UK:CHINA RELATIONS
The UK Government
Dimension
ETI Seminar Report 5
May 2000
In seeking to apply codes of conduct to trade with China,
producers and importers become aware of the influence of the many different
branches and levels of the Chinese government and the fact that the UK has a
number of official connections with China. What are the principal UK policies
towards, and programmes in, China? Which branches of the UK government are
involved? How does the UK government balance human rights concerns with the
desire for improved relations? What services are available to UK companies
trading with China?
These questions were addressed at a seminar for ETI members and
other interested companies and organisations on 27 April 2000 at the Regent's
College Conference Centre. Fifty-one people attended.
[ ETI
Library ]
The seminar was chaired by Dan Rees, Manager of ETI, and opened
by Yve Newbold, Chair of ETI, who welcomed the speakers and commented on the
fundamental dilemma in ETI's approach to China: the fact that China is too
important not to engage with, but breaches one of the fundamental principles of
the International Labour Organisation and the ETI Base Code, namely freedom of
association and the right to collective bargaining. ETI, being aware of its
limited knowledge of the Chinese reality, was keen to take the opportunity to
learn more about the official links between the UK and China and to consider
the role of those links in the development of commercial relations.
Speakers' presentations
Rod Wye (FCO)
Rod Wye (FCO) spoke on the UK government approach to China,
where China policy resides in the UK government, examples of engagement and
co-operation, and the human rights issue:
China can't be ignored because of its size, economic power and
presence on the international stage. China is undertaking a huge experiment in
modernisation which is leading in many strange and different directions. In
some areas of human rights, China's record is poor and there are particular
problems over political rights. The UK government wants to draw China more into
the inter-national community and to contribute to positive change in the long
term. The UK seeks managed change and the promotion of the rule of law by
working "with the grain" of the Chinese system. The UK government also wants to
promote UK commercial interests in China and is looking for more creative
commercial initiatives. Finally, it supports Hong Kong's autonomy and
particular values.
The primary responsibility for UK policy towards China rests
with the Foreign and Commonwealth Office, but many other departments have major
responsibilities and inputs. Particularly the DTI (through British Trade
International), DFID and the Ministry of Defence. The Departments of Health and
Environment & Transport also have interests. The FCO tries to unite all
these policy strands, and over all is the Prime Minister, who takes a positive
interest. At the FCO, the Minister primarily responsible is John Battle and
there is an Asia and Pacific Command headed by Rosalind Marsden. The China Hong
Kong Depart-ment manages bilateral relations with China, Hong Kong, Taiwan and
Macau. There is an embassy in Beijing and consul-ates in Shanghai, Guangzhou
and Chongqing with com-mercial branches attached to British Trade
International.
In engaging with China, Hong Kong has the advantage of a
familiar legal system and its strengths as a financial and economic centre with
relatively transparent and comprehensible ways of working. But one should also
make approaches in Beijing because of the influence of central government. The
commercial section of the British Embassy can give advice.
On human rights, since 1997/98 the FCO, along with the EU, has
been following a policy of "critical dialogue". China now accepts human rights
as a legitimate area for international discussion. There are two sessions of
bilateral dialogue each year, covering issues such as Tibet, the death penalty,
torture and legal process. The UK has a wide ranging programme of co-operation
with China aimed at improving the legal and judicial system and developing
civil society. However, the basic political system is expected to evolve only
slowly, and abuses of political rights will continue.
Sarah Smith
Sarah Smith spoke about DFID's China strategy in the context of
the UK's international development policy:
DFID was set up as a new department after the last election and
in its 1997 white paper adopted the elimination of poverty as its key goal. It
wants to move from "islands of excellence" to approaches that have an impact at
policy level. Working more effectively with others is key to their approach;
for example, working with the Treasury on debt issues, and working with the DTI
on trade liberalisation. DFID is also working with multilateral development
banks in support of poverty eradication and initiatives like the comprehensive
development framework.
DFID is increasing its emphasis on outcomes, i.e. measurable
poverty reduction.
In China, 200 million people have escaped from poverty since the
late 1970s, but some 200 million remain in poverty. For example, Yunnan has a
lower human development index than Ghana. DFID is prioritising education,
health, economic reform and the en-vironment, in Gansu, Sichuan, Yunnan and
Liaoning.
