to be—comprehensive, but merely illustrative. Visits from the United Kingdom to China this year include, in no particular order: the West Bromwich Albion football team, a call by the QE2, delegations as varied as arts, education, librarians, the National Farmers' Unions, the Press Association, television, the combined Houses of Parliament, Kew Gardens, British publishers and three from medical and scientific bodies. In reverse, from China to the United Kingdom, we have had this year a medical delegation and, separately, the director of the Peking Cancer Hospital, a group of weightlifters, geologists, mathematicians, acrobats (including an acrobatic theatre), martial arts groups and an 11-member delegation from the Chinese Academy of Sciences.
In the field of what might be called straight education, there are presently 20 post-graduate students in each others country plus, I understand, a further 50 to 100 Chinese students in the United Kingdom learning English, as against only a handful of English students studying Chinese in China. To an extent, as a result of the recent visit by the Secretary of State for Education and Science to China, the numbers of students exchanged will hopefully increase—and that must be good. However, so far as I can ascertain —and I shall be only too happy if any noble Lord or Her Majesty's Government can prove me wrong—there is a singular lack of co-ordination, certainly in this country, in organising cultural exchanges with China. My information is that the British Council——
Lord RHODES: My Lords, might I just say at this juncture that the Britain-China Centre has been responsible for a group of educationists who came to this country only a fortnight ago. They were really looking for information about the performing arts. I, myself, was host to them for several days in Manchester.
Lord GEDDES: My Lords, I am grateful to the noble Lord, Lord Rhodes. In fact, he has anticipated the very body that I was going to suggest in just a moment who might co-ordinate such a function. There seem to be so many different bodies: the British Council, the Department of Education, the Royal Society, the Ministry of Defence and I do not know how many private entities and individuals all in on the act. I am in no way decrying their efforts. On the contrary, it would be a sad story if they were not so active; nor am I suggesting that such exchanges should only be under a central Government aegis. What I am suggesting is that there should be, to everybody's benefit, some co-ordinating body—I thank the noble Lord, Lord Rhodes; and my suggestion is that it could well be the Great Britain-China Centre—who could not only be informed of all intended visits and exchanges within the broad definition I have given to the word "cultural" but could thereby greatly assist each to the benefit of the whole.
Hong Kong, partly due to being so much closer geographically, is considerably ahead of the United Kingdom in respect of such exchanges. The visits this year by the Grantham Teachers' Training College to Canton and the Chinese Cultural Treasures Exhibition and the Canton City Orchestra to Hong Kong are each encouraging "firsts" in their own field.
With humility, I have seen for myself the evidence of China's ancient civilisation —a point stressed, I am sure, correctly, by many noble Lords—a civilisation that is, of course, a great deal older than our own. Now, after thousands of years of looking inwards, China is going through a very dramatic volte face in her attitude to the outside world—and I do not just mean in that context the marked change of attitude of the last two years. In this respect and in many others, Hong Kong has, I am sure, an important role to play in Anglo-Sino relations. It is geographically part of the Chinese mainland; it is not only tolerated but is now, I suggest, positively welcomed by Peking— a change in acceptability for which the present Governor of Hong Kong, Sir Murray Maclehose, and his colleagues, deserve great credit. Its trade with China—as the noble Lord, Lord Rhodes, told us in his opening address—is out of

213
balance to a very considerable extent: £1,000 million against £4 million.
While I am sure that Hong Kong remains anxious to redress that situation, its significance in this context is, I suggest, two-fold. First, it provides, together with invisibles earned through Hong Kong, an estimated 40 per cent. of China's increasingly important foreign exchange; and, secondly, I believe that it creates a sense of moral indebtedness. Many, including, perhaps, some here this afternoon, may scoff at this last point and I would agree that it should not be over-emphasised; but, at the risk of offending my many friends both in the People's Republic and in Hong Kong, the Chinese have long memories. In the East, and, particularly, with the Chinese, they do not forget a favour done, however long ago it may have been. Of course, the converse is also true and, while many noble Lords have already mentioned this point, I most strongly urge Her Majesty's Government to give a speedy favourable decision to Peking's request for the purchase of Harrier jump jets.
Finally, so far as Hong Kong is concerned, I would just say to your Lordships that while the United Kingdom could trade with the People's Republic if Hong Kong did not exist, nevertheless it does exist, it is a territory administered by the United Kingdom and it clearly has had and will continue to have an important role to play in cementing the United Kingdom's relations with China. In terms of trade, I suggest—and this has already been mentioned—that we should look at both two-way (Anglo/Sino) and three-way (including Hong Kong) traffic. A prosperous Hong kong is a surviving Hong Kong; Hong Kong can only survive through imports of food and water from China and those imports give China the foreign exchange to buy foreign and, we hope, British goods.
China is a country so vast that it almost defies imagination: a country of 900 million people in a land measuring, at its extremes, over 3,000 miles by over 2,500 miles. My two recent trips have taken me to Canton, Whampoa, Shanghai, Soochow, Hangchow. Peking, Tientsin and Hsinkang—but a fraction of the whole. However, even within that fraction, the topography, the wealth, the climate, the people and the language vary a great deal
214
with one all-important exception: everywhere I went—and several noble Lords made this point—first on holiday with my wife and two small children and, subsequently with a colleague on business, our reception was always of the most friendly nature possible. The big difference beween my visits of October 1977 and September 1978 was in the increasing degree of overt inquiry. I happened to be in Peking on 30th September this year, the eve of the 29th anniversary of the founding of the People's Republic. Not only was I done the very great honour of being invited to the state banquet in the Great Hall of the People in Tie en Mun Square (I must admit, with some 3,000 other guests!) but I also had the chance to walk quite freely in the square afterwards when, for the first time as far as my British Embassy host was aware. we were approached by young Chinese who just wanted to talk English and, equally important, ask all sorts of questions about the West, including its way of life, its attitude to age of marriage, and its governmental and educational systems. The day before, I had been asked quite openly by my Chinese hosts when driving from Tientsin to Hsinkang to explain the membership and workings of your Lordships' House. I do not think I gave a satisfactory answer, but I tried my best.
I think one of the most moving and unlikely experiences I have had for many years was after our walk round Tie en Mun Square on 30th September when we stopped by the moat surrounding the Forbidden City and listened entranced to a young Chinese playing the solo part of Mozart's flute concerto. He was doing so entirely for his own pleasure. He was more than happy to talk with us openly on the musical scene in China. The effect of a fine warm autumn evening of superbly played music echoing off the walls and over the water of the moat was quite exceptional.
Particularly during my visit 10 weeks ago, the Chinese to whom I spoke were at pains to emphasise their technological disadvantage relative to the world outside them, their determination to catch up and the problems they would have in doing so in a way which would be as equitable as possible throughout the country. No visitor can hope to see or to understand China on a short trip or many trips; but

215
he can get a much better feeling for its size and the huge problem of modernising its agriculture by the simple expedient of travelling by train rather than plane. With my family I did so 15 months ago and, to a lesser extent, 10 weeks ago. The trains were clean and comfortable but, on their own admission, elderly.
Doing business with China is certainly different and, like travelling as we did, by train, possibly full of surprises; but it can also be immensely rewarding. At the grave risk of teaching my proverbial grandmother, I should like to say that the virtues of tact, patience and trust are all-important; but at the end of the line I certainly have never done business with a country which after all the hard bargaining is over, conducts itself on a straighter or more upright basis.
In my limited experience, I know of no other country in the world where the potential for trade is greater today than it is with the People's Republic of China. In his speech on 30th September, Chairman Hua Kuo-feng spoke of the necessity of
"putting to use the advanced experiences of foreign countries".
In my own experience, we have a first rate and very experienced team in our Embassy in Peking. In Hong Kong we have a unique advantage. In China today we have a people who, I sincerely believe, really want to be our friends. Let us use all that we know we have and a bit more besides to further our improved relations with China, not forgetting in that context the vital but unquantifiable asset of even better understanding through exchanges of people in a wide variety of fields. If asked, I for one would pay a further visit there tomorrow.
7.58 p.m.
Lord GORONWY-ROBERTS: My Lords, this has indeed been a timely debate revealing the widest interest within this House and outside in the very important question of our relations with China. We are all grateful to my noble friend Lord Rhodes for introducing it in so stimulating a fashion. The debate stems from another service which my noble friend rendered to this House and the country recently when he so ably led an all-Party delegation to China last June.
216
We have recently witnessed dramatic changes in China; when my noble friend mentioned to me that he had in mind to lead an all-Party delegation last June I instantly agreed wih him that this could only result in the very best gains for that country and for ourselves. May I in this connection join with him personally and on behalf of the Foreign Office in warmly paying tribute to the late Brigadier Ward who, until his untimely death a few weeks ago, served the British group of the Inter-Parliamentary Union, with such single-minded devotion.
These dramatic changes in China have led a number of noble Lords to ask for an assessment on these developments from this Box. I should like to say this much, bearing in mind what the noble Lord, Lord Chalfont, said: It is too early just yet to say anything very dogmatic about these developments. Our contacts with the new leadership show that they have taken a firm decision to undertake what they called a new Long March to modernise the Chinese economy and play an increasingly active part in world affairs. Chinese leaders want a modern, prosperous, stable and secure China and to achieve this they are determined to transform their economy and society at home and to look for new friends abroad. The recent ferment has shown that there is a widespread desire in China, to which the leadership is responding, to bring back experienced leaders disgraced in earlier political campaigns to restore norms of legality lost from sight during the cultural revolution, and to involve the Chinese people in a freer debate about the ways in which to achieve their objectives.
The leadership evidently attaches importance to maintaining order and to preserving confidence in the continued commitment to the modernisation programme. It is indeed too early to say how this new departure, this new adjustment, will take them; but the signs are that a society is developing in this vast country which will be more open, one may confidently hope, more participative and more liberal, and one with which the West should find it easier to communicate at all levels.
The British Government, along with other Western Governments, welcome China's willingness to play a greater part in the world community of which she is

