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China and UK: Partners in Sustainability

The Rt. Hon. John Hutton MP,  Secretary of State for Business, Enterprise & Regulatory Reform
The Sustainability Business Conference for China and the UK, London,  15 April 2008

Introduction

Good morning everyone. Can I start by thanking the China-Britain Business Council for organising this landmark event and for giving me the opportunity to say a few words at the beginning.

Your attendance at this conference and the calibre of today’s speakers emphasises both our strong and growing trade partnership with China and also the importance of our continued focus on sustainability.

Bilateral Dialogue

During my visit to China earlier this year, I saw for myself the determination of the Chinese people to succeed and the dynamism driving their economy, as they become one of the world’s leading trading nations.

I believe UK businesses can help power this growth and benefit from increased access to these new markets. Working with our Chinese partners, we can also help tackle some of the century’s biggest global challenges.

To do that will take ambition. Prime Minister Gordon Brown and Premier Wen Jiabao have already set a challenging bilateral target for increases in trade in goods and services to reach $60 billion by 2010.

This – along with our aim to generate 100 more inward investment projects and for over 100 Chinese companies to be listed on the London Stock Exchange by 2010 – should help focus efforts to create the right business conditions, jobs and wealth in our two countries.

Dialogue on financial and economic issues between our two countries has been raised to Chancellor and Vice Premier level. This is the first agreement of its kind between China and an EU country. And will, I think, be an important forum for analysis and debate on the critical issues facing UK and Chinese businesses in the world economy.

The UK Chancellor is now in China for this Dialogue. And during his visit, he will reaffirm our commitment to meet the bilateral trade target; discuss the operating environment and issues impacting on UK businesses in China; and identify areas where we can strengthen our partnership.

Working Together

And as our two countries work together, we know there will continue to be important issues for us to discuss openly and frankly.

We must continue to discuss those things. And I hope China will maintain and accelerate its progress towards opening up to the rest of the world in the months and years ahead.

In addition to the economic benefits it can bring to both our countries, increasing the levels of trade and economic partnership between us can be an integral part of that long term process of change.

China is, I believe, coming to realise that growing international economic influence carries with it political responsibilities too. And we will continue to encourage China to approach international engagement positively and to work together with us and other countries, as responsible members of the international community.

Success

The benefits of trade between our two countries, I think, are already clear.

British companies continue to flourish in China. Following their work on Beijing Airport’s new Terminal 3, the internationally renowned UK architects, Foster & Partners have been short-listed to potentially design the US$1 billion "Shanghai Tower". Once completed, this will be Asia’s tallest building and yet another iconic Chinese landmark.

Other UK major investments across China include RBS/Merrill Lynch’s US$3.1 billion investment in the Bank of China. BP’s US$2.7 billion SECCO joint venture refinery plant. AstraZenca’s planned Innovation Centre. And Tesco’s 90% stake - in a joint venture with Taiwanese partner Hymall - in a chain of supermarkets. These and other deals have helped secure the UK’s position as Europe’s number one investor in China.

The UK also remains a world-leading location for Chinese investment, second only to Germany in the EU. By the end of July 2007, over 350 Chinese mainland companies had invested in the UK. And six Chinese companies are already listed on the main London Stock Exchange board and a further 64 listed on the secondary exchange – the Alternative Investment Market.

Chinese investment in the UK is also increasing rapidly, powered by big inward investment projects across the UK. Huawei has steadily grown its base in this country, as have ZTE. Shanghai Automotive has established an engineering and design centre in the West Midlands developing technology for use in manufacturing vehicles in Shanghai.

And now the world’s biggest mobile operator China Mobile Communications Corporation have established a London base, to be followed soon by China’s national television company – CCTV. The UK welcomes this and other international investment to our shores, including Sovereign Wealth Funds.

The UK’s Export Credits Guarantee Department and its Chinese counterpart, Sinosure also recently signed an agreement to co-operate more closely. This Memorandum of Understanding will benefit both UK and Chinese exporters. Through closer partnership-working on projects, and the sharing of knowledge and experience for better export credit policy and practice.

Sustainability

To truly succeed in today’s global markets, all economic growth must be, first and foremost, sustainable. The challenge of climate change threatens the lives and livelihoods of tens of millions across the world, and if unchecked will limit irrevocably rising aspirations and living standards for all.

So the increase of Clean Development Mechanism (CDM) projects is especially welcome. UK companies are involved in around a third of the 930-odd CDM projects now approved in China. But this is just a small, albeit incredibly important, part of the work between our countries on sustainability.

UKTI is running a series of seminars in key Chinese cities to demonstrate UK strengths in the development of green and energy efficient buildings. And has established a business led sub-group of the UK-China Construction Working Group to help improve building energy efficiency and sustainability in China.

