HL Deb 22 March 1978 vol 389 cc1890-909

7.26 p.m.

The Earl of KIMBERLEY rose to ask Her Majesty's Government what is their policy on exporting military equipment, such as aircraft, tanks and ships, to China. The noble Earl said: My Lords, I realise that this Question is a very controversial one, and there are two aspects to it—financial and moral. I believe that my noble friend Lord Strathcona will be enlarging on the moral point of view, while the noble Viscount, Lord Montgomery, will deal with the financial aspect. But first things first. We have the aircraft and shipbuilding industries, which have been nationalised for just about a year, both sides of which build military and naval equipment. So that, looking at the matter from a financial point of view, if we exported more both companies would be considerably better off. That is not to say that we do not already export arms to certain countries, because we do. British Aerospace, through Hawker Siddeley, has just done a very fine deal in selling Hawks to Finland. But about two years ago, I raised the question of selling jump jet Harriers to China, and the answer I received was very non-committal.

Today, I am very honoured that the noble Lord the Leader of the House is to reply for the Government. The noble Lord, Lord Peart, knows that I speak my mind and if, by chance, I ruffle feathers this evening, or come on a bit strong, I know that at least I shall have his understanding, if not necessarily his agreement. Further, the noble Lord well knows that there is no personal animosity directed against any Member of your Lordships' Chamber, because it has been said and rumoured that Her Majesty's Government will not export arms to China, as two-thirds of the Cabinet are worried about what the United States will say, while the other one-third are worried about what Russia will say.

But whatever may be the reasons for the lack of drive in the export of arms to China, it is, in my humble opinion, a wrong decision. There is no possible doubt that if China's defences were bolstered up by the West, and particularly by us, NATO and the whole of the Western world would have a very much stronger hand to play in the game of détente, particularly as the game is, at the moment, played under Russian rules. I have said before in defence debates that you cannot have true détente unless you have parity of power. Alas! it is a sad thing to say, but through the imperfections of the human race that is the way life is.

The noble Lord, Lord Chalfont, wrote an extremely interesting, although very frightening, article in The Times last Monday, about the Russian SS.20, which is their new intermediate-range ballistic missile. He asked the planners whether they had an answer to it. I am so pleased that the noble Lord, Lord Chalfont, is going to speak tonight, because he is a true expert in this field. His knowledge and wisdom will add greatly to the depth and quality of this Unstarred Question. May I hazard a small suggestion that a partial solution to the problem which the noble Lord raised about this missile must surely be to make Russia's Eastern flank more vulnerable.

In the summer of 1972, China became very interested in the Harrier. It would be a very great asset to them on their Russian frontier, where they have very few runways and where their ground forces badly need air support. I am given to understand that the subject is continually raised at banquets in the Great Hall of the People, particularly when foreigners speak to Chinese officials; but I understand that since the present Government were elected, the British Embassy in Peking usually comes up with the stock answer that the Chinese have never put their request in writing. Of course the Chinese have not put their request in writing, for if the request were to be turned down they would lose face.

I believe it is a fact that on 4th November the Foreign Office denied that any approach had ever been made to them by China. On 6th December in another place, at col. 1098, the Under-Secretary of State for Defence for the Royal Air Force said: I think that in matters of this nature it would be best to await a formal approach from the Government of the People's Republic of China. When that approach comes, if it comes, it will be properly considered under the normal arrangements. He went on: When and if we receive an application from the Government of the People's Republic of China we shall consider all the factors, including the economic and political ones. He ended by saying at col. 1099: If we receive such an application—it is purely a hypothetical matter at the moment, because no such application has been received—from the Government of the People's Republic of China we shall adopt the normal procedure of going through COCOM and then coming to a decision.

The second reason that the embassy usually gives is that there would be a problem with COCOM. As your Lordships know, this is the organisation, based in Paris, which controls arms sales to Communist countries. But we seem to have forgotten one point: that in 1972 when ex-President Nixon visited China, China became an unofficial ally of the United States. Surely, therefore, the second reason is null and void.