217
an important member, both in terms of size and influence and because of her permanent membership of the United Nations Security Council. We are ready to co-operate with China across a wide spectrum of activity—political, cultural, commercial, scientific and technological. The external policies adopted by China over the first couple of years have indeed underlined China's interest in Western Europe. That interest, in turn, has been partly dictated by China's determination to push forward with the rapid modernisation of its agriculture, industry, science and technology and defence—the four modernisations: everything goes by four in China, I sometimes think!—and to promote that modernisation China has decided to turn to foreign sources for much of the necessary equipment and technology. Foreign trade is being much expanded and China's formerly reserved attitude towards foreign credit and joint ventures has been considerably eased.
In seeking foreign sources of supply to assist in the modernisation of Chinese industry and technology, the Chinese leaders have turned first to Western Europe and to Japan. Their interest is reflected in the current very active series of visits, agreements and commercial contracts between their country and countries of Western Europe. The United Kingdom, I am glad to say, is playing a full part in this. We greatly welcome continued Chinese interest in improving contacts with the West, and particularly with this country, and we consider it is not only in the interests bilaterally of China and the United Kingdom but also in the interests of the West as a whole to reciprocate as fully as possible.
Both government and industry are promoting our commercial contacts with China with energy. As noble Lords will recall, the then Secretary of State for Trade, Mr. Dell, visited China in August, while delegations from both the private and nationalised sectors of British industry have also been going to China throughout this year. Indeed, over the past year the United Kingdom has received a number of high level visitors from China including the Minister for Foreign Trade, Mr. Li Ch'iang and the Minister for Metallurgy, Mr. Tang Ke, and China's Foreign Minister, Mr. Huang Hua, who visited us in October. Perhaps most significant in this context was the visit
218
last month of Vice-Premier Wang Chen, at the invitiation of the Secretary of State for Industry. He and his team, were able to make a general survey of British industry and technology, in particular of aerospace, shipbuilding and offshore oil.
We hope, too, that Premier Hua will be able to take up our Prime Minister's invitation; and tomorrow we shall be welcoming Mr. Lu Tung, the Minister in charge of the Third Ministry of Machine Building, who is coming here with a large team of aviation experts. Other areas of interest cover power generation, mining equipment, steel and steel plants. Deals have recently been concluded with British firms for coalmining equipment, petrochemical plants, steelworks consultancy, steam generators and plant for various other forms of manufacture.
In this connection, may I refer to the remark of the noble Baroness, Lady Vickers, that perhaps there may have been some comments about the reception accorded to our distinguished visitors from China. I have looked into this and really I do not think that this country has any reason to chide itself on the level and nature of the reception given to our friends from China. I have details here: Mr. Wang had discussions with our Prime Minister and with my right honourable friends the Secretaries of State for Industry, Trade, Energy and Foreign and Commonwealth Affairs and with the Chancellor of the Exchequer. He practically became a member of the Cabinet! He was received by the Prime Minister at No. 10 and was also entertained to luncheon by His Royal Highness the Duke of Kent, in his capacity as vice-chairman of the British Overseas Trade Board. Mr. Wang was also entertained by my right honourable friends the Secretaries of State for Transport, and for Scotland, and by the Lord Privy Seal, as well as by Members of both Houses. The level of treatment, indeed, is fully in accordance with British protocol and, as one who has some experience in these matters, I would say it really compares favourably with that accorded by any comparable country to which the Chinese Government have sent their Ministers. We shall maintain, and endeavour to improve on, this record.
In the course of Vice-Premier Wang Chen's visit, both sides expressed their

219
firm desire and intention to develop economic co-operation between China and the United Kingdom. In particular, agreement was reached in principle to negotiate a long-term economic cooperation agreement, under which our two countries will aim to achieve between now and 1985 a level of joint trade of the order of £4 to £5 billion—that is £4 to £5 thousand million—and indeed in practice this might be exceeded. That figure compares with the present level of Sino-British trade of under £200 million a year. Since August we have achieved contracts of about that magnitude, and indeed the signs are that we are already well in flow with new contracts to achieve much higher targets than we have had in past years. However, the long-term target of £4 to £5 billion by about 1985 remains. It is a big target and, as a number of noble Lords reminded us and particularly my noble friend Lord Davies, it does not all depend on Governments. It depends on performance on the shop floor by management and by men.
I have been looking at the arrangements relating to credit. They compare very favourably with those accorded by any comparable country. I have considered with my advisers what the position is in regard to governmental aid, advice and promotion, and we are in very good trim, for a Government—as would any Government of either side—would have the necessary instruments of promotion to its hand now. But I am very glad that this debate has emphasised that not all the powers of government, or even of institutions in the financial world, can achieve this target unless we find in production, in delivery and in all the essentials of industry a match for the enablements that successive Governments have been able to provide. My right honourable friend the Secretary of State for Industry hopes to carry forward this co-operation by visiting China himself early in the new year.
Our readiness to co-operate in China's technological development was reflected in the signing during Vice-Premier Wang's visit of a science and technology agreement on 15th November. This is a broad and flexible framework agreement, designed to encourage co-operation in various fields of science and technology, by means of exchanges of visits and of scientific
220
information and other methods which are to be agreed on by the appropriate organisations, both governmental and non-governmental on each side.
On this point, perhaps I may refer to a question raised by the noble Lord, Lord O'Hagan, who led for the Opposition on this occasion. Both the EEC/China and the potential United Kingdom/China trade agreements are indeed framework agreements. It is up to individual firms or organisations—one refers to private and to nationalised organisations—to pursue the opportunities thus opened to them. The framework is there and it may well be very strong indeed. The opportunities are there, but I repeat that they must be grasped by those who carry out the work, or say that they can carry out the work, and they will receive every possible encouragement from Her Majesty's Government.
Noble Lords have mentioned the possibility of defence sales. These were also discussed with Vice-Premier Wang and his delegation, and their visit did indeed clarify and confirm Chinese interest in United Kingdom defence equipment, including Harrier aircraft. On our side, we made it clear that the British Government are willing to discuss the sale of defensive military equipment, subject to appropriate consultations with our allies. This is where COCOM comes in. It is an organisation not set up by this country only, but indeed by 15 countries, plus Japan and minus Iceland. It is essentially a NATO organisation, and its purpose is to exercise reasonable oversight of strategic exports and to keep lists of goods and equipment in reasonably up-to-date order, so that the primary purpose of NATO is not subverted by a mistake in the commercial field.
I have had reason to look into this to see how it is working, and I am glad to assure the House, and those who have raised this matter tonight, that it is working extremely well. These lists are not sacrosanct from year to year, or indeed from week to week. They are constantly being looked at and adjusted, so that necessary exclusions are taken out and additions, which are inevitable with the march of technology and science, are added. But the point was well raised and I can assure my noble friend Lord Davies, and the noble Earl, Lord De La Warr, that we shall, with our friends and

221
allies, in the context of the purpose of NATO—that is, the defence of Western democracy—exercise this oversight responsibly, and with a view to giving the greatest possible margin of enterprise to the industries not only of our country but of the countries which are participative of the Paris arrangement. Noble Lords will recall that the Prime Minister has stated that Britain wishes to develop a broad and balanced political, as well as commercial, scientific and cultural relationship with China. This may well include some exports in the field of defence equipment, though we are not prepared to be only a supplier of defence equipment to China.
As part of the Chinese commitment to rapid modernisation, and as a condition of its success, the Chinese are reforming their education system, with the aim of encouraging high standards, and of creating an educated workforce and an echelon of fully trained scientists capable of taking China forward into the modern world. Again, China is prepared to look abroad for assistance with her educational programme, both in terms of sending Chinese students overseas and in inviting lecturers to China, and the United Kingdom is ready to make what contribution it can in both directions. It is gratifying to record that exchanges in the academic, scientific and educational fields are all developing rapidly.
I wish that I had time to give some very interesting facts and figures about the results of the agreement on an educational programme which stems from the visit of my right honourable friend Mrs. Shirley Williams, the Secretary of State for Education and Science. Very briefly, the Chinese authorities hope to send over 1,000 students to United Kingdom universities and polytechnics each year, though it will take time to build up to those numbers. In a reverse direction, we are discussing the sending of a large and increasing number of teachers of English to China; and in teaching English to the Chinese, I am quite sure that the Chinese will teach them the Chinese language.
On the point raised by the noble Earl, Lord Selkirk, and, I think, the noble Lord, Lord Geddes, about whether we are doing enough to increase the number of Chinese speakers in this country to serve not only the Foreign Office, trade and the Civil
222
Service in an analogous department, but also industry and the professions, I believe that we are now alive to the need to do this, and part of the programme which is flowing from the very successful visit paid to China by the Secretary of State for Education and Science this year is to build up, both in China and in this country, mutual tuition of the two languages.
Lord O'HAGAN: My Lords, I hesitate to interrupt the noble Lord if he has reached his peroration, but has he finished his remarks on the Harriers?
Lord GORONWY-ROBERTS: My Lords, I had in my own estimation, but clearly the official spokesman for the Opposition would like a little more and, as always, I am prepared to oblige. As a result of Vice-Premier Wang's recent visit, the British Government are now in possession of more precise Chinese requirements for the Harrier aircraft. It has been the practice of this and previous Administrations not to discuss details of individual arms negotiations. Before a final decision is made, the views of Britain's allies must be obtained and consultations are now going on. I hope that that helps.
Lord GLADWYN: My Lords, will it take months, perhaps years, to consult our allies?
Lord GORONWY-ROBERTS: I am not disposed to argue on the basis of the time needed to negotiate, let alone decide. It takes two to negotiate, and it is not always one side that is a little tardy in providing the necessary data for decision. Suffice it to say that this is an immensely important matter, not only for this country but for our friends and allies as well. We have not, I think, been guilty of dragging our feet in the necessary discussions that must be the precursor of a decision in this field. The noble Lord did not interrupt me in my peroration; I wish I were that far on, for it might be a great relief to the House and, not least, to me if I were.
The noble Lord quite rightly placed great stress on the educational and technological exchange programme. An agreement of exchanges between the Royal Society and the Chinese Academy of Sciences has been signed. We hope to receive a greatly increased number of Chinese students in this country next year. Additionally—and I think that this is a

