PM’s speech at Beijing University, China

Introduction
Twenty five years ago I came to Hong Kong as a student.
The year was 1985.
Deng Xiaoping and Margaret Thatcher had recently signed the historic Joint Declaration.
The remarkable story of the successful handover of Hong Kong…
…and the great progress Hong Kong has continued to make…
…is an example to the world of what can be achieved when two countries cooperate in confidence and with mutual respect.
 
Since then, China has changed almost beyond recognition.
China’s National Anthem famously calls on the people of China to stand up…
Qi lai qi lai (stand up, stand up)
Today the Chinese people are not just standing up in their own country…
…they are standing up in the world.
No longer can people talk about the global economy…
…without including the country that has grown on average ten per cent a year for three decades.
No longer can we talk about trade…
…without the country that is now the world’s largest exporter and third largest importer…
And no longer can we debate energy security or climate change…
…without the country that is one of the world’s biggest consumer of energy.
China is on course to reclaim, later this century, its position as the world’s biggest economy…
…the position it has held for 18 of the last 20 centuries.
…and an achievement of which the Chinese people are justly proud.
Put simply: China has re-emerged as a great global power.
Threat or Opportunity
Now people can react to this in one of two ways.
They can see China’s rise as a threat…
…or they can see it as an opportunity.
They can protect their markets from China…
…or open their markets to China.
 They can try and shut China out…
…or welcome China in, to a new place at the top table of global affairs.
There has been a change of Government in Britain and a change of Prime Minister.
But on this vital point there is absolute continuity between my government and the Governments of Tony Blair and Gordon Brown.
We want a strong relationship with China. Strong on trade. Strong on investment. Strong on dialogue.
I made that clear as Leader of the Opposition when I visited Beijing and Chongqing three years ago.
And I repeat it as Prime Minister here in China’s capital today.
In the argument about how to react to the rise of China…
…I say it’s an opportunity.
I choose engagement not disengagement.
Dialogue not stand-off.
Mutual benefit, not zero-sum game.
Partnership not protectionism.
Britain is the country that argues most passionately for globalisation and free trade.
Free trade is in our DNA.
And we want trade with China. As much of it as we can get.
That’s why I have with me on this visit one of the biggest and most high-powered delegations a British Prime Minister has ever led to China.
Just think about some of the prizes that the rise of China could help to bring within our grasp.
Strong, and sustainable growth for the global economy.
Vital progress on the Doha trade round which could add $170 billion to the global economy.
A real chance to get back on track towards a legally binding deal on emissions
Unprecedented progress in tackling poverty.
China has lifted 500 million people out of poverty in just thirty years.
Although there is still a long way to go – that’s more people lifted out of poverty than at any time in human history.
You can see the results right across this enormous country.
When I worked in Hong Kong briefly in 1985, Shenzhen was barely more than a small town, surrounded by paddy fields and waterways.
Today it is a city larger than London. It makes most of the world’s iPods and one in ten of its mobile phones.
And there are other benefits too in tackling the world’s most intractable problems.
I welcome the fact, for example, that more than 900 Chinese doctors now work in African countries and that in Uganda it is a Chinese pharmaceutical firm that is introducing a new anti-malarial drug.
 
So I want to make the positive case…
…for the world to see China’s rise as an opportunity not a threat.
But China needs to help us to make that argument…
…to demonstrate that as your economy grows, so do our shared interests, and our shared responsibilities.
We share an interest in China’s integration into the world economy, which is essential for China’s development.
If we are to maintain Europe’s openness to China, we must be able to show that China is open to Europe.
So we share an interest in an international system governed by rules and norms.
We share an interest in effective cooperative governance, including for the world economy.
We share an interest in fighting protectionism…
…and in a co-ordinated rebalancing between surplus and deficit countries.
These interests, those responsibilities are both economic and political.
Let me take each in turn.
Economic Responsibilities
First, economic responsibilities.
Let’s get straight to the point.
The world economy has begun to grow again after the crisis.
But that growth is very uneven.
Led by China, Asia and other emerging markets are growing quickly.
But in much of the advanced world growth is slow and fragile and unemployment stubbornly high.
We should not be surprised at this.
The crisis has damaged many advanced economies and weakened their financial sectors.
They face major structural and fiscal adjustments to rebalance their economies.
This is true of my own country.
We know what steps we need to take to restore the public finances and rebalance our economy towards greater saving and investment and greater exports.
And we have begun to take them.
But for the world economy to be able to grow strongly again – and to grow without creating the dangerous economic and financial instabilities that led to the crisis, we need more than just adjustment in the advanced world.
The truth is that some countries with current account surpluses have been saving too much…
…while others like mine with deficits have been saving too little.
And the result has been a dangerous tidal wave of money going from one side of the globe to the other.
We need a more balanced pattern of global demand and supply, a more balanced pattern of global saving and investment.
Now sometimes when you hear people talk about economic imbalances, it can seem as though countries that are successful at exporting are being blamed for their success.
That’s absolutely not the case.