The third and last reason given by the embassy is that it would anger Russia. I think it is about time that the ugly Russian bear was baited a little by the English bulldog. Our foreign policy today seems to be strangely familiar and reminiscent of that of the 1930s—appeasement, appeasement and appeasement, particularly where there seems to be any Soviet Communist influence. We, and the Americans over the Horn of Africa, have, in my humble opinion, become far too pacifistic and wet. If we and the rest of our Western allies have any respect for our liberty, we should start doing something about it right now, before it is too late.

One cannot possibly blame the British Embassy in Peking for being lukewarm, because their policy is directed from Whitehall. And in no way do I imply that there are no dedicated Foreign Office officials in Peking. However, the embassy does not provide the services which are offered to businessmen from France and Germany through their embassies. It is extremely difficult to get a visa for China, unless you are a Peer. But the French and the Germans freely give letters of invitation to responsible businessmen and women. I think it is significant that when Mr. Li Chiang, the Chinese Foreign Trade Minister, was here at the end of November last and spoke to the Secretary of State for Trade, the Prime Minister and the Foreign Secretary, we never heard what happened. All we know is that this Chinese trade delegation went to France and spent a considerably longer time in that country.

If I may make another small point, the French and the Germans provide a room in their embassies which contains airmail newspapers in order that while visiting businessmen are in China they can keep up to date with what is happening throughout the world. But the British do not do this. Lastly, the French and the Germans are way ahead of us in organising visits for their Chiefs of Staff and military delegates, although I understand that the Chief of Defence staff, Sir Neil Cameron, is shortly to visit China. However, I have also been given to understand that for quite a while now a sales team from British Aerospace has wanted to go to China, but somewhere along the line their visit has been, as usual, held up.

We give financial aid to some countries who seem intent on promoting Soviet-type Communism throughout the world. May I ask the Government to consider that perhaps it might be better in some instances to stop this aid and at the same time to start exporting military equipment to a country which (a) would pay for it, and (b) would help to keep Russian defences more occupied on their Eastern flank? I believe that we in the West should show a realistic respect for the vital interests of Russia, but I do not see that that is any reason why we should refrain from any action that upsets Russia. NATO exists to defend the Western world by trying to maintain a military balance with the Warsaw Pact countries. If NATO's task can be made any easier by Russia being forced to show some respect for the military strength of China, so much the better. Therefore, by exporting military equipment to China we are making a larger contribution to NATO.

I gather that the sale of warships is not too good a prospect, but that specialised equipment for ships, such as radar, communications systems, computers, generators, et cetera, would be more than welcome—and we can always throw in a few Chieftain tanks. We have the Society of Defence Manufacturers' Association which seems to concentrate its efforts mainly on the European market. Therefore may I ask Her Majesty's Government this question: If it is their policy not to export arms to China, will they please reconsider this policy? If, on the other hand, they wish to export arms to China, will they try to do all that they can to help our salesmen to get on with the job?

I repeat that it is no good waiting for the Chinese to ask, as they are terrified of losing face. We must go to them. Let us not forget that an order for 100 Harriers would be worth £600 million to us as a start.

7.37 p.m.


My Lords, I am very grateful to the noble Earl, Lord Kimberley, for asking this Unstarred Question, but I must say that he is going to be rather difficult to follow. He is obviously very knowledgable on this subject, but I am going to take a slightly different line from the noble Earl. On the subject of difficult visits, the noble Earl may like to know that in the early 1960s my late father visited China at the time when the United Kingdom was negotiating the sale of Vickers Aircraft to China. However, it was a pure coincidence that his visit should take place at the same time. For some reason, not entirely clear although my late father's visits and travels were frequently controversial, the Foreign Office took rather a dim view of his visit. Indeed, when the ubiquitous spokesman for the Foreign Office was asked how many aircraft were being negotiated for export sale, he replied that there were five Viscounts, if you included the Field Marshal. He hoped that at least one would be concluded!

I have not given the noble Lord the Lord Privy Seal, who is to reply, notice of my intentions as they relate mainly to common sense. My experience of speaking outside the Chamber to the noble Lord the Lord Privy Seal is that he is very high up in the common sense league table. I have no experience of defence sales, but the export of ships, aircraft and the like is very similar to the sales of other capital goods. It depends to a very large extent upon building up goodwill over a very long time.