223
point which the noble Lord had very much in mind—the cultural section of our Embassy in Peking is to be substantially strengthened by middle level appointments and also by secretarial additions.
In other spheres, too, I am glad to note the other exchanges—cultural, sporting and private—which have all contributed to the strengthening of our links with China. They are much too numerous to list in full on this occasion. My noble friend Lord Rhodes intervened to give a very good example of how exchanges in this field are proceeding. I shall certainly consider what the noble Lord, Lord Geddes, said about the need for further co-ordination. There is always need for co-ordination of activities of this kind when more than one Government Department, more than one quasi-governmental organisation like the British Council and more than one private or near-private organisation is involved. However, I was very pleased to hear the tribute paid to the Great Britain China Centre for the fine work that it has done.
Our relations with China over Hong Kong are excellent, and this is clearly shown by a number of recent developments: the introduction of new air and surface communication links, the increasing number of visits to China by people from Hong Kong, joint ventures between Chinese and Hong Kong enterprises and numerous instances of practical co-operation between the Hong Kong and Chinese authorities, most notably the recent agreement by China to provide increased water supplies to meet the anticipated demand in Hong Kong over the next decade or so.
We are mindful that China attaches importance to developing relations with Western Europe as a whole. It places particular value on the European Economic Community and concluded an important trade agreement with the Community earlier this year. In looking to Western Europe to meet many of its new needs, China, following its habitual pattern, will spread around its orders for contracts, and we shall undoubtedly find ourselves in competition with our European partners and, indeed, with Japan for trading orders. This is a challenge to which we are happy to rise.
I want to make one important point very clear. As the Government have
224
repeatedly emphasised, the improvement in our relations with China is not directed at any third country. In particular, the Government want good and stable relations with the Soviet Union, relations within which we can pursue the vital interests we have in common in security matters such as disarmament negotiations, and also in trade. There is no influence without contact. We should expand trade with all countries, and perhaps especially with countries whose systems and philosophies may not be the same as ours. I do not believe that you can exercise democratic influence unless you are fully in contact at all levels, including that of trade.
In particular, the Government want the British-Chinese relationship so to develop that no other country feels that we are in any way eroding the relationship with that country. The normal development of Anglo-Chinese relations will not be allowed to impair constructive relations between the Soviet Union—and, indeed, any other country—and the United Kingdom. The Soviet Union, I repeat, will find us ready to pursue these relations at all times with energy, determination and good faith.
Lord GLADWYN: My Lords, do the Government really think that the sale of Harriers would seriously affect our relations with the Soviet Union?
Lord GORONWY-ROBERTS: My Lords, we are addressing ourselves to the question of Harriers and every other aspect of possible trade with China, regardless of what is said to us from outside. I was just coming to that point on which I have been pressed by more than one noble Lord, and I am very glad to say it. It goes without saying— but I am saying it—that we shall not allow any third country to tell us how we should manage our relations with China in any particular.
This has been a productive year for Sino-British contacts from all points of view. Many speakers have mentioned important points which I have not had time to mention. I shall refer to only one outstanding point which the noble Lord, Lord Polwarth, raised. It related to air services. Following the meeting in London between my right honourable

225
friend and the Chinese Foreign Minister about a month age, we have been actively engaged in discussions with the Chinese side with a view to finalising and bringing into effect the air services agreement which was originally initialled in 1973. Discussions to reach the point of implementation are therefore, as a result of my right honourable friend's discussions, now in train, and I hope that without much more delay I may be able to respond from this Box as to the satisfactory conclusion of that very important agreement.
In conclusion, I can assure noble Lords that the Government will endeavour to build on the contacts I have mentioned— the agreements that are in formation—in order to develop relations with China in accordance with the needs and interests of our two countries. Despite the great differences in our histories, our traditions and our attitudes—and we must always take full account of these—there is ample scope for beneficial co-operation and growing understanding in all fields. We shall do our best to develop a dialogue with China, not only for mutual reward but in the larger interest of strengthening international peace and co-operation.
8.29 p.m.
Lord RHODES: My Lords, I do not intend to detain the House for more than a minute, but it just shows how recent news can rapidly become out of date, My report, speaking of China, says that Communism is essential, because only by tight control can an exodus from the countryside be prevented. This is an experience which has been the bugbear of many emerging countries since the war. In this connection, I must mention that a fairly disturbing feature is emerging, news of which has been handed to me today, as regards immigrants into Hong Kong. At the end of November the figure stood at 60,030 whereas for the whole of 1977 the figure was 21,000. The illegal immigrants into Hong Kong are now twenty times more numerous than they were two years ago.
This has been a fascinating and interesting debate. The education that I personally have had during these last four years on the European Committee has convinced me that there is a headlong
226
rush all over the world to become industrialised and at some time or another there will be a really terrible stocktaking. Every single meeting that we have has to do with surplus production. When China is industrialising let her take notice of what the noble Lord, Lord Fulton, was telling us, because that philosophy ought to be considered. I thank everybody who has taken part in the debate and also all those who have listened so patiently to what we have said. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

INDUSTRIAL RELATIONS: CODE OF PRACTICE
8.32 p.m.
Lord JACQUES Lord JACQUES rose to ask Her Majesty's Government whether they will try to secure widespread and influential support for a brief and well-publicised code of industrial practice with limited objectives including procedures for trades union recognition and procedures prior to industrial action. The noble Lord said: My Lords, in any community there are differences of opinion and conflicts of interest which give rise to dispute. The way in which a community resolves those disputes is one of the indicators of the standard of civilisation which has been attained in that community. In a highly civilised community we expect disputes to be resolved peaceably, quickly and fairly. In our own country in industrial relations there has been a tendency for ruthlessness, and in some cases violence, to be used in the pursuit of sectional interests. This is not in the interests of the community, and very often it is not in the interests of the workers concerned. For example, hasty industrial action in pursuit of higher wages which results in a strike of nine weeks means that in the remaining 43 weeks of the year there has to be an increase in wages of 21 per cent. merely to break even. Your Lordships will see from those figures that very often hasty action and long periods of industrial disputes have been not only not in the interests of the community, but also not in the interests of the workers themselves.
Of course the worker has rights. He has the right to withdraw his labour. I think that is unquestioned. But he also

227
has the duty to carry out the terms of any contract on which he has entered; and with rights there are also duties. Since unnecessary industrial action is not in the interests of the community, it is the duty of Parliament and Government to see that so far as possible conditions are created which avoid that kind of unnecessary action. It is the duty of Parliament and Government to see that people are adequately informed before they decide to take such action. It is also the duty of Parliament and Government to see that if there have to be group decisions on whether or not such action should be taken, there should be proper procedures and facilities for the taking of that decision. It is upon those assumptions that I have based my Question.
My Question is to ask the Government to
"try to secure widespread and influential support for a brief and well-publicised code of industrial practice with limited objectives …".
I stress the word "brief", and also the words "limited objectives". I want to deal with essentials only. I have in mind a code of practice which states that if negotiations have failed to resolve a dispute, as the next step there shall be some form of conciliation. I do not want conciliation to be used as an excuse for delay, and consequently I would expect there to be a time limit of, perhaps, one month or such other period as might be agreed by the parties. It must be kept flexible. If at the end of the period of one month the conciliator has not been able to resolve the dispute to the satisfaction of the parties, it would then be his duty to report and to recommend, and I would expect every worker involved in the dispute to get a copy of the conciliator's report and recommendations. That is the way in which I would keep him informed.
If the parties had in mind industrial action, I would also expect that before taking such industrial action they would have a ballot—a ballot to give proper facilities for everybody who is going to be involved, to participate in the decision. I believe that is essential because of the importance of industrial action upon the community. I would remind your Lordships that a ballot before industrial action is not new—the miners have had it for
228
years. So far as national stoppages are concerned, it used to be the case that a majority of 60 per cent. was required in a secret ballot; now it is 55 per cent. I am not asking for anything as big as that; I should be quite happy with a simple majority.
I was one of those who were responsible for piloting through this House the Employment Protection Bill 1975. Among other things, that Bill dealt with the procedure which would be followed when a trade union was seeking recognition which was not acceptable to the employer. Since that Bill became an Act we have had widespread publicity about it on occasions when the Act has not worked—in particular, Grunwick. But I should like to point out that the Act has worked in far more cases than it has failed. The number of employees who have become members of trade unions as a result of the influence of the Act or because of the procedures embodied in the Act, is far and away greater than the number who have failed to become members of trade unions because there has been some obstacle to the operation of the Act. We only hear of cases where there has been failure. For example, earlier this week the Guardian estimated that there had been 30,000 new members of trade unions as a result of the Employment Protection Act.
Lord TORPHICHEN: My Lords, could I ask the noble Lord whether it would worry him to think that some of those members who have been obliged to become members of trade unions as a result of the working of that Act may not have wished to become members of trade unions? Does that worry him?
Lord JACQUES: My Lords, if I thought that what the noble Lord has said is true, I would be worried. But I am convinced it is not true. In the trade unions which are concerned in what I would call the badly-organised industries —not badly organised because of any fault on the part of the trade unions but because of the way in which the workers are distributed, for example in the retail trades—because of the Act there have been opportunities of getting the opinions of the employees; because their opinions have been favourable to joining trade unions they have joined, and there has been recognition by the employers. Those are

