I was recently present at the BFI  launch of ” Electric Shadows 2014″ a year of film collaboration with China, beginning with a special UK visit from China’s most popular film director, Feng Xiaogang.

See : http://www.bfi.org.uk/china

 

 

 

The prime Minister’s recent visit to China was clearly very successful but the makeup of his delegation left something to be desired.

I recently took the opportunity to raise this in the Lords with the new Trade Minister Lord Livingston.

Lord Clement-Jones (LD): My Lords, I warmly welcome my noble friend to his new role, and the success of the Prime Minister’s visit to China. I declare an interest as a partner of a law firm. Why did the Prime Minister not find room in his huge delegation for any representative of the UK legal services sector? The sector contributes some £3 billion to our professional services exports; it provides crucial commercial and dispute-resolution services and support for British businesses around the world; and, not least, will help them to take advantage of the new Shanghai free trade zone. I realise that not everybody wants to be accompanied by a lawyer on their travels.

Noble Lords: Hear, hear!

Lord Clement-Jones: However, seriously, how does this square with the continuing support that is being given by the MoJ and UKTI to boost the growth of the legal services sector internationally?

Lord Livingston of Parkhead: My noble friend is correct that the legal services sector is one of the most important sectors for the UK. He may not be comforted by the fact that we took some accountants on the trip. The law firms were represented, particularly in discussions on the Shanghai free trade zone, in which the UK is going to provide excellent support. The UK legal sector is a great strength, not just as an export in its own right but as a reason for FDI into the UK, because it shows that the rule of law and support from professional services are very strong. I will certainly seek to champion the legal sector going forward.

See the full exchange here:

http://www.publications.parliament.uk/pa/ld201314/ldhansrd/text/131211-0001.htm#13121184000800

http://www.confuciusinstitute.ac.uk/

I gave a lecture  on China, Britain and the Creative Industries as part of their Autumn 2013 business lecture series.

 

A very good debate on relations with China on the 7th November. Read my speech here.

http://www.publications.parliament.uk/pa/ld201314/ldhansrd/text/131107-0001.htm#13110766000642

Here is the full length version as well as we were only able to speak for 7 minutes on an immense subject!

This debate is very timely. It comes with the prospect of the opening of EU /China Trade negotiations on 21^st November and the opening of the Third Plenum this weekend.

It comes in the aftermath of a series of official visits last month, not least the so called Yin and Yang Boris/Osborne visits, also those of the Lord Mayor Roger Gifford, Ed Davy Patrick McLaughlin and David Willets

And an expected visit by the PM later this year or the beginning of next.

 

It is notable that despite frosty relations in the past 18 months with the new Chinese leadership, major inwards Chinese investment has been at a record level :

• Huawei have announced  a £1.2 investment programme
•  Dalian Wanda a £700m into Nine Elms on the South Bank,
• Geely Automobile in Manganese Bronze –the Black Cabs
•  Ping An Insurance have bought the Lloyds building
•  Advanced Business Park are investing £1bn in the Royal Albert Dock
• the ZhongRong Group has said it will be investing £500m to rebuild The Crystal Palace in south London.
• CIC-the sovereign wealth fund have invested  in Thames Water
• And In Manchester the Beijing Construction Engineering Group (BCEG) is taking a 20% in the the ‘Airport City’ project which is creating 16,000 jobs
• All this as well as the Chinese General Nuclear Power Group and China National Nuclear Corporation minority investment in the planned new nuclear plant Hinkley C announced by the Chancellor on his visit to China

In that period record levels of trade have been set between China and the UK. In April this year Britain’s monthly exports to China hitting the £1 billion level for the first time.

We have also had the award of an 80 billion  RMB RQFII trading quota for London. This is the first such licence outside China.

We are now the top European destination for Chinese inward investment.

I have made 30 visits or so to China over the past 10 years  and having accompanied  my noble friend Lord Sassoon  in his recent handover visit in September as the new Chairman of the CBBC and taken part in a recent All Party China group visit last month to Shanghai I am convinced  that prospects for trade and investment both ways are now better than they have ever been between China and the UK.

And rightly so. Governments of every colour have always emphasized the virtues of free and open trade and investment. It is in our DNA unlike the US and more markedly than other EU countries. This is particularly important as regards China  in responding to their going global strategy.

Although there are some frustrations  when it comes to strategic industries, China has largely reciprocated by opening their markets following accession to the WTO.

Under its latest 12th 5 year plan the Chinese government has a comprehensive strategy towards a more consumer led economy, a more environmental and energy conscious economy and one where the services- insurance, pensions health and education- and the private sector become more important, especially with the rising middle class in China.

Under the plan China also wants to move from Made in China to Created in China or as others have put it “imitation to innovation.”

Premier Li gave a keynote speech at the Annual “Summer Davos” meeting in Tianjin on 11 September where he restated the leadership’s commitment to deliver economic reform. He said that the key to economic reform was letting “the market do what the market should do” and pledged that China would continue to open up financial markets to internal and external competition. In the next few days the 3^rd Plenary will no doubt confirm the direction of travel.

This not to say that China doesn’t have major challenges to overcome. Income disparities between East and West, Countryside and City; An ageing population; environmental challenges; the challenges of internal migration and urbanisation; internal ;a lack of financing for SME’s- reflecting the high percentage of SOE ownership of industry;  an education system that is belatedly acknowledging the need for creativity and uncertain property rights both in respect of real and intellectual property.

But both the plan and the challenges give us substantial opportunities.

The APPCG’s  visit last month gave me considerable reason to believe that we can take advantage of the welcome new initiatives such as the Shanghai pilot Free Trade Zone and the Qianhai  special economic zone, particularly in the provision of professional, financial  and consulting services

We also have a great deal to contribute in our creative industries Britain has a great reputation in architecture, design, fashion, film, animation, games, television, advertising, publishing and music. We have great opportunity for creative and artistic partnership between China and the UK typified by the success of Thomas Heatherwick’s UK pavilion at the Shanghai Expo in 2010.