A well-intentioned, very distinguished but regrettably ill-informed politician some years ago said that, "exporting is fun". Having been involved in little else for the last 27 years I can assure your Lordships that it is not. It is extremely hard work, but absolutely fascinating. As I have said, the success of our overseas trade depends on goodwill, well established friendship and an ability to supply the right goods at the right price and on the right terms. Obviously a paramount feature of credibility and goodwill is the sanctity of contract, about which much has been said on various occasions. Sanctity of contract must be a pillar on which rests the credibility of our capability to supply. There has been a recent case in which a contract has been negotiated and subsequently cancelled for political reasons. Although it is in a different part of the world I think it illustrates the point that I am trying to make. I refer to the recent sale and subsequent cancellation of a very small consignment of armoured cars for E1 Salvador.

On 8th December last, when this matter was being discussed in Question Time, I asked the noble Lord, Lord Goronwy-Roberts, whether he would not agree that if negotiations were reopened on this contract it would raise doubts about our credibility as a supplier of capital goods. The noble Lord entirely, and quite rightly, agreed with me that that would be the case. I am not resurrecting the E1 Salvador issue as such, but I should like to make the point that the exporting of capital goods will become increasingly difficult unless we are consistent in our policy regarding overseas trade. I would very much appreciate comments from the noble Lord the Lord Privy Seal on that matter.

As the noble Earl, Lord Kimberley, pointed out, the manufacture of defence equipment is an important industry. In this respect it is no different from other heavy industry requiring finance and labour. The United Kingdom has such an industry but it needs a stable economic climate to prosper. If the Government wish to stifle it they must say so. If the Government take political decisions and subsequently cancel sales, clients will go elsewhere, and there is no shortage of alternative supplies. It may be politics, but it is not very practical.

Whatever we do we must not prejudice the good relations that exist between suppliers of capital goods in this country and their overseas clients. These carry on over many years irrespective of the political philosophy in this country, which tends to oscillate, whereas our sales overseas, on which the lifeblood of the country depends, must continue despite these fluctuations. A more stable and less contentious attitude would assist our commercial relations in all overseas markets, not only in China.

7.43 p.m.


My Lords, like the noble Viscount, Lord Montgomery of Alamein, I am very grateful to the noble Earl for initiating this short debate this evening and giving me an opportunity to contribute to it. Although he framed his Question in the rather special context of military equipment, I think it gives your Lordships' House the chance to consider, however briefly and however late in the evening, a fundamental change of a very important kind which is taking place in Chinese foreign and economic policies, a change which has enormous significance for us in the West, the West as a whole, and more specifically for the countries of Western Europe. I sometimes wonder whether we in Western Europe, and more especially in this country, really have any coherent strategy at all, any view of the world within which to consider our reactions to what is a constantly changing world scene. I hope it may be possible before too long in your Lordships' House to have a wider debate on that kind of subject and on such matters as the broader implications of relations with the People's Republic of China.

However, in the meantime it might be useful to place on record a very brief outline of the background of the changes which are now taking place and which make the noble Earl's Question so topical, and to my mind so important. Chairman Mao Tse-tung and Prime Minister Chou En-Lai are both dead. After a period of intense political turbulance in China we now have a new leadership, and China is clearly embarked on a fundamental process of reassessing its whole economic planning, and not only its internal economic planning but its place in the international power structure. Over the past year in China, without any great fuss or publicity, there have been a series of vital conferences on such things as the mechanisation of agriculture, the development of coal, oil and other energy sources, on railways, on communications and not least on the subject which is at the heart of the noble Earl's Question today, the question of defence.

The culmination of this process of reappraisal by the new Chinese Government has been the Fifth National People's Congress which has just been completed in Peking. In the course of a long report to that congress on the work of the Government, the new Prime Minister of China, Hua Kuo-Feng, underlined the new basic national aim of his country—that of making China, by the end of the century, a powerful, modern, socialist, industrialist country. The basis for this transformation was laid down before his death by Chou En-Lai, who made it clear that there had to be a fundamental transformation in four areas of the Chinese economy and society. Those four areas were agriculture, industry, science and technology and, finally, defence—the military establishment of the military defences of China.