229
the cases to which I am referring. But we have only heard one side of the case, such as Grunwick, because that is the side which gives rise to drama and the news. It is a side which is depressing. It means that the employer has not been prepared to accept the provisions which were made by Parliament in the Act, that he has resisted.
Why has he resisted? He has resisted, I think, because he has felt that with organisation in trade unions the employees would get some power and they would probably misuse that power. What he is afraid of is the misuse of that power. I, therefore, seek a brief and simple code of practice which would try to avoid misuse of the power, but at the same time would provide for obligations on the part of the employer, and in particular in respect of recognition of trade unions.
I would expect the kind of code which I have in mind to lay down that the employer, in the case of recognition, would not resist a ballot which was asked for by ACAS. I would expect the employer to agree that after the ballot, after the decisions had been taken by ACAS, after the employer had had the opportunity of appealing to ACAS against those decisions, he would accept the final decision of ACAS as obligation in industrial relations without resort to the higher courts. I would not prevent his going to the higher courts on what would be largely questions of law, but I would expect him to regard the machinery which has been laid down as fair and reasonable and something which he ought to accept in the last analysis. That is the kind of code that I want. A code which deals with the essential matters, but two matters in particular; the procedure before industrial action is taken by trade unions and the obligation of the employer in respect of the recognition of trade unions. Those are the things I want in particular. Whether it has anything else is another matter. But I want it to be simple and brief and something of which each worker can have a copy, not something for the lawyers.
I am aware that we already have an industrial code, but that industrial code suffers from two disadvantages. First, it is a comprehensive code, and because it is comprehensive it is ambitious and consequently it is more difficult to get it accepted. Secondly, it has the mis-
230
fortune to be associated with the ill-fated 1972 Act, and in saying that I believe that is simply a psychological disadvantage; I am not opposing it because of that, but it is a psychological disadvantage. If we earnestly require a better atmosphere in industry we should not allow psychological things like that to frustrate us in our attempts. But I would retain the comprehensive code. I would retain it as the comprehensive code, but in so far as there was a popular simplified code, such as I have in mind, something which could be published among the workers and of which they would have a copy, I would expect the comprehensive code to be amended so that the codes were consistent. There would be a simplified version and a comprehensive version, but they would be entirely consistent with each other and there would be no doubt and no confusion. I believe that is the way in which it is best to deal with that part of the problem.
I also believe that if we had a simplified code which was accepted and agreed by Parliament, by Government, by the CBI and by the TUC, it would be accepted by the workers. I believe the influence of those bodies together would be so great that it would be accepted. And those who challenge my belief I invite to submit an alternative. We have a problem here and we have got to be prepared to use public opinion to deal with that problem. That is the real objective of the code which I have in mind.
In conclusion I would remind you that this country has the talent and has the resources to be the richest country in Europe, but if we continue to waste our resources fighting with each other we shall never attain that position. If, on the other hand, we can look and try to find a basis of co-operation, so that we are cooperating with each other instead of scrapping with each other, I believe that we could be the richest country in Europe and that everyone of us would be a good deal better off than we are now.
8.47 p.m.
Lord BELSTEAD: My Lords, the reason for Lord Jacques's Question this evening should meet with a response from anyone concerned with trying to solve the dilemma of industrial relations in this country. I follow the noble Lord in

231
claiming that in inventiveness and quality of goods in this country we can hold our own against all comers. But at the same time some hard facts are continuing to tell against us. The number of days lost through unofficial strikes last year was almost as high as the peak figure of 1974. These frequent disruptions are a direct disincentive to production and to investment, and, as the noble Lord said, hasty action and long periods of industrial action are not in the interests of the employees concerned.
I should like to make it clear that I agree with the noble Lord that a code of practice, voluntarily agreed and readily understood, could go a long way towards preventing unofficial strikes. In fact, it would be unlikely that I would disagree, because, as the noble Lord mentioned, the 1972 code, for which my noble friend Lord Carr of Hadley was responsible, recommended procedures for recognition and the settling of disputes, the two areas specifically mentioned in Lord Jacques's Question; indeed page 3 of the 1972 code recommended periodic revisions. But a new code based, as the noble Lord, Lord Jacques, suggested, on the 1972 code, which is still in effect, will only be successful provided there is a genuine commitment to the code.
The central question for the noble Lord replying to this debate is, if the Government accept Lord Jacques's Question this evening, how can this commitment be secured? At the moment ACAS has already issued three codes of practice; one on discipline, another on disclosure of information, and a third on time off for trade union affairs. Apart from the consideration that actually none of these three codes falls within the scope of the noble Lord's specification of "brief", the distinctive feature of the three codes is that neither the CBI nor the TUC can be held to be jointly responsible and therefore jointly committed to them. I believe as firmly as anyone that the voice of the individual employee or company should always be heard alongside the voice of the big battalions. But I suggest that, if a voluntary code of practice is to be made to stick, somehow ACAS must use its influence to secure joint agreement from the CBI and the TUC that they are
232
committed to such a code and will use their influence with their members to that effect.
This is no mere debating point, for the only alternative to voluntary commitment is the imposition of some form of discipline. I am not saying anything very revolutionary by that, because it is worth noting that each of the three codes so far produced by ACAS carries with it sanctions of some kind. But, if the discipline for that part of the noble Lord's code which will be concerned with recognition is to be regarded as fair and balanced, then I am afraid I must register my disagreement with the noble Lord, Lord Jacques, that I do not think it can be based exactly upon the Employment Protection Act 1975. Under Section 11 of that Act a trade union can refer a recognition issue to ACAS, but an employer cannot. If the trade union refuses to approach ACAS at all, then the conciliation process, about which the noble Lord, Lord Jacques, was talking and which he was recommending to us, cannot come into effect—there is, in fact, nothing that anyone can do. Meanwhile, the trade union may be demanding, strenuously, recognition from the employer, very possibly in competition against the interests of another union, backing the demand possibly by the threat of blacking and protected by the immunity against breach of contract which the Trade Union and Labour Relations Act provides. I agree that that is by no means frequently the case, but when it happens it is an impossible situation for any company or any commercial undertaking.
I cannot believe that the Government foresaw the effect which their legislation in 1975 and 1976 would have. If a code of practice, so far as it relates to recognition, is to be accepted as fair and balanced, will the Government give an undertaking that they are prepared to consult about the working of the recognition procedures under the Employment Protection Act, to review and, if after consultation it is found necessary, to amend?—for nothing would give a greater chance of success for a code on recognition than that the Government would be prepared to give that undertaking.
In his question the noble Lord, Lord Jacques, asks for the code to be well-publicised and I certainly support that

233
intention. However, here again that provision would carry with it the requirement that all who read and use it should regard such a code as being fair and even-handed. On these Benches we recognise the value of the services of ACAS and we certainly support the need for ACAS to have continuing responsibility. But, in respect of its responsibility for recognition of disputes, so far as reaching decisions and reaching consistent decisions is concerned, I am bound to say that ACAS obviously has run into some difficulties.
I think that a great deal of misunderstanding could be cleared away if the general duty with which ACAS is charged under Section 1 of the Employment Protection Act could be re-worded in a more balanced way. To the general duty of promoting the improvement of industrial relations, your Lordships may remember there is specifically added a single additional duty—that of the extension of collective bargaining. Certainly that is a duty of ACAS—of course it is, where it is appropriate—but that is not always the case. In addition, ACAS is concerned obviously with conciliation, arbitration and the safeguarding, I should hope, of the individual rights of employees. In addition to that, surely it would be appropriate to have spelled out in a code some clarification as to what sort of proportion of employees should be represented by a particular trade union, for ACAS to be able to make a recommendation for recognition.
In suggesting that, may I say that I in no way wish to detract from ACAS's discretion. I am saying that some guidance from ACAS on this subject would clarify matters for those using a code and would provide some public understanding of the basis for ACAS's decisions. When the noble Lord originally spoke on this subject during the debate on the gracious Speech a year ago, my noble friend Lord Carr of Hadley also made much the same proposal in that debate. Indeed, my noble friend recommended that we should attempt, point by point, to try to tackle industrial relations problems in this way. The noble Lord, Lord Jacques, must have been using his very persuasive powers.
In his question the noble Lord, Lord Jacques, has, I think, chosen perhaps the two hottest potatoes that he could have
234
laid his hands on. The second one of course is the procedures prior to the taking of industrial action. May I suggest that there are two elements to be considered here. The first one is to establish effective disputes procedures which will be honoured. The second one is to establish democratic procedures within trade unions for deciding whether or not to take individual action. As I understand him, in effect what the noble Lord has been saying to the House is that the presence of a simple code in the hand, understood by those concerned and by the general public, will contribute in itself to the honouring of disputes procedures. I agree, provided, and only provided, there is genuine commitment to the code.
At this very moment, or at least up until about 8 o'clock this evening, thousands of people have been unable to return home because of the unofficial strike on British Railways, in direct breach of agreement. If the noble Lord went to catch his train back to Portsmouth this evening, I say in all seriousness that it would be no good for him to show a copy of the code to the engine driver. There must be some commitment to the document and the procedures in the code, and then—and only then—can the code become effective.
However, I very much join with the noble Lord in saying that the procedure, which is absolutely inseparable from the responsibility of taking official strike action, is the opportunity for trade union members to express their wishes by way of secret ballot. I wonder whether the bread strike would ever have taken place if a ballot had been held.
At the weekend your Lordships may have noticed that the Sunday Telegraph reported my right honourable friend Mr. Prior's proposal for the Government financing of ballots if there is pressure from trade union members for a secret vote. I think that the advantage of this method would retain for union executive's freedom to negotiate, because clearly the executive's own membership would not press for a ballot while negotiations which could lead to a better offer were still being carried out; but this method, which is almost exactly the same as the noble Lord has been saying, would ensure something which is by no means always the case when a strike is called or confirmed these days— namely, that the members, or possibly the

235
union executive at its own discretion, have ensured that a majority actually supports the strike action.
The Government have a responsibility to reveal in this debate whether they believe that a code of practice such as that for which the noble Lord has asked could mark a step forward in recognition and bargaining procedures. I believe that such a code can do so provided it is accepted as fair and provided those concerned with it are committed to it. I hope that the noble Lord, Lord Wallace of Coslany, who is to reply to the debate, can show that the two objectives of fairness and commitment can be secured, and that he may be able to announce that through ACAS action can now be taken to introduce a new code on recognition and disputes procedures.
8.59 p.m.
Lord ROCHESTER: My Lords, I should like to join in thanking the noble Lord, Lord Jacques, for having asked this Question and, so far as I possibly can, to support him in the matter. Like the noble Lord, Lord Belstead, I recall that he made a similar suggestion in the debate on the gracious Speech a year ago, and following him then I expressed the hope that since the suggestion came from such an authoritative source the Government would give it the attention it deserved.
Since then, unfortunately, nothing seems to have happened. Indeed, it was with the aim of pressing the Government to take some initiative directed towards the achievement of at least one of the two objectives specifically mentioned in this Unstarred Question of the noble Lord, Lord Jacques—that concerning negotiating procedures—that I recently asked a Starred Question in your Lordships' House as to whether they would consult with the Opposition Parties, the TUC and the CBI with a view to drawing up an agreed code of practice under which disputes that were concerned with the interpretation of agreements already entered into should be settled by arbitration rather than industrial action. I think it is fair to say that that suggestion met with so much support from all parts of the House as to mean that the noble Lord, Lord Wallace of Coslany, undertook to convey to the council of ACAS your
236
Lordships' views. No doubt when he replies to the debate he will be kind enough to let us know where that matter now stands.
The request that I then made was limited. It took account of the clear distinction that is drawn in Europe between disputes of right involving interpretation of agreements already entered into, and disputes of interest. In disputes of right there is an obligation not to resort to industrial action before referring the issue either to a court of law or to arbitration. Almost invariably the parties to that agreement abide by the independent decision. Disputes of interest, on the other hand, arise out of a bargaining situation. They are typically when an existing agreement relating to pay has expired and a new one has to be negotiated. In that situation both parties retain freedom until a new agreement is reached. If the parties cannot agree on the terms of a new agreement, a dispute of interest then exists and it is open to both parties to take industrial action: the unions to call a strike and the employers, equally, to operate their lockout. Incidentally, even in disputes of interest, as I understand it, although industrial action is regarded as entirely legitimate, it is very seldom actually employed.
At that time my suggestion was confined to the proposition that in all disputes concerning the interpretation of agreements already entered into and whether they affect individuals or groups, in the last resort there should be recourse to arbitration which both management and employees would abide by. In this sense there is, I think, some difference of emphasis between the noble Lord, Lord Jacques, and myself; I noted what he had to say about conciliation as opposed to arbitration. However, I very much welcomed—as did the noble Lord, Lord Belstead—the emphasis that the noble Lord, Lord Jacques, placed on the importance of a secret ballot now being conducted before strike action is actually taken.
When we have reached the point when The Times Newspapers have felt obliged to suspend publication, at least largely because no adequate disputes procedure has been established and is adhered to, and when enormous damage is being inflicted on the country—for example, as