In the Automotive field brands such as Jaguar, Bentley, Aston Martin, Land Rover not mention are experiencing record success. For JLR China is now a bigger market than the UK.

China is leapfrogging the West in many areas of environmental sustainability . This need for green growth provides an important Market for ULK goods and services.

But in all of this as the All Party Group heard in Shanghai  from a whole variety of successful and well established British companies we need to stay ahead of the game if we wish to compete effectively in China.

Increasingly China is moving from licensing Western intellectual property, knowhow and technology towards developing its own. Brands such as Huawei and Lenovo are now global and highly innovative.

So British companies need to keep innovating to stay successful. We need to focus too on those areas where we can demonstrate efficiencies and better use of resources.

For our trade and investment to keep forging ahead we need SME ‘s to have greater self confidence in entering the China market. As we heard earlier this week in the APPCG we can now welcome the establishment of a growing  FCO outreach team  to work with China’s provincial governments and 2nd and 3rd tier cities. We have well staffed consulates in many cities and an increasingly effective team from the CBBC accross the key cities, with sector specialisations.

In the FCO in London we have the Emerging Powers Department.

Of course we would like more but the basic support is there in China, what we really need is to get the message home in the UK to SME’s, through UKTI, through our Chambers of Commerce through our trade bodies and through our  borough and city local authorities.

 

In the context of SME’s and the contribution they make to local prosperity they really do need more active  assistance from them in cracking new markets in China.

There is no doubt that setting up close twinning relationships between Chinese and UK towns and cities can be not only culturally important but also of great benefit for business if done in the right way.

Carl-Johan Carlstedt and Christopher Georgiou have recently published some interesting research with the Chinese Liberal Democrats , entitled UK China Twinned Cities: A friendly gesture or a viable channel of trade and investment for regional cities?

Twinning relationships can work well, particularly if they have history behind them. Liverpool demonstrated commitment in exhibiting at the Shanghai World Expo and reaped the reward of a much altered perception of Liverpool as an international outward-looking city.

 

But twinning needs to be properly leveraged and managed they say.  Often there is an inbalance between the Chinese and the UK twinning partner.

Shanghai has a population of 24 million with its city authority boundaries; Liverpool City by contrast just 500,000 or so. So the role of the Local Enterprise Partnership in the region and the prospect of a combined authority with outlying boroughs is of great importance.

Local political and economic structures are important.

Lord Heseltine argues in his  ‘No Stone Unturned’ Report that the UK has one of the most centralized political systems in the western world.  As a result investment in much needed infrastructure and development required to attract international business and investment has been delayed .

Local authorities need to be able to stand on their own two feet.

They say  “Although population levels could never compare between these countries it is important that the jurisdictional agreements between local authorities work to facilitate connections, investment, trade and business that exist within their surrounding area.”

But much more is needed. The actual structures of the local authorities in these city regions need changing if they are to match the conurbations of developing countries.

This is a message which is amplified by the RSA. The RSA are now launching “the City Growth Commission” chaired by Jim O’Neil .

What further steps are planned by DCLG and BiS towards greater economic devolution for our cities to fully take advantage of links with China. Are they prepared to make a fundamental shift towards powerful city regions?

What is also needed for SME’s to take the plunge into China as are effective cultural and business relationship bridges. One of the key ways of doing this is through Chinese alumnis of UK universities.

In terms of attracting China business, students and tourists to the UK tourism and higher education are vital sectors for us.

Whilst noting that our trade promotion budget in Germany is 40% higher the GREAT campaign has been very effective post Olympics in highlighting what Britain has to offer.

Quite apart from the immediate benefits, today’s tourists are also often tomorrow’s business visitors and potential investors. Student alumni are a growing and important source of soft power for the UK and cultural bridge for British business.

Visa policy to date as regards Chinese tourists and students, appears to have taken no account of the risks and rewards involved.

The level of abuse by Chinese students for example has been minimal-after all Chinese post- Graduate students have excellent prospects in China. On the other hand 100,000 or so Chinese students bring huge benefits to our higher education institutions and their host towns and cities. They comprise 26% of all international students.

Chinese tourists mainly visit Europe in groups and spend per head more than any other nationality, delivering some £300 million annually to the UK economy or £1,600 per head.

I very much welcome its partial change of heart on tourist visas.

 

The Chancellor’s recent announcement in China of a pilot scheme which should lead to a simplified process for group visas, through closer alignment with Schengen applications, is a welcome move. This would allow Chinese tourists to apply for a UK visa using the Schengen form through approved Chinese travel agents organising group tours.

We need to go further however both in process and promotion for both students and tourists as organisations such as Universities UK, London First and Walpole British Luxury have urged. All our visitors should be treated as VIP’s!

We need to co-locate our visa application centres with selected Schengen countries – especially in respect of collection of biometrics data, soon to be introduced as a requirement by the rest of Europe.

The latest improvements need to be extended to the Free Independent Traveller category (FITs), which is a growing segment of the Chinese outbound tourism market.

we need to alter the perception that overseas students are not welcome in the UK. Inclusion of students in the net migration figures sends out all the wrong signals. The Home Office’s own evidence shows that of those students who entered in 2006 only 1% had settled permanently by 2011. The sooner the Government sees sense and excludes students from the immigration figures the better it will be for the health of our Higher Education Sector.

Here are a few photos from our very successful All Party Parliamentary China Group visit to Shanghai last month

 

 

 

Great debate at Xi’an Jiaotong-Liverpool University with the All Party Group visit to Shanghai on the motion:” This House believes that creativity is a more important trait than diligence for university students.”

http://news.xjtlu.edu.cn/en/recent-news/4105-british-members-of-parliament-visit-xjtlu.html

Here’s my speech for the the motion!

Let me first of all admit that in life to be successful you must have at least one of the qualities of diligence and creativity.

