HL Deb 06 December 1978 vol 397 cc117-29

2.53 p.m.

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 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 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 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 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 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 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.


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 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 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.

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