The new Prime Minister, Prime Minister Hua, made it very clear in his speech to the Fifth Congress at the end of February that China cannot hope to realise this vast and imaginative programme without help from the outside world, the industrialised world; and he was doing nothing more than underlining a statement by the State Planning Commission in Peking in September of last year to the effect that substantial imports of foreign equipment, foreign plant and foreign technology should now, for a change—and this is something new in China's thinking—be regarded as not only acceptable but inevitable. At the risk of taking a few seconds longer, I think it may be worth while to quote from that statement by the State Planning Commission, because I think it is a statement of enormous significance: While we rely on our own efforts to build up an independent and comprehensive economic system, this does not mean we are closing our doors to the rest of the world. We must expand our economic, technical and cultural exchange with other countries on the principle of equality, mutual benefit, and one supplying what the other needs. We must learn hard from the good experience of other countries and combine this with our own originality. We learn from other countries and introduce their advanced technology to meet our needs, not to hinder but to promote our own creativeness, not to weaken but to increase our ability to develop our national economy and achieve modernisation independently". A long quotation, my Lords, but I think it underlines a fundamental change in the emphasis of Chinese foreign policy and one that we shall ignore at our peril.

As it is, to say the very least, unlikely that there will be in the future any serious co-operation between China and the Soviet Union, it follows that the implications for the West are enormous. For example, in the non-defence field there are quite clearly great industrial and export opportunities over a very wide field, including railways, field plant, oil exploration, coal mining, aerospace technology—all the areas to which the noble Earl referred in passing in his opening speech. Already there have been a number of missions both ways between this country and China, and, of course, the framework of co-operation between the Common Market and China is in an advanced state of development.

This will not be easy, of course. The Chinese political system, highly centralised, with an economy totally State-dominated and State-controlled, does not make commercial relations between us and them easy. But there is now a great opportunity not only to assist in the transformation of the Chinese economy and Chinese society—which in themselves I would have thought were admirable aims—but to do so in a way which will promote our own interests as well as those of the Chinese Government and its people.

To move, in conclusion, from the general economic field to the specific field of defence, to which the noble Earl's Question refers, it is essential, I believe, that in considering the ideas that he has put forward this evening we should understand the Chinese attitude to the international power structure. Of course, it is impossible to analyse it at any length in a debate of this kind at this time of day, but one can say very briefly that it proceeds from a fundamental mistrust of the two great super-Powers, the United States and the Soviet Union. They are regarded by the Chinese quite simply as deadly rivals for world domination, for what the Chinese call hegemony. Of the two, the Soviet Union arouses the greater hostility and mistrust in Peking. The Russians they regard as the social Imperialists, and they believe that one of the Russian aims is to separate Western Europe from the United States in order to achieve a high degree of Communist domination in the West as a step towards their aim of global imperialism.

In this context, I think it is interesting to note that in his speech to the Fifth National Congress the new Prime Minister of China said something that I think we should all bear in mind. He said: At present some people in the West follow a policy of appeasement towards the Soviet Union with the fond hope of saving themselves at the expense of others. This can only whet the ambitions of the aggressors and hasten the outbreak of war". That is the view of the Prime Minister of China.

A natural corollary of this view and of this analysis is a desire on the part of the Chinese to see the emergence of a strong and powerful Western Europe, able to pursue its own way in the world without too much domination and interference by either the Soviet Union or the United States. At the same time—and here I come to the real point, I think, which lies behind the noble Earl's Question—the Chinese recognise that they must be in a position to defend themselves, to secure their own national security. In their view, the main, indeed the only, threat to that situation comes from the Soviet Union, and it is possible to argue that one of the principal reasons for the determination of the Chinese to build up their economy and their industry, to which I referred earlier, is to provide more effectively for their means of defence. It is possible to argue that the whole of their economic and industrial policy has behind it the motivation of survival and security.