Particular DFID programmes being implemented or devel-oped
address health services for the rural poor, HIV/AIDS, urban health and TB,
basic education, environmental management and water. The biggest intervention
is in state owned enterprise reform. The SOE share of industrial output in
China has decreased from 78% in the late 1970s to 26% in the late 1990s, and
this has been accompanied by a loss of social safety nets and large scale
redundancies. For example, 11.7 million workers were laid off last year. There
is political commitment to reform SOEs in a way that takes account of social
impact, and DFID is sup-porting an emphasis on socially responsible
restructuring.
DFID is interested in exploring possible working links with ETI.
Possible ideas included sharing information on government approaches to labour
issues and economic reforms, the role of key players such as the ADB and the
World Bank, migrant workers, gender issues and the impact of HIV/AIDS.
Mandi Robinson (China Britain Business Council)
Mandi Robinson (China Britain Business Council) spoke on the
services available to UK businesses operating in China, particularly those
provided by the CBBC:
The CBBC (through its predecessor organisations) goes back to
1953 and the first "icebreaker" trade mission to China. This is still
remembered positively in China. After 1989 there was an inevitable downturn in
trade with China, so the CBBC was formed by merging the "48 group" of UK
traders with China and the Sino-British Trade Council (DTI). It has a
business-led Council of Management and a fee-paying membership base.
Approx-imately one third of CBBC's revenue comes each from its membership,
British Trade International and revenue from activities. Over one third of its
members are small and medium sized companies; it has between 250 and 300
members and a database of 3000 UK companies interested in trade with China.
CBBC has offices in London, Scotland and, shortly, in North East England, and
five offices in China, in Beijing, Shanghai, Guangzhou, Wuhan and Chengdu.
CBBC is mainly involved in promotion of exports to and
investment in China and runs a number of services to support that work:
seminars and workshops in the UK, specialist seminars (e.g. on wholly foreign
owned enterprises in China), business culture briefings and trade missions,
seminars and exhibitions in China. It advises people organising China missions,
arranges business events in the UK for visiting Chinese officials and company
representatives and arranges programmes in China for UK companies. It helps
facilitate UK business in China, for example by helping companies follow up on
non-response to communications and providing office space and services such as
recruitment in China. It is particularly involved in the agriculture, financial
services, education, telecom, environ-ment and health care sectors.
In the China research area, CBBC delivers the govern-ment's
Tailored Market Inquiry service and recommends the Internet Reuters service,
the Financial Times, web sites such as the CBBC's own web site, which includes
links to Chinese organisations, the CBBC trade library and the EMIC library at
the DTI.
Structures for UK:China co-operation include British Trade
International, the CBBC, the China Council for Promotion of International Trade
(the Chinese equivalent of the CBBC) which has an office in London, government
bilateral organisations such as the Joint UK:China Commission and the UK:China
Forum, and trade associations and regional groups such as city twinning
arrangements.
The CBBC produces its own magazine, the Trade Review, and a
quarterly magazine in China which aims to explain the UK to a Chinese
audience.
Questions & Discussion
After the speakers' presentations there was an active question,
answer and comment session. Some of the questions and answers were:
Is the FCO really up to speed on China? Only two weeks ago
an oil company was asked by the FCO to pull out of Burma? Could this happen at
short notice to companies operating in China?
Rod Wye: The UK is generally wary of the use of
economic sanctions and it is unlikely that circumstances could occur which
would lead to an official call to pull out of China. In the case of another
Tiananmen incident, the international community would probably react with a
similar range of measures to those taken after 1989. Except for the embargo on
defence sales, those steps have now been reversed. The FCO accepts that it is
sometimes seen as being remote and is trying to break this down, and be seen
for the real work it is doing in promoting UK commercial and political
interests.
The FCO is seen to be reluctant to address Chinese pressure
on Hong Kong, so how credible is its influence in China? What is the FCO's
approach to political and civil rights in China, including the promotion of
labour rights?
Rod Wye: Britain is concerned about Hong Kong and sees
itself as a champion to protect the rule of law in Hong Kong. For example, the
UK government made a statement in favour of Hong Kong retaining a free press,
when the Hong Kong media were faced with pressure from China. On political
rights in China there are limits on what can be done. The Chinese government
still cracks down on any forces that appear to have a political implication.