This is unlike the pandas Sweetie and Sunshine which are now in Edinburgh Zoo  in Scotland thanks  to my good friend Peter Budd of Arup over there.

Failing to mate and produce a little Panda demonstrates that you either must have creativity or diligence but to lack both is definitely not acceptable!

But our case today on this side of the House is that creativity is a far more important trait for university students than determination.

What did the Opening Ceremonies of the 2008 Beijing Olympics and the 2012 London Olympics have in Common?

Well in Beijing you didn’t have a Confucian lesson about the hard work needed to pass the Imperial examinations to become a mandarin.

In London we didn’t have a moving scene set in Victorian times about the virtues of hard work!

Certainly not !

We had great celebrations of creativity and innovation by our two great nations!

The Beijing Opening Ceremony celebrated the four Great  Inventions when China invented just about everything 1000-2000 years ago!

In particular paper, gunpowder, printing and the compass.

In London we celebrated the Industrial revolution, rock music and the invention of the internet

What now unites us as countries is our creativity and innovation.

China since reform and opening up has reinvented it’s innovative entrepreneurial spirit so well demonstrated by Admiral Zheng He in his voyages for the Ming Emperors.

Something very important for creative industry is happening in China. The economy is moving from “made in China” to “Created in China”.

Who needs Facebook, Google, Twitter, EBay and Tumblr when you have Baidu, Weibo, Wechat , Taobao, Alibaba and a host of other new social and business networks.

Brands such as Huawei and Lenovo are now global.

Britain has a great reputation in architecture, design, fashion, film, animation, games, television, advertising, publishing and music.

 

You and your parents all seem to be watching Sherlock and Downton Abbey.

Of course everybody now  thinks we English Lords live like that!

Famous and creative brands such as Burberry, Jaguar, Bentley, Aston Martin, Land Rover not mention  Chivas and Johnnie Walker are highly sought after by Chinese consumers

Chinese visitors to the Shanghai Expo I know were delighted by the winning British pavilion at the Shanghai Expo designed by Thomas Heatherwick we called it the seed cathedral and you called it  the “Dandelion”.

We now have great opportunity for creative and artistic partnership between China and the UK.

Chinese companies are reinvigorating or developing some of our long-standing British brands such as MG cars and yes Weetabix the breakfast cereal!

We didn’t have some dull seminars on fuel efficiency to celebrate the formula 1 Grand Prix in Shangai. We imported some  the Breakdancers onto the city streets. There’s creativity for you!

September visit

Just back from a visit to Shanghai to mark the handover of the Chairmanship of China Britain Business Council from Sir David Brewer to Lord Sassoon. Great evidence of much increased trade and investment between China and the UK and the great potential for further growth, particular in consumer brands.

See the piece in Law Society Gazette in which I commented before going out.

http://www.lawgazette.co.uk/72123.article

On this page I regularly post speeches and photographs relevant to my links with and visits to China.

Here is the link for a letter to All Party China Group Chairman Richard Graham from Minister for Immigration Mark Harper MP responding to criticisms of the process for obtaining UK visas from China.:

http://appcg.files.wordpress.com/2013/07/l-mark-harper-02-07-2013.pdf

This a speech from  Lord C-J to the Chinese Libs Dems on the 3rd June:

East/West Reflections

As I’m among Chinese Lib Dems I should point out that It’s an interesting coincidence that I married my late Chinese wife Vicky and joined the Liberal party  in the same year 40 years ago.

 

A bit of Confucian or Tao harmony at work there perhaps!

 

I had a rather more romantic introduction to the one rather than the other however!

 

I met my late wife on my first day at Cambridge University after being introduced by my cousin who went to the same college at what was quaintly called a “coming up dance” for freshers.

 

Vicky came from a well-known Hong Kong family who were the main Chinese go-betweens or “compradores” in Portuguese between the trading house of Jardine Matheson and the Chinese business community in Hong Kong.

 

Strangely enough another cousin married the head of Jardines a few years after I met Vicky which meant I had strong connections with both sides of the early trading history of Hong Kong!

 

She had come over to England when quite young and she subsequently achieved a double first-in medicine, discovered how acupuncture works and founded an important cancer advice charity.

 

As a result I got to know Hong Kong well but not the mainland over the next 20 years and discovered what good Cantonese food my mother in law could prepare and what a competitive (and noisy!) game Mahjong is!

 

My one regret is that I should definitely have learnt Mandarin! I now advise every young person I meet to do so!

 

Joining the Liberal party was quite a different proposition I was qualifying as a lawyer in a major city law firm doing very dull work in the banking and shipping finance area and someone suggested going to volunteer at the first public Law Centre in North Kensington.

 

Many young lawyers now do what is called pro bono work but in those days it was quite unusual.

 

North Kensington in the 1970s had appalling housing problems with landlords evicting tenants without regard to their rights often violently.

 

The only party I thought had the proper regulated market approach to peoples housing rights and how to control landlords’ behaviour at the time I thought were the Liberals. This was in the aftermath of the notorious slum landlord Rachman.

 

What is more they were winning by-elections in by a handful always a good incentive to join!

 

It was only after I joined that I came to appreciate understand and value the vital combination of their regard for freedom and fairness and their open and international approach which lasts to this day in the merged party I and many others helped to create in 1988 – the Liberal Democrats.

 

Over the last 10 to 15 years both in my professional life in politics I’ve been privileged to see the rise in influence of China internationally and the growth in its prosperity . I have visited it many times and most of its major cities.

 

I became vice chair of the All Party China Group over 10 years ago and Deputy Chairman a year ago although in Chinese I think there is no difference! Their work is very important in promoting good relations between the National Peoples Congress and our own Parliament.

 

We cover a range of subjects and are not afraid to sometimes deal with difficult issues.

 

The one thing that I’m convinced of whether I’m wearing a business or a political hat is the vital importance of free-trade and ease of travel between China and the UK and indeed between all emerging and developed markets.