They realise only too well that their defence equipment at present is inadequate both in quantity and in quality. They are clearly not going to turn to either of the super-Powers to repair that. For similar reasons they are unlikely to turn to Japan, another possible source of supply. They will almost certainly turn to Western Europe to repair their defences. Furthermore, they will regard the readiness of the countries of the European Economic Community to help them in this respect as an acid test of our attitude towards the international power structure and towards the global foreign policies of the Soviet Union.

At the same time their own strategy is clearly undergoing a very fundamental change. In the past we have generally believed—I think with some justification—that the Chinese strategy for meeting a military invasion would be to allow the invading force to penetrate deep into the heartland of China and then to envelop them in a great People's War, which would involve tunnel warfare, guerilla warfare, all the techniques that they have learned from the profound military writings of Mao Tse-tung. I believe that is now changing. Under the new and pragmatic and rather more outward-looking leadership in Peking, I think they are now embarked upon a new and more conventional strategic doctrine which involves defending their frontiers, defending the seas around their coastline, with the nuclear weapon always, inevitably in modern warfare, in the background as the ultimate deterrent.

If this is so, and I believe it to be so, they are going to need large-scale programmes of development of military aircraft, surface ships, submarines, tanks, guns and missiles, and to equip their enormous forces with those modern weapons of war, with that modern equipment is clearly beyond their own immediate capabilities. They have, for example, only about half a dozen aircraft manufacturing centres of their own. And, of course, apart from weapons and weapon systems, they are going to need, as the noble Earl suggested, command and control equipment involving complicated electronic apparatus, advanced early warning radar networks and that kind of thing.

It is my view, which I think I share with the noble Earl, that Her Majesty's Government must have, and must be seen to have, some coherent policy in this matter. Whatever that policy may be, let us have one and let it be seen to exist. There will be—there is no mistake about it—intense competition; whatever we say about it, whatever moral positions we adopt, there will be intense competition for this kind of trade in Western Europe. Already a large Chinese military mission has spent a long time in France, and they were not there sightseeing! Unless we have some kind of policy we may be sure that our partners in Western Europe will have one.

This is, I readily admit, not a simple matter. There are many factors to be taken into account. The COCOM list of strategic materials which we are forbidden to send to Communist countries will have to be substantially revised. On the political level, there are a great number of people who genuinely and justifiably believe that it would be wrong to take sides in what is regarded as a struggle between the two Communist super-Powers. There are also—and I regret to say it—a great number of people in this country who will resist any suggestion of co-operation of this kind with the Chinese because it is against the interests of the Soviet Union; and there are, whether we like to admit it or not, a great number of people in this country for whom the interests of the Soviet Union take precedence over everything else, even over the interests of their own country.

What we must understand is that China is one of the world's great Powers and that great changes are taking place there, both in its internal development and its perception of its place in the world. We must be prepared to meet those changes with new attitudes and new assessments of own own. I very much hope that the noble Earl's Question and the short debate which is following it will make some contribution to what I believe is now essential for this country, both in our own national interests and as members of the EEC; namely, a fundamental reassessment of our political, economic and military relationships with the People's Republic of China.


My Lords, before the noble Lord sits down, may I ask him one question? Is there any history of the Chinese having an atom bomb?


Yes, of course, my Lords, the Chinese have a nuclear weapon. They have tested it on several occasions. Recent tests demonstrated that they have a thermo-nuclear weapon of a kind which is at least as sophisticated as our own; it is approaching a degree of advanced technology similar to that of the Soviet Union and the United States.

8 p.m.


My Lords, I hope that the noble Lord the Leader of the House will take due note of the point made by the noble Lord, Lord Chalfont, that the noble Earl, Lord Kimberley, in asking this comparatively confined Question is, in fact, triggering off the possibilities of a much more important debate later, when perhaps rather more noble Lords will be present to listen to what is being said.

As a trading nation with a balance of payments problem, it is very tempting to be an uninhibited free trader in the arms business, like any other profitable business. My noble friend Lord Montgomery of Alamein has already pointed out that we have a rather unusual industrial capacity and ability in this direction. Two noble Lords at least have pointed out that China is a particularly interesting case, with rather special opportunities for us. The noble Lord, Lord Chalfont, has expanded on all of those matters in the authoritative and informative way that we have come to expect from him.