237
in the recent Ford dispute—-and when that industrial action is taken before agreements have expired and in circumstances where there is no dispute at all as to the interpretation of those agreements, I suggest it is high time that we, as a House, should call strongly and unitedly for the Government to take some new initiative in this matter.
On the question of trade union recognition, the noble Lord, Lord Jacques, has said that there are recommended procedures already in existence in the code of practice which was associated with the Industrial Relations Act, which he said has been left intact in subsequent legislation. However, I agree with him that on this point also it would be helpful if some new Government initiative were taken designed, as he puts it in his Question:
"to secure widespread and influential support".
The words "and agreement" are not added in his Question, but I take it that they are implied in the phraseology which he has used.
As I understand it, he sees ACAS as the agent for administering a code of practice covering both the question of negotiating procedures and of trade union recognition. I acknowledge that that is the body which, under the relevant sections of the Employment Protection Act, is charged with dealing with questions concerning arbitration and recognition. Furthermore, because our failure in recent years to achieve the industrial stability that we so badly need is, in my view, due largely to the fact that so many different bodies have been set up by both Labour and Conservative Governments and then abolished or rejected by their successors, if it is at all possible I should like to make use of ACAS for the purposes that both the noble Lord, Lord Jacques, and I have in mind.
I have some doubts—and I must express them—whether, having regard to the way in which ACAS is now constituted and operates, it has enough standing and its verdicts sufficiently enjoy the confidence of all concerned to be the generally acceptable agent that is required. Because, fairly or unfairly, ACAS is now viewed somewhat sceptically by many employers, it may be that it would be best that ACAS should show itself willing to submit itself, if necessary, even to some
238
restructuring. Certainly I very much agree with the noble Lord, Lord Belstead, that the relevant sections of the Employment Protection Act should be reviewed and, where necessary, amended so that as far as possible they satisfy both employers and trade unions.
It was partly with considerations such as those in mind that in my earlier Question I suggested that there should be consultation with the TUC and the CBI, rather than with ACAS in the first instance. I was glad at any rate to note the importance which the noble Lord, Lord Jacques, attached to consultation with the TUC and the CBI, and the emphasis he gave to the force of public opinion in this matter, and in those respects I would agree with him. What cannot be tolerated is a situation in which the powers of ACAS are revised to suit only the trade unions, and are altogether isolated from the judicial process. For the rest, I should like simply to agree in principle with the proposals Lord Jacques has made concerning ballots on union recognition.
I find that in your Lordships' House I am increasingly advocating the search for a consensus in matters such as these. This is certainly not because I am in favour of compromise for its own sake. It is simply because I see no solution—and here I agree again with Lord Jacques— to our basic industrial problems until we are prepared to mark out some common ground on which to tackle them. The current case of Sanderson v. Fork Lift Limited has merely served to confirm me in that view.
Perhaps in support of it I may, in conclusion, call on the evidence of Sidney Webb, as he then was, to the Royal Commission on Trade . Disputes, which reported in 1906. This links up closely with the words with which the noble Lord, Lord Jacques, asked his Question in the first instance this evening. The year 1906 was a significant year for Liberals, and indeed for the industrial development of this country. It may therefore be appropriate that it should be someone from these Benches who should quote Webb's words then. He wrote:
"I cannot believe that a civilised community will permanently continue to abandon the adjustment of industrial disputes, and incidentally the regulation of the conditions of life of the mass of its people, to what is in reality the arbitrament of private war".

239
I suggest that if we are to remain a civilised country and a democratic society it behoves us now to heed the warning implicit in those words.
9.10 p.m.
Lord MCCARTHY: My Lords, I should like to join previous speakers in thanking the noble Lord, Lord Jacques, for putting down this Question tonight. I am afraid that I cannot follow him in some of the things he said, and I should like to concentrate on that aspect of his Question which deals with recognition. I am somewhat sceptical now as to how far procedures can be improved by codes of practice. We used to believe this, and a lot of effort has gone not simply in relation to the 1971 Act but into many of the publications of the old CIR and now of ACAS to producing new model procedures through such things as codes of practice. One must be sceptical as to how far one can in fact make general provisions of this kind.
The trouble is that a good procedure is very much concerned with the particular circumstances of the case. If it is a good procedure, it fits well the particular circumstances of an individual industry or firm, and you cannot prescribe for particular circumstances in generalised codes of conduct. But, more importantly, whatever it may say about particular circumstances, it should embody certain shared understandings, certain beliefs which are shared between the parties, hopefully arising out of mutual trust between the parties to a procedure, and you cannot induce that by general codes of practice. I think most practitioners in industrial relations, and most people with experience of attempting to reform industrial relations in the last 10 years, would say that they are much more sceptical than they were, for example, at the time of the publication of the Donovan Report, as to how far one could improve disputes procedures by general statements of the sort that can be embodied in codes of practice.
Quite frankly, I cannot follow Lord Jacques in what he said in relation to strike ballots. Of course strike ballots have an important part to play in the methods by which trade unions consult their members. Of course there are many
240
trade unions which have long traditions of using strike ballots. It does not follow from this that there is anything necessarily better as a technique of consultation and gaining information about a ballot per se than a shop floor meeting. It depends on the circumstances.
In many situations, a shop floor meeting where people can explain what is involved and answer questions and answer objections is a much more sophisticated and flexible tool than a ballot. The problem is not whether we prefer ballots or shop floor meetings. The problem arises from the experience that we have had in these matters, and in particular the experience we had under the Industrial Relations Act 1971. I was rather surprised that the noble Lord, Lord Belstead, spoke about ballots on the railways. We had a compulsory ballot on the railways under the Industrial Relations Act 1971 and I should have thought that one of the things that would have ensured was that nobody on the Benches opposite would talk about compulsory ballots again.
The problem with ballots is that if you seek to induce them from outside, even through a code of practice, you are, however gently you may seem to do it, it appears to those involved, seeking to change the rules in the middle of a dispute. We have had much experience not simply in this country but in the United States of the fact that, if compulsory or quasi-compulsory ballots are induced or forced on trade unions in the course of a dispute, it becomes a matter of basic amour propre that the trade union shall win the ballot.
Lord BROWN: My Lords, my noble friend has not mentioned Germany, where ballots are universal and highly successful.
Lord MCCARTHY: They are universal but they are not imposed by law, my Lords, In other words, they are part of the system. I am saying that if you tried in a quite different system to impose it by law, it will be resented; it will be made an issue of principle and the overwhelming evidence from this country and the United States and from many other countries is that the unions will win and that, when they have won, you will be in a worse position than before.
Lord ROCHESTER: My Lords, would the noble Lord agree that, as I understand the Question in the name of the noble Lord, Lord Jacques, and the responses to it by the noble Lord, Lord Belstead, and myself, no question of the law has arisen? It was all covered by the code of practice that we together envisaged.
Lord MCCARTHY: My Lords, if the noble Lord is saying that there would be no compulsion—even the compulsion of demonstrating through a code of practice that this is the sort of thing that should happen—then he really seems to be saying that, since nothing will change as a result of the publication of that code of practice, I should not be bothered about it. If that is what he is saying, I accept his argument, though I do not think we should be getting much further forward.
I come to the question of what Lord Jacques said about recognition, which is a very different case It seems that here is a case where a code of practice could do a great deal. It is remarkable that successive Governments have been committed in general terms to the extension of collective bargaining by recognition support through legislation for the last seven or eight years—indeed, if we count the publication of the Donovan Report, it is 10 years—and we have had no idea of the sort of criteria or circumstances and in what conditions the Government would want to see recognition accorded to a trade union.
That is all the more: remarkable if we go back to the Donovan Report because, as I understand it, that broadly put forward three arguments in favour of statutory aids to recognition. The first was that collective bargaining was the best way of dealing with problems of settling terms and conditions and that therefore we should see an extension of collective bargaining. But the second argument was that the British system of collective bargaining was disordered and that in the past we had had a great deal of disorder and fragmentation on the issue of trade union recognition, particularly so far as blue collar workers were concerned, and we wanted to do rather better for white collar workers. Thirdly, I think the members of the Donovan Commission were much impressed by the fact that
242
it was put to them that the numbe of notoriously bad industrial situations in this country—particularly in the car industry, but not in that industry only— had begun to get that way because very strong employers' resistance was put up to trade union recognition in the early days.
The Donovan Commission were saying, "If we accept that collective bargaining is a reasonable way to settle terms and conditions and if we want to extend collective bargaining, particularly in the white collar field, in a rational and sensible, not a fragmented, way; if we want to do it in a way which will not create problems from the point of view of competition and inter-union disputes; and if we are to do it in a way which avoids a legacy of disruption and a tradition of resistance, we need some form of third party involvement", and they recommended the establishment of the institution which became known as the CIR.
It is not often that Members on this side of the House say this, but I wish to point out that in some ways some of those ideas found expression in the Industrial Relations Act 1971. That Act was not simply saying that you should recognise any trade union that came along or any trade union that had a sufficent membership; it did not simply play the numbers game. That Act said you had to try to find a sole bargaining agent, that you had to try to define a sensible bargaining unit and that the CIR, in deciding whether or not to extend collective bargaining in a particular firm, was entitled to ask whether a particular unit had the resources effectively to represent the workers.
So the reformist elements which were stressed in the Donovan Report, and which would, and should, have led to a clear code of practice on recognition found some expression in the 1971 Industrial Relations Act. The trouble is, as we all know, and has also been said by the noble Lord, Lord Jacques, that all the other provisions in the 1971 Industrial Relations Act made it unacceptable. It is perfectly true, as was said by the noble Lord, Lord Belstead, that even on the recognition side the 1971 Industrial Relations Act allowed employers to bring references on recognition to the CIR, but in the context of the 1971 Industrial