There are undoubtedly some drawbacks of globalisation to be overcome but free-trade is the cornerstone I believe of world prosperity

Napoleon called Britain a nation of shopkeepers. (For French speakers he actually said: “une nation de boutiquiers“)

That sounds better for places like Bicester Village I think!

His fellow countryman Voltaire praised the British trade system, its benefits, and what it brings to the British nation. According to Voltaire,” trade greatly contributes to the liberty of the people, and this liberty in turn contributes to the expansion of commerce.”

 

Right through Georgian and Victorian times we were one of the most commercial, entrepreneurial and inventive nations on earth.

Our Victorian Liberal predecessors should take some credit for this free trade national mindset.

The liberal Prime Minister Gladstone in the 19th century was strongly pro free trade and against protectionism and we as a Liberal Democrat Party been strongly in favour of allowing the free flow of employment between countries and against unfair and unreasonable visa restrictions

We were and always have been too strong believers in individual human and civil rights, including proper working conditions, wherever that may be, running alongside our support for free trade.

 

I’ve always thought that the Chinese and British have a great deal in common, not just because both have a similar sense of humour and to seal a deal with a drink or two occasionally!

 

The Chinese as they celebrated at the 2008 Beijing Olympic Opening Ceremony invented just about everything 1000-2000 years ago! Paper, gunpowder, printing the compass (what are called the Four Great Inventions) and many other things- cast iron, the ploughshare, the stirrup, hydraulics, you name it they invented it! As Professor Joseph Needham described in his amazing body of work, Science and Civilisation in China.

 

Both Britain in the last 30 years and China since reform and opening up under Deng Xiaoping being have had to reinvent that innovative entrepreneurial spirit, Britain now in services and China in manufacturing so far.

It even clearer than ever that we need China to prosper and trade with and invest in Europe and in the UK in particular.

In the last financial year China was the third largest investor in the UK by number of FDI projects, generating and safeguarding more than 2,000 jobs. 80% of existing Chinese  investment in Europe is in the UK.

I believe that we have huge opportunities in partnership to do great things for the benefit of both our economies especially now that the Chinese companies are investing in the UK.

Chinese companies are reinvigorating or developing some of our long-standing brands such as MG and yes Weetabix!

Others such as Burberry, Jaguar, Bentley Aston Martin Land Rover and Johnnie Walker (!) are highly sought after by Chinese consumers.

 

The Chinese economy is changing to a consumer led economy which has great implications

There are many sectors where there is the prospect of real partnership.

The sector which I particularly value, because that’s what I speak on here in the Lords, consists of the creative industries.

Creative employment in the UK provides around two million jobs, in the creative sector itself and in creative roles in other industries. In recent times employment in the sector has grown at double the rate of the economy as a whole.

Britain has huge experience and expertise in architecture design fashion film animation games television advertising publishing music and so on.

Chinese visitors to the Shanghai Expo I know were delighted by the British pavilion at the Shanghai Expo designed by Thomas Heatherwick and took very much to heart what we called the seed cathedral and they called the “Dandelion”.

 

Something very important for creative industry is also happening in China. In business the emphasis is now on creativity. This is very much reflected the 12^th 5 year plan that is underway and marks an important new approach where creative and artistic skills are being highly valued.

 

This is of course with the aim of the economy moving from “made in China” to “Created in China”

 

We now have great opportunity for creative and artistic partnership between China and the UK. There is a real role for collaboration between us in helping developing creative industry clusters in China. Already we are seeing the formation of important joint ventures and collaborations in many creative areas.

 

For example Pinewood Shepperton has recently signed a joint venture with a Chinese media entrepreneur Bruno Wu’s Seven Stars company in order to expand its production services into China.

The partnership will make co-productions, run film courses, develop financing for Chinese productions and create film-themed entertainment venues.

Our Education links with China are of huge importance. We have over 1000,000 Chinese students here at both undergraduate and post graduate level.

That is why I regret the abolition of the post study work route visa which allowed  two years of postgraduate employment in the UK and the continued classification of students as migrants!

 

An attractive package of study and employment is very important for career development as the governments of US Canada and Australia with their more favorble visa regimes and other attractions know only too well.

 

I’m sure this audience can see many other potential areas of collaboration between China Britain whether in business or culturally.

We don’t know the answer to this but it could be in advanced engineering, low carbon technologies, sustainable urban development, healthcare and life sciences, information and communications technology or food security and infrastructure.

Of course Chinese tourists are of growing importance here too.

What we do know is that relationships aren’t built in a day. On a recent visit to the City of Taiyuan in Shanxi for the Central China Expo I was proudly shown a 3000 year old tree and a 1000 year old vine. Planted  to last I thought! And that’s what we must do in business in China -plant business relationships that last

We have the great advantage that despite our lack of language skills more and more people have some knowledge of China or Chinese culture or have visited there. Certainly here the New Year Celebrations in London get bigger. There are more Chinese Exhibitions, Delegations, and top Quality new Restaurants than ever before!

Speech at UCL on Chinese New Year February 2013

UK Relations with China

Xin nian kuai le! or for Cantonese speakers Gung Hei Fat Choy

Happy New Year of the (Water) Snake to you all. May you all have the wisdom cunning and determination of the serpent.

The snake or serpent rather like the dragon gets a bad press in the west. As a result of Adam and Eve and the apple of wisdom .

Not so in China of course! Snakes have quite a flair for business too!

At a time such as this – especially when my personal, political and professional life has been so heavily entwined with China over the years -I make no bones about my admiration for Chinese culture and view about the importance of Chinese British relations.

When I was younger and met -on my first day at university-and later married a young lady from Hong Kong had no idea how things would develop.

 As well as learning how to use chopsticks and being able to order Dim Sun and play mahjong, I should definitely have learnt Mandarin several decades ago! I now advise every young person I meet to do so!

 In fact the good news is that from a low base over the past 8 years there has been a 40% increase in those taking Mandarin GCSE. So we may be belatedly acquiring the necessary language skills.