The qualifications that one must bear in mind as an instinctive free trader are, first, that obviously we are not going to export the most highly sensitive technological equipment to any but the most reliable and trusted of allies. With the best will in the world, I do not think that we can in any way yet include the Chinese in that category. However, of course, it is also worth pointing out that the most sophisticated equipment is not, generally speaking, the kind of equipment which is suitable to export to relatively unsophisticated countries.

The second reservation must be the export of arms to nations with whom we might reasonably anticipate that we could one day find ourselves in conflict. It is a very obvious point to make. Although we found ourselves at variance with the Chinese, for instance, over Tibet and, I suppose, to some extent over Vietnam, the reality of the power situation, as has already been explained, is that China acts as a very important restraining factor on the USSR by pinning down some of what we see as a grossly over-inflated military capacity which it feels the necessity to maintain. Again, we must not go too far down that road, because we would have no wish to act in any way provocatively towards the USSR. Indeed, I think that most of us feel that the boot is really on the other foot.

It seems to me that the real problems arise when we start making too many nice moral judgments about those with whom we do business. Unfortunately, some of those judgments include double standards. The only note of political controversy which I shall intrude for a moment into my speech is that perhaps our side is a little less prone to flagellating our consciences about this than the Party currently forming the Government. I was not intending to extend very much further into the moral issues, despite what the noble Earl, Lord Kimberley, said.

However, I think that there is one point that is worth making here and it has already been touched upon. I am referring to the fact that if we do not provide the Chinese with arms, then somebody else will. It is not a wholly respectable argument for a country which still claims some degree of leadership in international affairs, but nevertheless it is a very telling one in real terms. Germany and France are the most obvious countries. I also think that it is worth making the point that any trade involves communication and an improvement in the understanding between two nations, even though we must accept that almost all forms of trade can, if we try hard enough, be diverted for what we might call para-military purposes. Communications equipment is not necessarily exclusively peaceful. Lorries can be used to transport troops, and we can extend that argument right down to things like fertilisers and disinfectants.

Coming back to the main question, I agree with the noble Lord, Lord Chalfont, that we ought to have a consistent policy. If there is one, many of us are not totally aware of what the Government's policy is. We ought to state it and stick to it. We should certainly avoid the kind of unhappiness to which my noble friend Lord Montgomery of Alamein referred, where contracts are broken by the instructions of the Government.

I feel that our attitude towards defence sales should be to throw the onus of proof on those who are opposed to them—that is, there should be a presumption that we can proceed with these sales unless there is a demonstrably powerful reason why we should not. I have already explained that I believe that not only does trade follow the flag, but in certain instances the flag and better understanding can follow trade. We must accept that if we do not do it other nations will try to beat us to the punch.

The noble Earl, Lord Kimberley, has mentioned the French connection. I was interested to see in The Daily Telegraph of the 27th January reference to Sir Neil Cameron's proposed visit, to which the noble Lord has already referred. Clare Hollingworth said: It is no fault of Sir Neil that he was preceded, more than a year ago, by his French opposite number with the result that the French Prime Minister, M. Raymond Barre, recently signed a 'framework' co-operation pact with China". I should like to ask the noble Lord: Are we being out-manoeuvred because of policy hangups, or are we suffering from a lethargy born of lack of enthusiasm? I hope that the noble Lord will be able to tell us that the Government give full and enthusiastic support to the examples of products that we can make in this country, like the Harrier, whereby we can demonstrate the continuing pre-eminence of our engineering capacity.

8.7 p.m.