We all share an interest and a responsibility to co-operate to secure strong and balanced global growth.
There is no greater illustration of this than what happened to China as the western banking system collapsed…
…Chinese exports fell 12 per cent…
…growth dropped to its lowest point in more than a decade…
…and some 20 million jobs were lost in the Chinese export sector.
Changes in the structure of our economies will take time.
What is important is that the major economies of the world have a shared vision of the path of this change: what actions countries should avoid; what actions countries need to take and, crucially, over what period it should happen.
This is why the G20 – and the meeting in Seoul – is so important.
Together we can agree a common approach.
We can commit to the necessary actions.
We can agree that we will hold each other to account.
And just as China played a leading role at the G20 in helping to avert a global depression…
…so it can lead now.
I know from my discussions with Premier Wen how committed China is to actions to rebalance its economy.
China is already talking about moving towards increased domestic consumption…
…better healthcare and welfare…
… more consumer goods as its middle class grows…
…and in time introducing greater market flexibility into its exchange rate.
This can not be completed overnight…
…but it must happen.
Let’s be clear about the risks if it does not…
…about what is at stake for China and for the UK – countries that depend on an open global economy.
At the worst point of the crisis, we averted protectionism.
But at a time of slow growth and high unemployment in many countries those pressures will rise again…
….already you can see them.
 
Countries will increasingly be tempted to try to maximise their own growth and their own employment, at the expense of others.
Globalisation – the force that has been so powerful in driving development and bringing huge numbers into the world economy could go into reverse.
If we follow that path we will all lose out.
The West would lose for sure. But so too would China.
For the last two decades, trade has been a very positive factor in China’s re-emergence on the world stage.
It has driven amazing growth…
…and raised the living standards of millions.
Trade has helped stitch back China’s network of relations with countries across the world.
We need to make sure that it does not turn into a negative factor.
Just as the West wants greater access to Chinese markets…
…so China wants greater access to Western markets…
…and it wants market economy status in the EU too.
I had very constructive talks with Premier Wen on exactly this issue yesterday.
I will make the case for China to get market economy status in the EU…
…but China needs to help, by showing that it is committed to becoming more open, as it becomes more prosperous.
And we need to work together to do more to protect intellectual property rights…
…because this will give more businesses confidence to come and invest in China.
UK companies are uniquely placed to support China’s demand for more high value goods for its consumers.
Our Pavilion at the World Expo in Shanghai – which won the Gold Award for the best Pavilion design – was a showcase for so many of Britain’s strengths…
…from advanced engineering to education…
…from great brands to great pharmaceutical businesses…
…from low carbon to financial services to the creative industries.
In all these areas and many more, British companies and British exports can help China deliver the prosperity and progress it seeks.
We can be part of China’s development strategy, just as China is part of ours.
A true partnership of growth.
In recent days, Britain has won new business worth billions of pounds…
…involving companies across the UK and cities all over China.
…including a deal between Rolls Royce and China Eastern Airlines for 16 Airbus 330 aeroengines worth £750 million…
…and inward investments worth in excess of £300 million
This is all in addition to at least £3bn of business which British companies have secured as part of the Airbus contract concluded with China last week…
…and a further £2 billion of investments by Tesco to develop new shopping malls over the next five years.
And with nearly 50 of Britain’s most influential culture, education and business leaders joining me on this visit…
…I hope these deals can be just the beginning of a whole new era of bilateral trade between our countries.
Achieving this would be a real win-win for our two countries.
So if China is prepared to pursue further opening of its markets…
…and to work with Britain and the other G20 countries to rebalance the world economy and take steps over time towards internationalising its currency…
…that will go a long way towards helping the global economy lock in the stability it needs for strong and sustainable growth.
And just as importantly, it will go a long way in securing confidence in the global community that China as an economic power is a force for good.
Political Responsibilities
But China does not just have new economic power.
It has new political power.
And that brings new political responsibilities too.
What China says – and what China does – really matters.
There is barely a global issue that needs resolution, which does not beg the questions: what does China think, and how can China contribute to a solution?
China has attempted to avoid entanglement in global affairs in the past. But China’s size and global reach means that this is no longer a realistic choice.
Whether it’s climate change or development, health and education or global security, China is too big and too important now not to play its part.
On climate change, an international deal has to be fair.
And that means that countries with different histories can’t all be expected to contribute in exactly the same way.
But a fair deal also means that all countries contribute…
…and all are part of an agreement.
And there’s actually a huge opportunity here for China.
Because China can really profit from having some of the most efficient green energy in the world.
On international security, great powers have a bigger interest than anyone in preserving stability.
Take development for example, China is one of the fastest growing investors in Africa…
…with a vital influence over whether Africa can become a new source of growth for the world economy.
We want to work together to ensure that the money we spend in Africa is not supporting corrupt and intolerant regimes.
And the meeting of the UN Security Council which the British Foreign Secretary will chair later this month provides a good opportunity to step up our co-operation on Sudan.