 

Every year the New Year Celebrations in London get bigger. Yesterday we a huge parade, films and events in Leicester and Trafalgar squares and Shaftesbury Avenue despite the rain.

There are more Chinese Exhibitions, Delegations, and top Quality new Restaurants than ever before.

One of our well -known food critics was bitterly complaining recently how expensive the new Chinese restaurants opening were. Certainly not the image of the past!

Spending across London’s shops and tourist attractions by Chinese shoppers reached a new record last week and in that respect the changes to the visa system for Chinese tourists whilst not going far enough -we should be collaborating in a one stop shop with other EU countries-will  be of considerable benefit to us.

China’s increasing numbers of Students and tourists make a huge contribution to our economy.

As a result more and more people have some knowledge of China or Chinese culture or have visited there.

The Chinese as you know have a very long perspective.

 200 years is but a passing phase. On a recent visit to the City of Taiyuan in Shanxi for the Central China Expo I was proudly shown a 3000 year old tree and a 1000 year old vine. Planted to last I thought!

 So I am heartened by how the China UK relationship is building into a really long term one.

Chinese Emperors and Presidents alike have emphasized the need for harmony over the centuries. The importance of the way of the Tao continues. Confucius has been rehabilitated as a philosopher in China and the ideal of harmony at home and abroad has new currency.

 Trade and investment is however crucial to the maintenance of that harmony within China, where continued strong economic growth is vital.

 So it is even clearer than ever that we need China to prosper and trade with and invest in Europe and in the UK in particular.

In November 2010, the Prime Minister and President Hu Jintao agreed a bilateral trade target of $100 billion by 2015.

Within this, the UK aims to double exports to China to $30 billion by 2015. And progress towards these targets is broadly on track

As a sign of its commitment to UK-China relations the Government is allocating significant new resources to its network in China network – around 60 additional staff – and is in discussion about opening a new consulate to expand UK’s engagement in China-perhaps in Wuhan.

Britain has consistently been an advocate not just of free trade but liberal capital markets where, sometimes controversially, unlike most other nations we concern ourselves less with ownership than with the quality and success of a business.

There are great opportunities in terms of inward investment here which will be China’s focus in the next few years.

 China aims to use this to move up the value chain, away from low-cost manufacturing, towards output driven by innovation. This will require Chinese companies to “go global” even more than they have been doing.  Many of them are setting up their HQ’s in the UK.

 In the last financial year China was the third largest investor in the UK by number of FDI projects, generating and safeguarding more than 2,000 jobs. 80% of existing Chinese  investment in Europe is in the UK.

The UK is now home to more than 600 Chinese companies that have taken advantage of our status as one of the most open economies in the world

 Chinese companies are increasingly reaching beyond natural resources and are acquiring a broader range of assets.

 This includes buying more global brands and overseas technology and promoting Chinese service industries such as banking.  We are strong in these sectors and need to demonstrate our expertise and capability to assist them.

 In terms of investment in contrast to a number of other Western countries we have welcomed investment from Chinese companies.

•  China Investment Corporation’s (CIC) investments in Thames Water and Heathrow Airport,
• The State Administration of Foreign Exchange’s (SAFE) investment in Veolia,
• As well as Huawei’s announcement that it will be investing a further £1.3bn in the UK, creating up to 700 new jobs.

China also has an appetite for well-known foreign brands and products, together with their related knowhow and technology.  The trend is to take these brands back to China and unlock a new home market, tapping into China’s aspirations as a growing economy.

 For example, through its 2012 acquisition of a £1.2bn stake in UK-based Weetabix, China’s Bright Food aims to develop this Western food brand for evolving Chinese tastes. Similarly Western luxury brands appeal, offering potential to open new, high-end markets in Asia.

 As regards UK investment in China we know how important it is to make sure that we go with the grain of China’s economic strategy.

 A result of the latest 12th 5 year plan the Chinese government has a very comprehensive strategy towards a more consumer led economy, a more environmental and energy conscious economy and one where the services and the private sector are more important.

This is of course with the aim of the economy moving from “made in China” to “Created in China” which is a significant shift in approach, where creative and artistic skills are being highly valued.

This means a change from the hardware driven approach of manufacturing and assembling to others’ design towards a higher value added economy of conceiving the concept and design elements as well, a move towards encouraging creativity and innovation.

 Something very important for creative industry is also happening in China.

In the last two years I’ve been in a variety of cities: Beijing , Shanghai, Hong Kong, Shenzhen, Chengdu, Taiyuan and Nanjing.

In all of them-whether in discussion with business people, national or provincial or municipal officials or students and academics- I’ve seen  total agreement about the new importance to China of creativity and the creative industries.

In recent times employment in our own UK creative industry sector has grown at double the rate of our economy as a whole. We need to follow up the opportunities available to us and build creative links between the UK and  China.

We have a great opportunity for creative and artistic partnership between China and the UK. This is especially relevant in the year after we took over the Olympic torch from Beijing for our 2012 Games in London and demonstrated our creativity and cultural heritage  in the opening ceremonies.

All over China I have seen a real enthusiasm for partnership with British cultural instructions and  creative industries

The UK Shanghai pavilion designed by Thomas Heatherwick nicknamed “the Dandelion”  -awarded the gold prize among the foreign pavilions by Chinese visitors to the Expo 3 years ago successfully illustrated our strengths in innovation, creativity and technology and the great opportunities for partnership with China in a host of areas such as games and new media, architecture, design, fashion, animation, music, film, radio, television and advertising.

I know that our key trade promotion and cultural bodies UKTI, CBBC, and the British Council are seeking openings for British creative industry to partner in China.

 We also have great Education links with Asian countries as we know well at UCL.

 The UK  has 7 of the top universities in the world including UCL itself of course.

  There are some 85-100,000 Chinese students studying in the UK at both undergraduate and post graduate level.