We’re also working closely with other departments in the UK Government, such as DEFRA and DFID on the urban strand of the China-UK Sustainable Development Dialogue - designed to share lessons, experiences and establish sustainable development links between our two countries.

A project is now addressing the challenges of transferring knowledge and practical experience between the UK and China. Focussing on the experiences of businesses and city authorities in regenerating older industrial cities and providing affordable housing for low-income urban households.

At January’s UK-China Business Summit, we signed a Memorandum of Understanding to help overcome other barriers to sustainable urban growth and drive collaboration on the development of the cities of the future.

A framework to promote and encourage this involvement by UK business in the sustainable development of Chinese cities was detailed in a further MOU, and work has already begun on the pilot city of Wuhan.

While British Expertise has recently signed a MOU with the Municipal Construction Commission in Chongqing for a consortium of UK companies to lead the development of a new Green Town.

This is in addition to plans for various UK organisations and the Chongqing Government to establish an Education, Training and Qualification Centre. Where British Professional Institutions will provide professional development courses to many talented people in the region – primarily in the fields of built environment and environmental protection.

These, I believe, are just some of the huge opportunities available to establish valuable business relationships and generate new trade. And soon my Department will publish two new pieces of research from UKTI that aim to help UK companies make the most of them in China and the rest of the world.

Firstly, by identifying the potential for UK companies in the environmental services and Carbon Abatement sectors of seven key international markets. And second, by looking at how countries and business can capitalise on the growth of second tier cities in China.

UKTI is also supporting a strong British presence at leading business events in China. These include the International Intelligent, Green and Energy Efficient buildings event in Beijing, earlier this month and the upcoming Central China Expo in Wuhan – where UK companies will be promoting UK renewable energy and energy efficiency technologies, CDM and carbon financing.

Energy

Energy is once again a major issue on the international stage. Competition over access to, and control over energy resources is intensifying. And coupled with the urgency of climate change presents a clear challenge to global energy systems.

No one country can tackle these problems on its own.

They demand a fundamental overhaul of global energy use and supply and fair and open markets.

The UK/China joint declaration on climate change shows how seriously our two countries take these challenges and our strong commitment to deliver the low carbon solutions we need.

To succeed, we must move beyond discussions in Government to clear and effective action in our finance, business and energy sectors. And recognise that this low-carbon transition presents business opportunities across our economies.

The world’s low-carbon revolution will create perhaps the most significant new market for investment and manufacturing in the decades ahead. The global environmental goods and services market is set to grow from $548 billion in 2004 to nearly $800 billion by 2015.

As two of the world’s largest manufacturing economies, the UK and China have the potential to benefit from a new generation of green collar jobs, and to lead on the development of these exciting new technologies.

For example, the UK has a strong collaborative relationship with China in developing carbon capture and storage (CCS) – the key mitigation technology for reducing emissions from fossil fuels. And we’re very pleased to be working with China on the first phase of the Near Zero Emissions Coal initiative, which aims to develop and demonstrate these technologies in China.

Liberal and open markets

Businesses need clarity to invest with confidence in these initiatives and others. And, in the energy sector and beyond, robust open markets provide that certainty - encouraging investment and delivering sustainable cost-effective solutions and competitive prices.

The UK Government is committed to securing a pro-development outcome to the Doha Development Agenda. We believe an ambitious agreement would benefit developing and developed countries alike, and could generate millions of pounds of business in the world economy.

It’s critical the UK and China work – with other global partners – to resolve current imbalances in global trade. And ensure all world markets are open, competitive and transparent to create jobs for our people, growth for companies and better deals for consumers.

No country ever prospered through protectionism. And our countries must work to remove trade barriers, wherever they exist. Trade between the UK and China is strong. And like every business relationship, it must be built on clear rules, openness and a shared understanding if we are both to truly prosper.

One of the main reasons behind the World Trade Organisation proceedings on financial information services in China is to help create the right regulatory framework and competitive environment necessary for well-informed and orderly financial markets.

These measures such as the provision of the same financial information at the same time to banks both outside, as well as inside China are essential to China’s programme of economic reforms and future success.

Conclusion

Partnerships between countries built on shared knowledge, experience and opportunity are fundamental to continued success in a time of increased global uncertainty.

Such is the power and speed of global economic change, that it is critical our businesses and people are able to seize opportunities wherever they exist, and overcome whatever issues threaten our future progress.

Trade between the UK and China has grown over the generations. This century offers us the people and technology to develop it further than could ever have been thought possible before. And events such as today can ensure we make the most of this potential for the benefit of both our economies and our societies.

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