As China’s star rises again in the world, so does its stake in a stable and ordered world, in which trade flows freely.
Today, China is the world’s second biggest importer of oil, and Sudan is one of your most important suppliers.
So China has a direct national interest in working for stability in Sudan.
And four fifths of your oil imports pass through the Malacca Straits.
So like Britain and the other big trading nations, you depend on open sea lanes.
And like us, your stability and prosperity depends in part on the stability and prosperity of others.
Whether it’s nuclear proliferation, a global economic crisis or the rise of international terrorism, today’s threats to our security do not respect geographical boundaries.
The proliferation of nuclear material endangers lives in Nanjing as well as New York.
China is playing an active role in helping to prevent conflagration over North Korea.
We have been working with China in the UN Security Council to keep up the pressure on Iran …
…and China’s continuing role here is vital if we are to prevent Iran from acquiring a nuclear weapon.
In your own region, I believe China can work with us to improve the situation for the Burmese people.
And China is one of the few countries that Burma will listen to on this point.
But political responsibilities are not just about how one country interacts with another…
…those responsibilities also apply to the way a country empowers its own people.
Political Perspectives
It is undeniable that greater economic freedom has contributed to China’s growing economic strength.
As China’s economy generates higher living standards and more choice for Chinese people, there is inevitably debate within China about the relationship between greater economic freedom and greater political freedom.
I recognise that we approach these issues with different perspectives. I understand too that being in government is a huge challenge.
I’m finding that running a country of 60 million people.
So I can only begin to imagine what it is like leading a country of 1.3 billion.
I realise this presents challenges of a different order of magnitude.
When I came here last I was Britain’s Leader of the Opposition.
Now we’ve had a General Election.
It produced a Coalition Government, which combines two different political parties – the Conservatives and the Liberal Democrats – with different histories and political philosophies, working together for the good of our country.
The Labour Party is now the official Opposition, with a constitutional duty to hold the new Government publicly to account.
Indeed if I were not in Beijing this Wednesday afternoon, I would be preparing for my weekly session of Prime Minister’s questions in the House of Commons, where MPs question me freely about the whole range of government policy.
All the time the government is subject to the rule of law.
These are constraints on the government, and at times they can be frustrating when the Courts take a view with which the government differs…
…but ultimately we believe that they make our government better and our country stronger.
Through the media, the public get to hear directly from people who hold different views from the government.
That can be difficult at times, too.
But we believe that the better informed the British public is about the issues affecting our society…
…the easier it is, ultimately, for the British government to come to sensible decisions and to develop robust policies that command the confidence of our people.
I make these observations not because I believe that we have some moral superiority.
Our own society is not perfect.
There is still injustice which we must work hard to tackle.
We are far from immune from poverty and the ills that afflict every nation on earth.
But in arguing for a strong relationship between our countries, I want a relationship in which we can be open with each other, in which we can have constructive dialogue of give and take in a spirit of tolerance and mutual respect.
The rise in economic freedom in China in recent years has been hugely beneficial to China and to the world.
I hope that in time this will lead to a greater political opening…
…because I am convinced that the best guarantor of prosperity and stability is for economic and political progress to go in step together.
In some respects it already has.
Ordinary Chinese people today have more freedom over where they live…
…what job they do…
…and where they travel…
…than ever before.
People blog and text more.
It’s right to recognise this progress.
But it’s right also that Britain should be open with China on issues where, no doubt partly because of our different history and culture, we continue to take a different view.
There is no secret that we disagree on some issues, especially around human rights.
We don’t raise these issues to make to us look good, or to flaunt publicly that we have done so.
We raise them because the British people expect us to, and because we have sincere and deeply held concerns.
And I am pleased that we have agreed the next human rights dialogue between our two governments for January.
Because in the end, being able to talk through these issues – however difficult – makes our relationship stronger.
Conclusion
So let me finish where I began.
China’s success – and continued success – is good for Britain and good for the world.
It’s not in our national interests for China to stumble…
…or for the Chinese economy to suffer a reverse.
We have to make the case…
….and I hope China will help us make the case…
….that as China gets richer, it does not follow that the rest of the world will get poorer.
It is simply not true that as China rises again in the world, others must necessarily decline.
Globalisation is not a zero sum game.
If we manage things properly, if we win the arguments for free trade, if we find a way to better regulation, we can both grow together.
But if we don’t, we will both suffer.
I referred earlier to Britain’s Pavilion at the Shanghai Expo, “the Dandelion”
We are extremely proud that it won a coveted prize, and that it proved so popular with Chinese visitors.
It is, in its way, a symbol of the strength and the potential in our relationship.
Two different countries, past and future Olympic hosts, on far sides of the world, sowing the seeds of a flourishing relationship in the future, a relationship which has the potential to grow and to bloom.
Proof, perhaps, that Confucius was right when he said…
…“within the four seas all men are brothers”
Yes, there we will be storms to weather.
Yes, there will be perils to overcome.
Yes, we will have to persevere.
But it will be worth it – for Britain, for China and for the world.