243
Relations Act they were bringing references the primary aim of which was to revoke sole bargaining agencies. That was swept away in the 1975 Act, but unfortunately nothing of a reformist nature was put in its place. So we had the repeal of the 1971 Act, and in its place we had the 1975 Act—the Employment Protection Act. As a result of this one can search through Sections 11 to 16 of the Employment Protection Act and not find any guidance, nor any principles. One will find nothing which tells what are the criteria which should be used in deciding whether or not to recognise a trade union under the provisions of that Act.
The theory of the EPA was that we could safely leave this to ACAS—that the ACAS council, which was to be a bipartisan council, roughly speaking 50 per cent. CBI and 50 per cent. TUC, would work out the criteria for recognition. I suggest that this was a very dangerous assumption to make. Recognition is a very controversial matter. It is not a matter upon which the trade unions and the employers automatically naturally agree. It is a matter about which they will naturally fall out. Therefore it was to be doubted whether the council of ACAS would find it easy to formulate an effective code of practice on recognition. That in fact has been the case. They have not done so. It is no criticism of them that they have not done so, because essentially and basically, in my submission, this was a task for those who framed the Act; and they did not do it.
The second assumption upon which the Employment Protection Act was based was that the council of ACAS would be given an unlimited amount of time in which they would be able to work out what the criteria on recognition would be because the judges would leave them alone. This is where naiveté really takes off. It passes my comprehension how anybody could believe that in a piece of legislation in the mid-1970s total discretion could be left to an extra-Parliamentary body—a QUANGO—and expect the judges of this country to keep their noses out. Of course, that is not what has happened. In fact every time the ACAS council, however slowly, however carefully, have tried to develop some criteria to decide between case A and case B, they have had to run the gamut of the courts.
244
The courts have taken a very simple view. It is easy for people on this side of the House to say that the courts have taken this view because of their prejudices. I should prefer to say that they have taken this view because of their ignorance. However, whatever the reason, the courts have taken a very simple view. Their view generally has been that you have to have the membership. It does not matter who you are. It does not matter whether by recognition you are to produce disruption in industry. It does not matter whether by recognition you are to add to the total number of unions. It does not matter whether you are to make the reform of British industrial relations—which was a central pillar of the Donovan Report— more difficult or impossible. If you have the membership, you get the recognition. This is a perfectly understandable, simple view for the courts to take. My point is that the main reason why they are able to take that view is because the Act does not prevent them from doing so.
Therefore, what I am arguing is that we should have a code of practice on recognition, and that this code of practice should go back to the basic assumptions behind the extension of State support for recognition in the Donovan Report, which are that we are not simply trying to extend the frontiers of collective bargaining; we are also trying to introduce a little rationality, a litter order, a little less competition inside the recognition procedures so far as the State is concerned.
People will say, of course, that this is in fact an undercover argument for supporting TUC unions against non-TUC unions, and to some extent it is, because if you are trying to rationalise, if you are trying to sort out, a complicated industrial relations structure, you will tend to support existing unions and you will tend to say, "We have far too many unions already, and we do not want to recognise any more". Nevertheless, I would argue that a sensible code of industrial practice on recognition would just as soon and just as frequently—in fact, maybe more frequently in time— come to decide between TUC unions on certain rational and sensible grounds as it would be deciding in favour of TUC unions as against TUC unions. But, whatever the consequences, it seems to me that we have got into a situation in which, so far as recognition is concerned,

245
we need a code of practice. I do not believe that code of practice can in fact be provided in present circumstances by the ACAS council: I believe it should be provided by those who frame the legislation, either in the legislation or separately.
9.26 p.m.
Lord MOTTISTONE: My Lords, it is a little difficult to follow the noble Lord, Lord McCarthy, because as I see it—and he will correct me if I am wrong—he says, in effect, that codes of practice without teeth are not worth very much, that codes of practice with teeth cause resentment, and that therefore there should be no codes of practice except in the one area he has just been suggesting —a code of practice for recognition procedures, a subject to which, surely, his earlier arguments would equally apply. It seems to me a little difficult, therefore, to take his argument all the way.
Lord MCCARTHY: My Lords, the difference is that we have legislation dealing with recognition, and we have institutions, ACAS and the CAC, that have to apply that legislation, but we have given them no guidance. That is why we need guidelines. That is the difference.
Lord MOTTISTONE: My Lords, they need guidelines, but in the case of other people, such as trade unions and employers, they are not to have guidelines because guidelines will cause resentment. Perhaps I read the noble Lord wrongly. Anyhow, perhaps I could very briefly say (because there is not very much to say in addition to what has already been said) that it seems to me that there is a need for the sort of code of practice that the noble Lord, Lord Jacques, has proposed; and, with others, I think we can be very grateful to him for plugging away at this point. There are, however, several misgivings about how this should be carried out and how effective it would be; and in some respects I go along with the noble Lord, Lord McCarthy, in saying that we have had not very good experience, for all sorts of reasons, of earlier codes of practice. I also go along with my noble friend Lord Belstead in one or two of the misgivings that he put forward.
The point about the proposal put forward by the noble Lord, Lord Jacques,
246
from which I think we should perhaps benefit most is its brevity. It seems to me that one of the problems of the codes of practice which have been tried in this area is that they are too long. The shortest one, in some respects, is the 1972 one, to which reference has been made. That got itself a bad name, and it is really awfully childish of us that we allow that in relation to something which you find, when your read it today, is remarkably in advance of its time. A lot of what it says is even now not being practised by a lot of firms and by a lot of trade unions.
This code of practice is in fact a very good one, but it has 133 paragraphs and 28 pages, and people do not like reading that amount. The Employment Protection Act has produced three codes of practice from ACAS, each of which, at first sight, is longer than the 1972 code of practice, and each of which is on a narrow front; and 13 Departments of Employment leaflets covering other areas that have not been covered by ACAS. If you put them all together—and I have had a quick look—they are about 20 times as thick as the 1972 Code of Practice.
People have not got the time to absorb all that. Naturally they say: "Well, we will not pay any attention to that. It is a put-up job. The Government are trying to thrust ideas down our throats". They find arguments for resenting it, because, in part, they cannot be bothered or have not got the time to read the material thoroughly. These are all produced by earnest and very well-meaning people who want to make quite certain that there are no errors, that nothing has been missed out and that people cannot misinterpret what they should be doing. When dealing with codes of practice, the one thing they can be is brief and one can risk missing things out—which you cannot do with the law. Where we tend to go wrong is when we allow people who are familiar with the law (let alone writing it) to have a hand in writing the codes of practice.
I suggest, therefore, that if the Government are going to take active steps to pursue the line which the noble Lord, Lord Jacques, is recommending—and I hope that they are—they should look very carefully at his recommendation for

247
brevity and hire somebody to write the code of practice who is not a civil servant, not a lawyer and not a Parliamentarian, in the vague hope that he or she will put together something which is easy to understand and quickly read by busy people who may then pay some attention to it.
My Lords, having said all that, the nub of the matter (which we have all touched upon) is really trust and commitment. All the writing in the world— even if written by the clever and angelic creature that I have suggested—is not going to create that. But if the Government set a sort of pointer with the sort of guidance the noble Lord, Lord Jacques, is calling for, that might help to encourage people who have to work together in industry to start to do a bit more trusting.
9.33 p.m.
Lord BROWN: My Lords, I find myself in general agreement with my noble friend Lord Jacques, and I want to suggest an addition to his suggestion. Before doing so, I should like to take up some of the comments made by my noble friend Lord McCarthy. I thought he was extremely sceptical about codes of practice. With respect, I think he does not understand why they have been relatively unsuccessful so far. I go a long way with the noble Lord, Lord Mottistone, in his explanation of this. What is missing in the minds of most employees at work is the knowledge of available means of dealing with such matters as industrial disputes differently from the customary way they have been dealt with in the past. I do not know how many copies of the original code of practice have been issued but I doubt whether 1 per cent. of the employees of this country have ever read it.
It is that failure to get it through into the minds of ordinary people in industry which makes it relatively useless. Incidentally, the continuing publication by ACAS of further additions to that code in separate booklets is in my view a disaster. There must be at least one booklet every year amended, so that any reasonable shop steward and employee interested in these matters has to have a collection of four or five in order to understand what it is all about. As I
248
understand my noble friend Lord Jacques, what he is after is a very abbreviated code that would be sent to every employee in the country, so that everybody would know that something was available as an alternative to these hideous disputes from which we all suffer. I could give instances of this. I am not going to do so because I have not much time, but one result of informing 76,000 doctors of what was going on in a huge negotiation of which I was chairman was that at the end of two years the unions were convinced it would not be supported by 20 per cent. of their members. It was actually supported by over 80 per cent. largely because they knew what was happening
I support the noble Lord, Lord Jacques, in his scheme of getting a simple code into the hands of the people. With large bodies of people one can only get commitment first by publication, and second by understanding. I wonder whether that minority in the Ford Motor Company who, according to the Press, sought a ballot might have succeeded in convincing many of those on strike of voting for a secret ballot, if there had been in the hands of every one of those employees at some previous date a suggestion as to how ballots should be conducted in these circumstances, approved at national level. People do not know that there are alternative institutions to the age-old ones of battle which they use.
Now I should like to come to the additional contribution that I want to make to what the noble Lord, Lord Jacques, said. My text for saying this is the old Scottish saying: "Many a mickle macks a muckle". I am sure all noble Lords understand what that means: "many a little thing makes a big thing", to put it in those terms. I believe that many a right royal industrial dispute, particularly of the unofficial kind, is created by a growing collection of unresolved individual grievances. I know that the industrial code calls for grievance procedures. I am also aware that although many firms have produced some form of grievance procedure, some are extremely faulty. I will not go into the details of the faults; but one of the most common is to discipline a man and impose the penalty first. Then he is invited to appeal afterwards. That seems contrary to the rules of British law. That is a common fault: there are many others.