 I hope they will continue to be a fantastic asset for us, despite regrettable changes to our student visa regime. And we must make sure that the visa system allows our strong international links with Chinese students and postgraduates to thrive

 A visa giving the ability to work post study visas was an important part of the decision by many Chinese students about where to study. They took the view that an attractive package of study and employment was important for their career development.

 I hope that other countries such as US and Canada with more favourable visa terms, tuition costs and bursaries will not now look more attractive.

 We must also make sure that the student experience for  Chinese  students is excellent and we create  and tap into  networks which they  have when they  leave.

There is a strong link to inward investment in China here.

A recent study by the China Britain Business Council -CBBC-has demonstrated that there are over 35 cities which are important and desirable destinations for western companies.

Many cities want to attract high value added industries to make sure that their graduates’ skills are developed and utilized and the trick for investors many of us is to understand the key factors for successful investment.

Crucially and interestingly for this audience a key factor is what research and development links are there that can be made with inward investing businesses with local universities?  Are there specialities that really match the kind of business the city wants to attract? Intellectual capital is crucial in modern business.

Good protection of Intellectual Property Rights is vital.

China still does not have a fully robust regime for protecting intellectual property, and this remains a key concern for European investors required to transfer technology to obtain Chinese market share as part of joint venture agreements. But things are improving China overtook the US in 2011 to become the Worlds’s No 1 recipient of patent applications. There is a new trademarks law on the way.

Corruption is being vigorously tackled. China has made considerable progress towards establishing an effective legal system. Reforms have led to an improved legal framework for foreign businesses working there.

I could have mentioned many other areas where there is great scope for UK partnership with China,

We have the often unsung but vital area of advanced engineering, particularly in aerospace, automotive and many other high tech areas.

Despite the vicissitudes of some of our banks. We have our strong global financial services sector which has very close links with the Shanghai, Singapore, Hong Kong and Shenzhen financial services centres. In partnership with Hong Kong we are now in London becoming a global centre for Renminbi trading.

We have a strong contribution to make in low carbon technologies of all kinds and sustainable urban development. Also in healthcare and life sciences, information and communications technology, food security and infrastructure. At UCL our Grand Challenges are bound up with many of these issues.

 At the end of the day however we need to acknowledge that China is the new superpower in our relations with them.

Much of their focus is inevitably on the EU where the key trade agreements are negotiated and enforced. In key areas such as trade policy and climate change, we need to agree trade and investment strategies within the EU and to speak with one voice.

This is the reality. Whether that meets with agreement across all parties in Parliament I leave you to judge!

Speech to World Traders Annual Dinner: May 2012

Master, Wardens Your Excellencies, My Lords, Chief Commoner,  Lord Lieutenant, Ladies and Gentlemen.

It is a privilege and pleasure-especially as a fledgling member- to be asked to thank The Worshipful Company of World Traders at Mei Sim Lai’s Installation dinner on behalf of the guests.

It seems extraordinary now that the World Traders are such a young company. Trading after all is in Britain’s DNA, as the Prime Minister said when visiting Beijing last year.

Prompted by a friend I was reading Voltaire’s letters on the English Nation only the other day. He was a great admirer of England and it’s political system. Inspired by his two-year stay in England a few years earlier he was writing in the 1730’s and he devotes a complete chapter to trade.

He praises the English trade system, its benefits, and what it brings to the British nation. According to Voltaire, trade greatly contributes to the liberty of the English people, and this liberty in turn contributes to the expansion of commerce.

In addition, Voltaire satirizes the German and French nobles who look down on trade as beneath them. For Voltaire, nobles are less important than the businessman who “contributes to the felicity of the world.”

Very modern and quite right too!

Of course Mei Sim herself, the new Master, links us to China and China to trading. And what a great link Mei Sim is: a classic example of how someone with her background can add so much to her adopted country whilst retaining and developing the links with both her ancestral homeland-China- and her country of birth -Malaysia-for our benefit.

In our lifetime the greatest story, together with the breaking down of  the Iron Curtain, has been the Rise of China and the Tiger economies of South East Asia

Isn’t it ironic that the Chinese Tiangong 1 space station (“sky palace”) due to be docked with by Shenzhou-8 in a week or so would be launched in the same year as the NASA shuttle was retired from service!

The last 20 years has seen us all benefit from the price of products being relentlessly driven down by a switch of production to Asia. We have seen Asian nations take the world stage economically and politically not least in taking a prominent role in the G20 in tackling the bank crisis and global recession without going back to a protectionist world trading system.

Indeed the Asia Pacific region has a whole has come to greater prominence than ever before. With economic stagnation in Europe and the US we are all looking at the region to pull us out of the economic rut!

I can testify as a partner in a global law firm that capabilities in the region are absolutely crucial and we have recently merged with an Australian law firm to ensure we have the right skills.

My personal political and professional life has been heavily entwined with China over the years so please forgive me for focusing unduly in that direction. I have however visited most the countries represented by the Ambassadors and High Commissioners here and climbed both Mount  Kinabalu and Mount Batur in my time!

I have been an unashamed Sinophile  for many years. But when I was younger and met -on my first day at Cambridge-and later married a young lady from Hong Kong had no idea how things would develop.

As well as learning how to use chopsticks and being able to order Dim Sun and play mahjong, I should definitely have learnt Mandarin! I now advise every young person I meet to do so!

In fact the good news is that from a low base over the past 8 years there has been a 40% increase in those taking Mandarin GCSE. So we may be belatedly acquiring the necessary language skills.

The Chinese have a very long perspective. 200 years is but a passing phase. On a recent visit to the City of Taiyuan in Shanxi for the Central China Expo I was proudly shown a 3000 year old tree and a 1000 year old vine. Planted  to last I thought!

It is not just long term thinking but fear of instability which drives Chinese policy. Many westerners tend to think of China as a large centralized  monolithic, uniform state which moves forward at a steady controlled pace.