My Lords, this has been an interesting debate and I should like to congratulate all those who have contributed. I shall deal specifically with the points that have been raised. I do not believe that there is much difference of view within the House. Occasionally one hears extravagant language—for example, the noble Earl, Lord Kimberley, talked about "appeasement". I thought that that was an out-of-date word to use in this connection and I do not want to go back to those days. There is no attempt here to appease anyone. I acknowledge that this is an important subject and that is basically why I welcome the seriousness of the speeches of the noble Viscount, Lord Montgomery of Alamein, and my noble friend Lord Chalfont who speaks, as always on defence matters, with great experience. I agree with my noble friend's analysis of the position of China and its development. May I just say to noble Lords that it is important, of course, for British industry and consequently for the jobs of those employed in it, but I am sure that noble Lords will accept that there are other considerations involved besides industrial and commercial ones.

The Government's attitude towards sales of defence equipment to any country is, and must be, a part of our general relations with that country. Therefore, I should like, first, to set the Question in context by saying a few words about our bilateral relations with China. I think that my noble friend Lord Chalfont did this clearly and succinctly. He mentioned the Fifth National People's Congress which was held recently, and confirmed the present Chinese leadership's policy of emphasising economic development, including the modernisation of agriculture, industry, science and technology and the armed forces. Although her philosophy of self-reliance remains important, China is now more willing than she was in earlier years to look abroad for some of the technology and equipment which will be necessary to achieve her ambitious economic targets. A striking example of this is the long-term trade agreement signed last month with Japan.

As has been mentioned by noble Lords, Western Europe, too, is for China a politically acceptable source of advanced equipment and high technology. We in the United Kingdom, which has had a long and friendly relationship with China—a relationship which continues to develop through increasing contacts at all levels—are naturally keen to expand our commercial relations with China in this new climate. That is the view of Her Majesty's Government. Of course, we shall not be alone in this hope—the competition from our European partners will be fierce. Mention has been made of the attitudes of France and of West Germany, and of how sometimes it has been argued that they have better facilities for their businessmen. I say to the noble Earl, Lord Kimberley, that that is not true and that that argument is not justified. We give all necessary support to our people—as much as the French and Germans give to theirs—and will always follow up individual complaints. If there are individual complaints, I shall certainly take them up with the Foreign Office after this debate.

But let us not be too pessimistic. As I have said, a long-term trade agreement was signed with Japan. Naturally, we are anxious to increase our commercial relations with China in this new climate. Of course, we are not alone; and I have said, competition will be fierce. Chinese interest in developing commercial relations with European countries is evidenced by the visit of her Minister for Foreign Trade, Mr. Li Chiang, to the United Kingdom and France last November and December. Mr. Li said at that time that his visit would be followed by others, designed to explore what each country had to offer towards China's development needs.

Among the high-level delegations expected here in the next few months are an iron and steel delegation led by the Minister of Metallurgy and one composed of senior representatives from the State Planning Commission and State Capital Construction Commission. Meanwhile China has initialled a trade agreement with the European Economic Community—and we are an important part of that—which provides a framework for expansion of trade, and which Mr. Li Chiang is expected to come to Brussels to sign at the beginning of next month. I believe that all of these developments augur well for our future economic relations with China, and the British Government welcome them.

It is an acknowledged fact that some of Britain's most important industries, and some of the equipment and technology of which we are rightly proud as being undoubtedly among the best in the world, fall within or have applications within the defence sphere. It is, therefore, not surprising that the Chinese should have expressed keen interest in such items and that British companies should be keen to sell such equipment.

The Government's attitude on this question is well-known. It is that any formal approach from the Chinese Government for the sale of a particular item of equipment will be considered on its merits, and in the light of our international obligations and the political and economic circumstances prevailing at the time. Your Lordships may be tempted to regard this as too cautious and unadventurous a stance—even self-defeating, given my earlier remarks about the keenness of the competition. But, as I said at the beginning of my speech, the issues are not restricted to industrial and commercial ones.

I should like to touch briefly on some of the wider issues involved. If all that needed to be considered was the direct effect of China's military strength on the United Kingdom's security, the issue would be simple enough. China does not present a direct military threat to the United Kingdom; indeed, as I have said, we have friendly relations with China. But this is too simple an analysis; and too narrow a viewpoint. Other considerations apply. I refer, of course, to our international obligations with regard to COCOM, or, to give it its full title, the Co-ordinating Committee.