249
Many firms now have agreed, published and well understood appeals procedures operating in their area. I want to say briefly what I mean by an appeals procedure because it can be outlined very easily. A proper appeals procedure is a system whereby any employee who has any grievance can insist that he takes his objection to his manager's decision to the next manager up the line, and so on up to the most senior man on the particular geographical site on which he is working. If the employee continues to feel that injustice persists and he gets the backing of the majority of those who represent him, then a negotiation must take place at that level. The procedure must be fully deployed before negotiation of that sort commences.
If this procedure were universal, then in the first case from between 60 and 70 per cent. of these appeals would be settled at the first stage of appeal. I have had a great deal of experience of procedures of this kind. Secondly, many unofficial strikes would be avoided. Thirdly, the rapid settlement of what may be looked upon as tiny grievances but which never appear tiny to the individual affected, would make a substantial contribution to the improvement or morale throughout the ranks of the employees concerned. Such a procedure could not of course deprive the individual of his right under the law to appeal to an external tribunal against what he feels to be unfair dismissal. The code could suggest that it would be highly advisable that this procedure should be gone through before the appeal to the external tribunal took place.
My understanding of what is happening in these industrial tribunals at the moment is that they have not turned out too happily in many cases. Some of the decisions being taken are extremely unfortunate. The passing of all appeals for trivial and serious matters like dismissal through the internal procedure first would not only save a great deal of time for the tribunals and also for the unions and employers involved, but would prevent many of the cases going to the tribunals at all. Such, again, has been my experience.
I should like to see in the code suggested by the noble Lord, Lord Jacques, some reference, perhaps in an appendix, to the availability of a detailed appeal
250
procedure such as I have described so that every employee, if he likes to get hold of a copy of the code, can learn of an objective, logical appeal procedure which he can begin to promote with his fellows for adoption in the firm by whom he is employed. I think that would be a useful addition, because the start of many disputes is, to a much greater extent than is commonly realised, a combination of unresolved petty matters which eventually is turned into a matter of principle by the shop stewards and then becomes one of the disputes with which we are all too familiar.
I hope that in considering the suggestion of the noble Lord, Lord Jacques, it will be realised that simply for the Government, the CBI and the TUC to get together and agree a code on the lines suggested would get us nowhere. As I understand it, the essence of what has been suggested to the House tonight is that this should be a matter of putting a copy of the code through the letterbox of every employee in the country. That is the value of the proposal.
Lord MCCARTHY: My Lords, before the noble Lord sits down, would he help me to understand? He said that a code of practice only helps if it is available, and in order to make it available he wants a copy to be put through the letterbox of everybody in the country. Surely a code of practice only helps if it is embodied in particular procedure agreements, and that only happens if those who negotiate those procedure agreements feel they have not got that already.
Lord BROWN: My Lords, the noble Lord is a much respected economist and adviser on industrial matters, but I do not think he realises that what goes in industry is what is felt to be real by masses of people—some 25 million employees. You can do all the logical scheming at the top that you want to, but it does not solve anything at the bottom until people know about these things; and the act of putting a code through letterboxes is very important.
Let me give an example of what happened three years ago. The Government asked the noble Lord, Lord Goodman, and the Daily Mirror team to produce a document on our dire economic straits. A lot of people sneered at that at the time but a document was put through every

251
letterbox in the country. What I noticed subsequently was that when a poll was taken it indicated that 70 per cent. of the trade union members in this country were in favour of a Government wage policy—which at that time was a very surprising result. I put that down to the fact that everybody knew some facts then which they had not known before.
9.44 p.m.
Lord GORE-BOOTH: My Lords, there is a famous saying that "fools rush in". I have actually tiptoed into this debate tonight really for two reasons. I will expand on one of them right away; that is, that I suppose your Lordships who are still present are so used to these subjects that perhaps they under-express themselves a little. I must say that when I read the Question put by the noble Lord, Lord Jacques, I was filled with enormous admiration and encouragement. That was because it seemed to me that the noble Lord, Lord Jacques, was doing an enormously wise and forward-looking thing. It is so tempting in this subject to try to do everything at once, and to rush at the whole problem as though it were one, which surely would have meant returning us into a great argument about a whole lot of things in the Industrial Relations Act and so on. Whereas it seemed to me that the noble Lord was extremely wise in taking, as a first attack on this problem after all the arguments, something about which there could certainly be no offence given and I should have thought great encouragement taken. This is because it was right to start with something rather quiet, if I may describe it in that way, something not imposed on anybody, and even avoiding the whole vexatious question of where you go from consensus to orders. So that we owe him a great debt of gratitude for doing this.
My other reason for coming in is that, apart from my own personal interest in this matter, as an ex-diplomat I am perhaps over-sensitive to what actions in this country do to our reputation, or indeed to our prosperity, in our relations with other countries. I can assure your Lordships that this question of industrial relations is regarded around the world as far the most important crisis that we have to contend with as a nation, and it
252
even goes so far as people talking about it as the British disease. Therefore, it is of the most immense importance that we go on trying and trying again to gain a little ground—here a little and there a little—until we get finally, and it may take us decades yet, the right answers to these questions. There will, of course, always be discontents, but certainly, latterly, we do not seem to have been very successful as a country in anticipating them or in stopping them quickly when they happen.
Perhaps I may refer specially to the whole problem of balloting. It may be that some of your Lordships have forgotten that balloting for elections to Parliament was introduced—and I am happy to recognise to the noble Lord, Lord Rochester, that it was by the Liberal Party—in 1872, over 100 years ago. I should rather hope that, as a country, we were getting used at last to the idea of secret ballots in situations where an open indication of one's opinion was embarrassing. There is no doubt that there are sometimes rather dislikeable cases of action being taken on people revealing their hand, and this must much distort the answers given, particularly in a big crowd, rather suddenly, where people perhaps have not had time to make up their minds what they really think, and where there is a certain amount of fear in the air. I am very much encouraged by what the noble Lord, Lord Jacques, said on the subject of the acceptability of balloting, and I think I am not over-interpreting him by saying that he would like to see this increased.
One other reason, and then I shall finish, is that I also felt that the debate was likely to be very learned and scientific and, obviously, I greatly admire the proficiency with which noble Lords have argued these matters. I should just like to finish my own very brief remarks by saying two sentences simply as a consumer and just to express the hope, on behalf of commuters, that people who are expert in these matters always think in terms of the person who arrives at the station and then finds that his train is not there. Here, again, if I may just conclude these brief remarks, I think that the noble Lord, Lord Jacques, was so extremely wise, in that he pinpointed in his Question the matter of the stoppages of work which happen without the proper procedure having been observed first. So may I

253
express my obligation to all noble Lords for having been able to listen as a member of the public. Once again may I express the very strong hope that the Government will give the fair wind that it deserves to the Unstarred Question posed by the noble Lord, Lord Jacques.
9.50 p.m.
Lord WALLACE of COSLANY: My Lords, the hour is late, but the importance of the debate calls for a reasoned reply. In view of certain remarks which I shall make towards the end of my speech, I do not intend to go in detail into the points made by the various speakers. However, I am grateful to them all, because this debate is perhaps of far greater importance than some of us realise. It is a very serious issue, to which, unfortunately, the media does not give sufficient attention.
Perhaps I may refer briefly to the speech made by the noble Lord, Lord Gore-Booth. He referred to the British disease, meaning strikes and industrial unrest. The noble Lord, Lord Belstead, also referred to strikes. I am not saying that everything in the garden is lovely, but Britain's strike record compares favourably with that of quite a number of countries. This is nothing to be proud about, of course, for we are not satisfied with the situation as it is.
The unfortunate fact is that industrial relations achievements never receive publicity, although every strike, large or small, is publicised by banner headlines. Although there are certain honourable exceptions, one of which is the Guardian, it is regrettable that the media does not give a little more attention to constructive efforts and achievements.
The noble Lord, Lord Belstead, asked me how, if the Government accept an ACAS code, support for it can be secured. All ACAS codes follow upon close consultation with the CBI and the TUC. Both the CBI and the TUC have nominees on the ACAS council, and both bodies accept all ACAS codes. In this way, it will be supported. Furthermore, their provisions can be used at industrial tribunals, et cetera, as evidence of good practice. If, however, the noble Lord is suggesting penal sanctions, then I have to tell him that we part company.
254
The noble Lord, Lord Rochester, asked me a question to which he certainly did not expect to receive an answer tonight. The noble Lord suggested that there should be a revision of the powers of ACAS. That is a matter for the Government to consider. I can say only that I take due note of the point. I thank all noble Lords for their very reasonable approach, and I am sure that their contributions will be appreciated in other quarters. In particular, I want to thank my noble friend Lord Jacques who asked for support for a code of industrial practice offering guidance on a number of matters. The Government share his view that codes can play a useful role. It was for this reason that Section 6 of the Employment Protection Act laid upon ACAS the duty of producing codes of practice to provide such practical guidance. I know my noble friend agrees with me that ACAS, an expert body in which, as I have already stated, the CBI and the TUC are represented, is the proper body for such a task.
As the House knows, ACAS has so far produced three codes of practice—on Disciplinary Practice and Procedures, on Disclosure of Information for Collective Bargaining, and on Time off for Trade Union Duties and Activities. These codes have been widely publicised and are having a considerable impact. The service also has the duty of providing one or more codes of practice to supersede the more general 1972 code of practice. ACAS is an independent body and the Government cannot tell it what to do. But I am happy to be able to tell the House that ACAS is currently working to prepare a code relevant to the matters which have been referred to by the noble Lord, Lord Jacques, in initiating this debate.
The Government are concerned that codes of practice should be widely publicised as well as being authoritative. To this end, Section 6 charges the service to prepare a draft of any code it seeks to issue, to consider any representations made on the draft, and to modify it, if necessary, before transmitting the code to my right honourable friend the Secretary of State for Employment for his and subsequently Parliament's approval. This House knows, from its debates on two of the ACAS Codes of Practice, the seriousness with which the service takes its duty to