This is far from the case even now. Over the centuries instability has been rife, there have been as many as 8 different capitals of China as different dynasties have taken power. This year after all the Chinese are celebrating the 90th anniversary of the Xinhai Revolution of 1911 and there was considerable turmoil until the creation of the People’s Public of China in 1949.

Even now we know that there are demonstrations in response to local development decisions and appropriation of property in some parts of China.

It is hardly surprising that one of the cardinal principles of successive governments has been retaining stability above everything.

Chinese Emperors and Presidents  alike have emphasized the need for harmony over the centuries. The importance of the way of the Tao continues. Confucius has been rehabilitated as a philosopher in China and the ideal of harmony at home and abroad has new currency.

Trade and investment is however crucial to the maintenance of that harmony, both in China and other densely populated Asian countries where continued  fast economic growth is vital.

Lord MacCartney’ visited  China as the official British envoy in the 1790’s. This of course was for the purpose of seeking greater trade for Britain. He carried a message from King George the III and a book containing all the things we thought we were good at including the design of stately homes!

However it turned out that we were not able to persuade the Chinese to open up more of their ports to trade which as you will know led in due course to gun boat diplomacy and the infamous Opium wars.

Nowadays of course one of the defining ppoliciesu that we have in common with China and many of the countries of South East Asia is the whole notion of free trade. Our nations have benefitted greatly from it and the UK is keen to further trade dialogue and free trade agreements between the EU and ASEAN countries.

I like think the predecessor of my own party, the British Liberal Party of Gladstone and Lloyd George can take some credit for our national mindset.

Britain has consistently been an advocate not just of free trade but liberal capital markets where, sometimes controversially, unlike most other nations we concern ourselves less with ownership than with the quality and success of an enterprise. This self confidence is I am sure a legacy of our Victorian Liberal predecessors.

There are  many issues to be dealt with by China and nations of South East Asia in the modern world, economic, social, political and environmental but only through continuing trade and investment  can the wealth be generated to resolve them.

 So what are the opportunities for partnership between  the Asia Pacific region and the UK in all of this you may ask? We in the UK are far too heavily focused on developed as opposed to emerging markets. We greatly need to expand our trade with Asian countries

But let’s look at our advantages.

We have an admired creative economy.  I went to the Expo in Shanghai twice last year. The UK’s Shanghai Expo pavilion was evidence of the importance of the China- British relationship in this area. Chinese visitors to the Expo awarded it the gold prize among the foreign pavilions and took to their hearts what we called the Seed Cathedral and they named the “Dandelion”.

The UK Shanghai pavilion the pavilion designed by Thomas Heatherwick successfully illustrated our strengths in innovation, creativity and technology and the great opportunities for partnership with China in a host of areas such as games and new media, architecture, design, fashion, animation, music, film, radio, television and advertising.

We have the often unsung but vital area of advanced engineering, particularly in aerospace, automotive and many other high tech areas.

Then Britain has one of the most sophisticated service economies in the world.

Despite the vicissitudes of some of our banks. we have our strong global financial services sector which has very close links with the Shanghai, Singapore, Hong Kong and Shenzhen financial services centres.

The recent round of the Economic and Financial Dialogue with China confirmed the strong expertise we can deliver in capital markets, bond market development, private equity, and insurance to name but a few.

Our lawyers and accountants are not incapable of making a contribution too as I am sure Mei Sim will agree! Our legal system and professional skills, allied to our time zone, in London make us a global hub for business.

We also have great Education links with Asian countries. We have 7  of the top universities in the world. There are some 85-100,000 Chinese students studying in the UK at both undergraduate and post graduate level and likewise a further 30,000 students from South East Asia I hope they will continue to be a fantastic asset for us, despite regrettable changes to our student visa regime.

The recent Economic and Financial Dialogue with China emphasized that we have a strong contribution to make in low carbon technologies of all kinds and sustainable urban development. Also in healthcare and life sciences, information and communications technology, food security and infrastructure.

Then of course there are the outward investment opportunities into China and South East Asia.

Britain has been the leading EU investor after Germany in China in recent years. We need to step up our efforts in the secondary and tertiary cities however. CBBC has published a recent report demonstrating the benefits of investing in at least 35 Chinese regional  cities, but we risk falling behind our continental and US competitors, despite all the support available.

Perhaps it is partly a failure to understand Chinese culture.  Relationships come first followed by business. This may involve drinking substantial quantities of baiju liquor!

There are great opportunities in terms of inward investment here too. Many Asian companies are now going global and Many of them are setting up their HQ’s in the UK.  For example 80% of existing Chinese  investment in Europe is in the UK.

The policy of this and all recent governments has been to maintain and develop even better relations with Asian Countries. We need Asia to keep its doors open to us and we need to reciprocate.

Even when things look grim in Europe, with the Eurozone under threat, we need to keep the free trade and investment flag flying! If we do I’m sure we can ensure that we’ll have growth and jobs for some years to come!

In any event, the World Traders are clearly ahead of the game in responding to world events by electing Mai Sim as their Master and they are to be congratulated!

 Speech At China Art Forum February 2012

Mr Chen, Mr Wang, ladies and gentlemen.

I am delighted to be speaking today after such an excellent introduction by Mr Zhe Chen.

Today’s  forum brings  together  two  of my great  interests: China and the creative industries, by which I mean the whole range of cultural activity including the creative visual and performing arts and the content industries such as film games and publishing.

Increasingly technologies are converging and technology and content are aligning so it is is possible and necessary to draw the description of creative industry very widely.

In many ways Jonathan Ive the British designer of the iMac, iPhone and iPad is a role model for our creative enterprise as much as some of our artists

Creative employment in the UK provides around two million jobs, in the creative sector itself and in creative roles in other industries.  Our creative industries contribute over 8% of the UK’s Gross domestic product. In London it is 16%.

Just take music for example. Live and recorded music plays a massive role within the sector. Combined income in the UK from live and recorded music and other licensing revenues, was estimated at nearly £3.7 billion in 2010.