COCOM includes all the members of NATO—except Iceland—together with Japan. The Committee is a consultative body originally set up in 1950 to agree and keep under review lists of prohibited exports covering military equipment and other goods of a strategic nature which should not be exported by the West to the Sino-Soviet bloc, as it then was, for fear of compromising our own security.

It is important that we should not allow strategic considerations which were valid more than 20 years ago—and here I agree with noble Lords who have spoken—to determine what we can and cannot sell to communist countries in the very different conditions prevailing today. In particular it is no longer realistic to talk in terms of a Sino-Soviet bloc, which was stressed by my noble friend Lord Chalfont; indeed, as has been mentioned, the Chinese now regard the Soviet Union as their main enemy and as the main threat to world peace. COCOM, which remains important to the United Kingdom, has kept the strategic criteria which govern its operations under review, and has made changes designed to ensure that the criteria reflect current political and economic realities.

The Spey aero engine deal, following as it did the successful sale of Trident aircraft to China, highlighted the opportunities that exist in that market for the British aircraft and aerospace industry. That has been stressed by the noble Earl, Lord Kimberley, the noble Viscount, Lord Montgomery of Alamein, and also by the noble Lord, Lord Strathcona and Mount Royal, from the Opposition Front Bench. But it is surely clear that the implications involved in the sale of the types of equipment referred to in the noble Earl's Question—aircraft, tanks and ships—are even wider than those raised by a transfer of technology, such as the Spey deal represented. Of course, that deal highlighted the opportunities that exist in that market for the British aircraft and aerospace industry.

I have said that each case must be looked at in the light of the circumstances prevailing at the time. Our relations with China are not static—indeed, I have touched on some of the ways in which they are continually improving. These growing links apply also in the field of defence relations. Last year a party of students from the Royal College of Defence Studies visited China. The Chief of the Defence Staff has accepted an invitation to pay an official visit to China—the first such visit by a United Kingdom Chief of Defence. As noble Lords know, the Chinese have been regular guests at the Farnborough Air Show, and are showing increasing interest in attending other similar exhibitions in this country and elsewhere in Europe. I do not wish to suggest that these contacts will automatically lead to sales of defence equipment. But circumstances change, and we must avoid committing ourselves to a rigid position. The attitude to our sales which I have outlined is thus shown to be, in these circumstances, the right one and in the best interests of this country.

In view of Lord Kimberley's remarks about the chicken and the egg on Harrier, it would be well to take note of what has happened in this respect. I should like to refer for a few minutes to the position of the Harrier aircraft. The Chinese first mentioned Harrier to Hawker Siddeley Aviation, now British Aerospace, at the time that the first Trident aircraft was handed over at the end of 1972. Quite naturally the company made it clear, both to the Chinese and to Her Majesty's Government, that they would like to be able to sell this aircraft to China. But the company, quite properly, also made it clear to the Chinese that such a sale would require the approval of the British Government, and that the British Government had made no commitment in this respect.

More recently the Chinese Vice-Premier, Wang-Chen, in November 1977, stated, in the presence of a visiting group of British businessmen, that China intended to acquire the Harrier. When the Chinese Minister for Foreign Trade, Mr. Li Chiang, visited Britain at the end of last year he saw a flying demonstration of the Harrier. The British Government are, therefore, well aware of Chinese interest in this aircraft. The British Government's general policy, which I have outlined, applies equally to the Harrier. The Government have stated their willingness to consider any formal proposal which the Chinese Government may wish to put forward.


My Lords, may I interrupt for one moment? Do we conclude that there is therefore no specific, or inherent, objection on the part of Her Majesty's Government to the sale of Harrier jets to China?


My Lords, I thought that I had stated the position quite clearly. We are now waiting for a proposal. I cannot go further than that. The next move must be made on this, and there must be a move, and I would hope that it is accepted by the House that in principle we believe in supplying equipment to China. I thought I made that clear. We must of course have a clearer idea of the Chinese requirement, and this is why we must have talks and discussions. All I am saying to noble Lords who have expressed their doubts is that it is the intention of the British Government to see that trade develops with China, and inevitably a part of that trade will be defence material.