255
consult widely and fully before producing a code. As well as hearing from parties thought by the service to have a particular contribution to offer, ACAS has issued its proposals for a draft code as a consultative document and allows time to receive written and oral submissions on its proposals. For its first code, it issued more than 40,000 copies of a consultative document, for its second it issued over 60,000 copies, and for its third it issued over 66,000 copies.
Points have been made tonight from these Benches and from the Benches opposite that individual members of unions should receive copies of this new code. But it is a fact that a number of unions already supply their members with copies of codes. Quite a number of unions do this and of course we would all agree that it would be desirable for others to follow this very good example.
Your Lordships will know that proposals in draft ACAS codes have sparked off considerable reaction. In addition to the oral submissions and queries in each case, ACAS has received very large numbers— in fact hundreds—of written submissions from important and representative bodies, employers' associations and unions, the CBI and the TUC as well as from individuals. It received more than 150 written submissions on its first consultative document, more than 140 on its second and more than 200 on its third.
I should mention that another reason for giving ACAS the job of producing relevant codes of practice is that this ensures not only that the code reflects the wide experience of ACAS, but also that the code will be applied in particular circumstances with the benefit of ACAS' advisory services. Your Lordships will know of the important function ACAS provides in the advice it freely offers to both sides of industry. Last year alone officers of the service made almost 9,000 advisory visits to places of work and conducted over 250 advisory surveys and projects at the behest of parties. For the service, a code is not a one-off document reflecting the particular concerns at the time when it was written; it is a document which can be applied by its careful and continuing commitments to the parties, employers and unions, who have to adapt to it.
256
On a more general note, the value of codes, as opposed to legislation, has been raised in the debate. I should like to make the Government's position clear on this. We do not see codes as alternatives to legislation in industrial relations. Rather, they supplement and amplify the legal framework. This is the case with the ACAS codes which I have mentioned, with the codes in the health and safety area, and in the Government's proposals on industrial democracy. At the same time, we are sensitive to criticisms that too many codes might prove indigestible. We think it sensible, in the general area of industrial relations, to rely on the good sense and experience of ACAS, whose day-to-day contacts with employers and unions put it in the best position to judge what are the priority subjects for inclusion.
I now turn to some of the more specific topics mentioned in the debate. Taking union recognition first, the Employment Protection Act itself lays down a procedure for parties and ACAS to follow when a recognition claim is made under Section 11 of that Act. As noble Lords know, this provides for reference to ACAS and lays on the service certain duties in handling a claim; for example, the duty to consult all parties who will be affected by the outcome of any reference. But the Act does not attempt to lay down a rigid set of criteria for application in every case. Rather, it was intended that provision should be made throughout for conciliation settlement by agreement, and failing this it was Parliament's intention that the service should have a wide discretion as to how best to proceed in any particular case.
This procedure has been widely used. Up to October, there have been almost 1,300 references to ACAS and already over half of these have been settled amicably. The problems which have arisen should be put into proper perspective. But I frankly admit there have been difficult cases and Grunwick is one of these. Here the employer refused to allow an independent survey of the opinions of workers by ACAS, and I agree with my noble friend Lord Jacques that this behaviour cannot be justified. Noble Lords will be aware that two Private Member's Bills were introduced in another place in the last Session of

257
Parliament to alleviate some of the problems which have arisen, but, unfortunately, because of Conservative opposition there, your Lordships did not have an opportunity even to consider them. However, the Government continue to keep the recognition provisions under review and will pay particular concern to the legal issues alluded to in this debate, some of which are still before the courts, and that must not be overlooked.
On the question of guidance to parties about what they should take into account in judging a union claim for recognition, ACAS has already in its last annual report indicated in some detail the factors which it finds relevant in defining the group of workers for whom particular collective bargaining; arrangements may be appropriate, and in assessing support for collective bargaining among workers concerned. I will certainly not recite all those factors this evening. Anyway, ACAS cautions that any particular factor is not decisive of itself. Different regard has to be given to each factor in different circumstances. I am sure this flexible approach to questions of union recognition is the correct one.
I now turn to procedures prior to industrial action. As we have seen today, and in the discussions following a Question from my noble friend Lord Rochester a few weeks ago, several subjects can be raised under this heading. First, there is the question of what procedures exist as alternatives to industrial action. Secondly, there is the matter of compliance with agreements, including fixed term agreements. Thirdly, there is the issue of the internal union procedure which should precede a strike. Fourthly, there is the role of arbitration. Noble Lords have illustrated tonight several other topics of this type, because all these questions become more complicated according to the type of industrial action under scrutiny. I share the sentiment of the mover of the Motion before us, a sentiment shared by a number of noble Lords, including the noble Lord, Lord Mottistone, that a code of practice should be brief. But, my Lords, I would venture to say that any code which seeks to cover all the matters I have just mentioned will scarcely have limited objectives.
I shall now consider some of these matters in more detail. On the question
258
of dispute procedures, most employers and unions do have some form of procedural agreement for settling disputes. Disputes may be of two kinds, disputes about substantive issues to be included in any agreement, and disputes about the interpretation of existing agreements. This distinction was noted by the noble Lord, Lord Rochester, who suggested that disputes about the interpretation of agreements were especially suitable for arbitration. However attractive this distinction is in theory, it does not in practice seem so important to the parties themselves. This was pointed out by the Donovan Commission and confirmed more recently by a survey of procedures in Great Britain whose conclusions were published by the Department of Employment in 1975. While some parties may use the distinction to identify arbitrable issues within their own agreements, I do not think too much should be made of it. Rather, I would agree here with the 1972 Code of Practice introduced by the last Conservative Administration, that parties should attempt to settle all disputes by use of their agreed procedures before contemplating industrial action. In practice, of course, this is generally what happens. Although the media concentrate on disputes, most industrial problems are solved through discussion between management and shop stewards or full-time union officials.
On the question of compliance with collective agreements, I am sure we would all agree that collective agreements, including fixed-term agreements, should be observed—and, in the case of fixed term agreements, observed for their full term. The Government would certainly endorse this proposition, and I am sure that the great majority of trade unionists and employers would agree with it. Clearly, the structure of collective bargaining will break down if this were not generally the case.
When we come to the question of internal procedures which unions should follow before their members take industrial action, concern has most recently been expressed about mass meetings. Many think secret ballots are a better way of taking members' opinions. The Government certainly share some of the reservations expressed about mass meetings and consider it would be preferable, in some circumstances, to use other means.

259
Of course some unions, like the National Union of Mineworkers—and there are a number of others—regularly use ballots, and others have rules requiring ballots before some type of industrial action is sanctioned. And we are all very much aware that whatever procedure is used by a union there is no guarantee that members will vote for industrial peace.
It seems to be generally accepted by the public that, in all the strikes that occur from time to time, if only we had a ballot there would not be a strike. That is sheer wishful thinking, because in point of fact we might have a ballot and a strike. On the other hand, some ballots may result in no strike. Therefore, the public at large should not get that impression and some leader writers and Sunday papers should take note of this fact.
The Government do not believe that they should attempt to intervene unilaterally in such matters and, still less, introduce legislation aimed at compelling unions to hold secret ballots on strike action. The experience of the last Conservative Administration, whose Industrial Relations Act had such a provision, showed that such intervention only serves to make this situation worse. The Government have repeatedly said they would be prepared to consider the question of financial assistance towards the cost of ballots—if the trade union movement were to come forward and ask for Government help. The plain fact is that this has not happened. The Government are quite willing, but there has been no request. But then we have no evidence that any union has decided, on the grounds of cost, against having in its rules provisions for ballots. I should like to say that unions are democratic and there is an indication growing that some union members and some of those taking part in the disputes would have preferred a ballot. All that I can say—and I have some knowledge of trade unions, as a rank and file member in the past—is that it is in the hands of union members. They must attend their meetings; they must assist in formulating decisions of policy, and if the rules do not allow them and they want to do so, they can change the rules. That is the position and it is up to them.
260
May I conclude with a few remarks about arbitration as a means of avoiding industrial action. Voluntary arbitration has long been a feature of our industrial relations. The State has provided for a standing arbitration body, currently the Central Arbitration Committee, since 1919. Collective agreements often include provision for arbitration and ACAS has —at the request of both parties—referred to independent arbitrators over 300 disputes in each of the last two years. In general, parties do agree to be bound by the arbitrator's award and in most cases they comply with it. But arbitration requires that the issue is relatively clear-cut, that parties agree on the details of what the real issue is and are willing to have it settled by a third party. One or more of these prerequisites may be lacking and so some other form of third party intervention, especially conciliation, may be appropriate. Here the importance of ACAS is widely recognised.
In the early 1970s the conciliation services of the Department of Employment was handling fewer than 1,000 cases a year. Now ACAS handles close to 3,000 cases annually and is helping to achieve settlements in three-quarters of these. I am sure that noble Lords will agree that this is a considerable achievement for which the service is to be congratulated. The suggestions made tonight for compulsory conciliation or for conciliators to make recommendations seem likely to be counter-productive and would undermine the success of ACAS.
This has been an interesting and, I would add, a vitally important debate which has covered quite a range of matters of concern to us all; we could have gone much further. I am glad to be able to inform your Lordships that work is in progress at ACAS on a code relevant to some of the matters mentioned today. I am sure that the views expressed today will be of considerable interest to the service. I can give the assurance that I have made arrangements for a copy of the debate to be sent to ACAS as a contribution to be considered in the formulation of these codes. Here this House is taking some practical steps to make its views known. I am obliged to all noble Lords who have taken part in the debate. Of course, when the code is ready and it goes to my right honourable friend, it will come to this

261
House for debate. Then we can look forward to further constructive debates on this very important matter. Once again, I should like to thank my noble friend Lord Jacques and all other noble Lords who have made a very valuable contribution to an important subject that is affecting the nation today.