The UK is pressing China to ratify the International Convention on Civil and
Political Rights.
The FCO has not addressed labour rights in great detail
with the Chinese, but it agrees that it should do so. China has made some
changes in favour of greater labour rights, but problems remain such as the
absence of a right to strike.
To what extent do the CBBC and the FCO have mechanisms for
identifying supply networks in China, for example, to detect the use of labour
camp workers?
Mandi Robinson: This is an important issue and
companies need to be absolutely clear where their product is coming from.
CBBC's advice is to know your Chinese partner and not just use intermediaries,
get hold of a copy of the Lao Gai handbook which lists prison factories,
including their pseudonyms, and research the supply chain through the CBBC's
offices in China.
Rod Wye: The commerical sections of the British
consulates can also provide information.
Chinese labour law is mostly very good but their labour
office does not seem to have the drive or motivation to police the law. What
can the UK Government do about this?
Sarah Smith: DFID's SOE project is at an early stage
but could produce relevant lessons as it develops. DFID is trying to involve
civil society, for example through the Chinese Women's Federation.
Rod Wye: There is a gap between law and implement-ation
in other areas too, for example on the environment. The FCO has mainly been
involved with the criminal law. The UK needs to persuade the Chinese Government
that stricter enforcement is needed. The UK can provide a useful demonstration
effect by means of its practical projects on the ground.
Marie Niven, from the UK Ministry for Employment,
commented that it is difficult to apply bilateral pressure on China but the UK
can exert influence via the International Labour Organisation. In June 2000 the
ILO will be producing a global report on freedom of association.
Mandi Robinson: Western companies can lead by example
in the private foreign invested enterprise sector. China itself often sets
higher standards in this sector. Some conditions of work in China are more
generous than the UK, e.g. the requirement of 13 months pay for 12 months
work.
Susan Handley from the Local Government International
Bureau commented that there was a fifty percent decline in town twinning after
Tiananmen. However, the other fifty percent remains.
Would the speakers agree that there is a significant local
authority business role?
Rod Wye: Yes, though the Chinese side is generally
keener. The Chinese find that these links have a much bigger impact for them in
creating commercial opportunities.
How soon is China likely to be admitted to the World Trade
Organisation and how fast will investment increase following this?
Mandi Robinson: China has been trying to gain entry to
the WTO for 13-14 years. They initially concentrated on getting agreement with
the USA as that would be the main hurdle, but they have found that other
negotiations have also been significant, for example with the European Union.
Accession may not be until 2001 and could take longer. Then it will take some
time for the actual changes to occur. Agriculture is likely to open up earlier
than other sectors. The CBBC will be holding a seminar on China's entry to the
WTO later this year.
The DFID emphasis on poverty reduction may mean that it is
less likely to form partnerships in export industries. Are there exporters in
DFID's area of focus?
Sarah Smith: There are some in Liaoning.
Lesley Roberts from Pentland commented that the DFID
focus on HIV/AIDS and women workers would be of great interest. This suggested
the possibility of a project in southern China.
International poverty measures are set in monetary terms
(e.g. less that US$1 per day generally or less than US$0.60 per day in China)
but non-monetised societies can get by on a lot less than this. How does DFID
take account of this in its poverty focus?
Sarah Smith: DFID recognises that the poverty line goes
wider than income measures. There will be a World Bank seminar on China in May
to look at poverty data.
It seems that different UK government agencies are doing
various things in separate areas. Would the speakers agree that the effort does
not look very "joined up" at the moment, and that more space is needed for work
on labour standards?
Rod Wye: Yes, the FCO does need to put more thought
into the promotion of labour standards.
Sarah Smith: DFID is looking with interest at the ETI
China Pilot and would hope to learn from it. DFID has to remain very focussed
to deliver an effective programme in China, but is happy to explore potential
links with the ETI that would contribute to its overall focus on reducing
poverty.
Yve Newbold, Chair of ETI, drew the seminar to a conclusion,
thanking the participants for their spirited questions, and the speakers for
rising to the challenge and providing information and points of view that would
greatly assist ETI members in moving forward on the monitoring of labour
standards in trade with China.
[Note: The views expressed in this seminar
are those
of the individuals concerned, and do not necessarily
represent the positions of their organisations, or
of the Ethical Trading Initiative.]
See also:
ETI Experimental Projects
(incl China Project)
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