Official Report 287KB pdf
We have a very full agenda, so we had better start on time. Good morning, everyone, and welcome to the fifth meeting in 2008 of the European and External Relations Committee.
We would like to start with Deborah Smith giving the opening statement to set the context. I will follow on from that.
Okay.
Thank you, convener, for the invitation to speak to the committee on the Scottish Government's activity in China and the role of the Scottish affairs office in Beijing. I returned only on Saturday from my first visit to China. The committee has the advantage of what I say being fresh in my mind, although that will be balanced by my receding jet lag.
First, I thank the committee for inviting me to appear before it today to discuss Scotland's engagement with China and, more specifically, my role in China.
Thank you for that helpful introduction. I will focus briefly on the review of the China strategy—the refresh, as you are calling it. You said that you invited Scottish stakeholders to take part in discussions. What particular role do you have in the revised strategy's development? To what extent has there been wider consultation on the issues?
As I said, we brought together a strong group of senior stakeholders who represent Scottish interests across the board, and we had interesting discussions. The next step was to bring together the views of stakeholders and colleagues in departments across Government and to agree on what the Scottish Government should be doing to add value in areas that stakeholders identified as being those in which we should be working. We are pulling all that work together.
What resources are available to you in the embassy in Beijing and in other parts of China?
My immediate team is very small. Two of us—my assistant and I—are based in the embassy in Beijing. We have one full-time person working on the China desk in Scotland. That person has some administrative assistance.
Does Scottish Development International have a presence on top of that?
SDI has a presence in Beijing and Shanghai and a person working in Hong Kong. It has eight people across China, including Hong Kong.
Is that sufficient?
China is a big country and there are limitless opportunities there, but we do what we can with the resources that are available to us.
That was a very diplomatic answer.
That is probably more SDI's field than my field. However, I know that Jack Perry had meetings with senior people in Beijing when he was in China a few months ago to consider the opportunities that exist in that respect. SDI is working on that.
Because SDI is in China, do you tend to concentrate on non-economic functions? Do you tend to concentrate on education and cultural links, for example?
Yes. SDI works specifically on developing trade and investment opportunities. I work on broader areas.
Is what happens in China similar to what happens in the United States? Does SDI report to you? Are you the overall guru or tsar, or whatever you like to call yourself, in China for the Scottish Government?
They do not call them tsars in China.
Indeed. That is the wrong country.
I do not call myself any such thing. The structure in China is different. I do not have line management responsibility for SDI, but we work in close partnership with each other. The head of SDI's greater China operations is Mairi MacRae, who heads up the office in Beijing. We have a strong collaborative relationship.
In setting the overall context, you mentioned refreshing the China plan and considering it in light of the new Government's strategic objectives. Is that a separate exercise from, for example, reviewing the international strategy and the targets that have been set in it, or will reviewing those targets be included in your refresh exercise?
It is all part of the same process.
So you are already examining progress towards the targets that have been set. I think that the timescale is that some of the targets should be achieved by 2010.
That is right. We are considering the targets to ensure that they were the right targets. If, through experience, we decide that they were not quite right, we will adjust them. We are now able to monitor some of the targets as a result of data that are available to us.
Should we expect a report on that in April?
Do you mean on progress towards targets?
Yes.
We did not plan to issue a progress report at the same time as a revised China plan. However, some progress will naturally be reflected in the revised China plan. A lot of progress data are now available to us. Therefore, that would not be difficult for us to do.
You mentioned that you might drop some of the targets. Are there any that you want to bring to our attention today? Why do you want to drop them?
We are not planning to drop targets; I said that we might adjust them.
Right.
You said that the targets might not be the right targets. What did you mean by that? What makes a target right or wrong? Is a wrong target one that you do not meet?
No, not at all. The difference between the China plan that we put in place with the previous Administration and the new China plan that we are trying to put in place now is that we are trying to be much more specific in this plan about the particular actions that we want the Government to take in order to improve Scotland's engagement with China. When I say that we are considering adjusting the targets, I mean that we want to ensure that the targets reflect the specific actions that we want the Government to take.
I can give you an example of that. At the moment, there is a target in the plan that concerns increased exports from Scotland to China. However, the nature of the growth of the Chinese economy is such that, even if we did nothing, those exports would grow. In line with what we are doing in our general international framework, we need to be much more specific about what the Government should be doing, and we should have a target that reflects the impact of Government activity on the growth of exports to China.
Is that not a point that could be made about all the targets? Given the general expansion of China, one would expect there to be some movement towards almost all the targets. The question is the extent to which the targets are challenging and how they show the effect of Scottish Government intervention. The one that you picked is the one that I thought had some merit in that regard, because it measures our performance against the European average. You would expect all European countries to benefit from China's expansion, so if we were doing better than average, the case could be made that our actions were having some impact.
We have recognised the need, in conjunction with our analytical colleagues, to consider whether the targets are sufficiently challenging as opposed to simply reflecting what is generally happening as a result of the growth of the Chinese economy, and whether the targets reflect Government activity that is making a difference.
One of the targets is to increase significantly the number of research projects. Would we expect the adjusted target to quantify what would be considered significant and also to say that our figure should be higher than that of our comparator countries in Europe?
We are discussing that target at the moment. You will probably appreciate that it is difficult to gather that kind of data across the whole of Scotland, let alone across the whole of Europe. I am not sure that there is an easy way to draw the comparisons with other countries.