In recent times employment in our UK creative industry sector has grown at double the rate of our economy as a whole.

Something very important for creative industry is also happening in China.

In the last two years  I’ve been in a variety of cities: Beijing , Shanghai, Hong Kong, Shenzhen, Chengdu, Taiyuan and Nanjing.

In all of them-whether in discussion with business people, national or provincial or municipal officials or  students and academics- I’ve seen  total agreement about the new importance to China of creativity and the creative industries.

Many of us have been hugely impressed by the development over the past few years of an artistic community in China with a range of cutting edge artistic quarters and galleries in different cities. 798 in Beijing springs to mind.

In fact from  the auction figures China now accounts for a third-if not more-of the sales in the international art market. Helen Wang and her International Art Foundation are very good evidence of  the huge interest now in Chinese artists and the art market in China.

She will be talking about this later.

In business the emphasis is also on creativity. There is a new phrase which is being used at all levels in the Chinese government,  “moving from Made in China towards created in China”

This means a change from the hardware driven approach of manufacturing and assembling to others’ design towards a higher value added economy of conceiving the concept and design elements as well, a move towards encouraging creativity and innovation.

This is very much reflected the 12^th 5 year plan-that is underway and marks an important new approach where creative and artistic skills are being highly valued.

This is to come to the essence of today’s forum:  the opportunity for creative and artistic partnership between China and the UK. This is especially relevant in a year in which we not only take over the Olympic torch from Beijing for our 2012 Games in London but also celebrate the 40th anniversary of the opening of diplomatic relations between our two countries.

All over China I have seen a real enthusiasm for  partnership with British cultural instructions and  creative industries and creators in art and design, games and new media, architecture, fashion, animation, music, film, radio, television and advertising.

We of course all need to make sure that creators are able to monetize and receive proper reward for their works and the skills that they have and the partnerships and collaborations they enter into.

Intellectual  property protection through copyright enforcement is a subject of increasing importance in the digital age. With much more intellectual property now being created in China between us we have a common agenda to protect it.

Working in dialogue between the Chinese government and intellectual property experts and together we can make progress towards better intellectual property protection and enforcement.

Combating piracy and unlawful copying is not simply a matter for the law however. We need to combat the idea that copyright infringement is socially acceptable through education and we need to make sure that there are legal ways of accessing copyright works at reasonable cost.

In addition It is clear that there is a real role for collaboration between us in developing creative industry hubs or clusters in China . Some of you will have heard of Media City in Salford Manchester, which now contains the main studios of the BBC or film studio developments such as Pinewood or Warner brothers Leavesdon-where the Harry Potter films were made.

There are clusters of innovative firms throughout the UK from film, photography and production in Brighton to video games and special effects in Dundee.

Our major cities, Liverpool, Manchester and Birmingham have done to much to turn themselves into creative hubs, through action plans

• facilitating networking groups,
• providing incubator space,
• investing in infrastructure,
• championing particular sectors,
• facilitating cultural apprenticeships,
• building strong links with their universities and Further education colleges.

In London itself we now have ‘Tech City’ in the East End which is emerging as a potential rival to Silicon Valley in the US, with Vodafone, Google and Facebook and now some major Chinese technology companies becoming involved  and committing to investing in the long-term future of the area.

Best practice is out there for us to share with our partners.  I am sure that there are strong partnerships to be made between British companies and cities and Chinese municipalities and enterprises  in  developing and managing space suitable for creativity of all kinds..

We also have strong experience in helping creative industries overcomes difficulty in access to finance. Many creative businesses face greater difficulties accessing finance compared to SMEs in other sectors with similar risk profiles.

I know that our key trade promotion and cultural bodies UKTI, CBBC, and the British Council are seeking openings for British creative industry to partner in China.

Chinese visitors to the Shanghai Expo I know were delighted by the British pavilion at the Shanghai Expo designed by Thomas Heatherwick and took very much to heart what we called the seed cathedral and you called the “Dandelion”.

We now need to follow up the opportunities available to us  and building creative links between the UK and  China.

There is a recognition that our centres of creative education can partner together. Our UK  higher and further education sector make a major contribution to the development of talent and skill for our UK creative economy. Some16% of our students are engaged in courses relevant to the arts and the creative economy.

Many of our universities and further education institutions make a unique contribution. They represent hubs for innovation and and centres for research. They engage with industry players, facilitate connections with creative SME’s and build networks. Many of them have important partnerships with cultural institutions such museums and galleries.

We must make sure that  the student  experience  for  Chinese  students  in creative skills in the UK is excellent and we create  and tap into  networks which they  have when they  leave. We also need to create  more internships  for Chinese students in the creative industries  and the arts.

And we must make sure that the visa system allows our strong international links with Chinese students and postgraduates to thrive and also with visiting creative artists.

Cultural exchange is vital if we are to nurture creativity in both our countries.

Returning to  the specific area of the international art market there is growing interest in Chinese art in Europe and the US   and Helen Wang herself has herself staged an important and successful exhibition of contemporary Chinese artists in London only last December.

Increasingly art has become an investment asset class. Art funds and wealth management are well established in the western world. With the rise in economic power of China, the newly established mid class is increasingly exploring investing in art.

Many art funds are setting up in China with a solid investor base. Art exchange too is an emerging concept which is beginning to have broad acceptance in China.

There are great opportunities but also challenges, the west needs to collaborate with the Chinese and explore opportunities in this most exciting market; the Chinese need to use the experience of the more established western art market to speed up its learning curve. The

By organising this conference, China International Art foundation is playing a pioneering role in building a platform between art and finance in the UK and China. I hope this will be the first step towards a ongoing dialogue so that opinion leaders can exchange first hand information which ultimately will lead to some fruitful cross border projects that can create a win win between China and the UK.

In conclusion ladies and gentlemen may I thank you for your attention and I  look forward to a strong partnership between China and the UK in all these creative areas and to a very successful International Art and Finance Forum today.