But if it is difficult to gather the data, why was the target set in the first place?
Some of that is about what experience has shown us. Our office in Beijing is very new and our initial plan is being refreshed in the light of experience.
If the meeting of whatever targets by 2010 is the basis of the evidence that will either validate or not validate the Government's spending in this area, it does not give members much confidence if the targets are scrapped halfway through the process and replaced. Will the new targets be based on progress so far? In other words, are the new targets already halfway to being fulfilled? You can appreciate that members might think that there is a danger that you might look at some figures and say, "We're doing quite well in that area, so we'll make that one of our targets."
I can reassure you that we have a co-ordinating role across the Government. It is not in our interest just to say that we will look at things that are already happening and decide that they are exactly what we are looking for. Our directorate's role, and that of Lucy Watkins, is to push and encourage other parts of the Government, where necessary, to set themselves challenges around their engagement with China and to support them where we can to make that engagement happen.
I am particularly interested in outcomes. Lucy Watkins said that Scotland was becoming well known in China. Will you expand on that for us? I have been to China a couple of times, and it always seemed difficult to differentiate between Scotland and the rest of the United Kingdom, unless you used a caricature of a kilted chap with a red beard or whatever. Please explain how Scotland is developing and becoming better known in China.
I mentioned fresh talent, through which Scotland has become well known as a place where people can study and gain work experience. The opportunity for work experience is important to Chinese students at the moment because the job market in China is so competitive and people need something that will give them a competitive edge.
So Chinese students come to study in Scotland to take advantage of our educational facilities.
That is right. They see Scotland as an attractive educational proposition because it also offers students the opportunity to work here once they have graduated, in order to gain some work experience before they decide what they are going to do next.
I cannot remember whether getting a certain number of Chinese coming into the country per year was one of our targets, but if it was not, is that the kind of target we should have? Should we be looking for X thousand to come to Scotland every year?
It is one of the targets.
Are we meeting it?
Yes. We are exceeding it at the moment.
That is fine.
We wanted to have a specific agreement with Shandong province probably because there is no other UK Government representation there and it was an opportunity for us to forge strong relations with a province. Before the geographical focus was decided on for the previous plan, a lot of economic analysis was done, along with some assessment of existing Scottish interests across China. Shandong was then selected as one of the focus areas. I should also say that we are reviewing our geographical focus in the new plan.
Yes. Our clerk's paper says:
No. It takes a long time for such an agreement to bear fruit, but some opportunities have developed very well under the agreement. Collaboration between universities in Shandong and Scotland is strong at undergraduate and postgraduate levels. There is also good collaboration with Scottish schools, a number of which now have links with schools in Shandong. We are also beginning to see the development of business opportunities, particularly in the life sciences sector.
Sticking with the issue of geographical focus, is the review considering the extent to which the strategy ought to have such a focus? Is that part of the refresh?
Yes, we want to examine that. However, our line has never been that our geographical focus should be exclusive. We always encourage Scottish organisations, institutions and businesses to engage where there are opportunities. We put in place a geographical focus because we cannot put resource into developing relationships throughout China, as it is far too big. However, we still encourage people to go where the opportunities are.
In our round-table discussion on 22 January, it was suggested—I cannot remember by whom—that there are many parallels between Scotland and western China, which is not a focus of the existing strategy. Will the review consider what developments could take place in relation to western China?
If opportunities are identified for Scotland to engage more deeply in the west of China, we will examine them, the kind of relationships that we should build and the steps that we need to take to provide fertile ground for those relationships and opportunities to flourish.
I have a general question on language before I ask about the specific target.
The teaching of Chinese in Scottish schools is not necessarily about providing fluent speakers of Chinese: the subject can develop people who have an interest in China's language and culture and who have an interest in communicating in some way with that country. Learning the language can be a broadening experience and opportunity for schoolchildren. We are not suggesting that all such pupils will become fluent Chinese speakers who can go out and strike business deals in China because of their fluent Chinese skills.
I echo what Lucy Watkins said. In my experience—I am not an expert linguist—learning Chinese is not just about learning the language to be able to communicate on a business footing. It is much easier for people to begin to understand how things work in China if they have some idea of the concepts of the language, which are very different from what we have here.
When we talk about the Chinese language, I think that we are, in fact, talking about Mandarin. However, we have large numbers of Cantonese speakers in Scotland and in the UK. The target in the current China strategy aims for
The choice of whether to study for a qualification in Mandarin or Cantonese is ultimately for the individual student. People might have different reasons for wanting to study a language. Someone with a background in Cantonese might want to have a qualification in that language, but currently qualifications in Mandarin are probably more useful.
Are we anywhere near reaching the target of 200 pupils studying for Chinese language qualifications by 2010?
I am not sure what progress we have made against that target, but we can provide you with information to demonstrate how we expect to progress.
The discussion about targets reminds me of the cartoon in which animals with targets strapped to their backs run around to ensure that the king's arrow hits the target.
One aspect that I can talk about is that we have a memorandum of understanding with the Chinese ministry of education, the intention of which is to create a fertile environment in which relationships in the sector can flourish. Fiona Hyslop will renew that memorandum when she visits China in April. Having a Scotland-China agreement in place at Government level raises the profile of the Scottish education system and provides an opportunity for us to discuss with the Chinese Government things such as approving qualifications in China and creating access to institutions so that the situation is easier for them to operate in. We can provide specific help at Government level to improve relationships.
Generally speaking, Government-to-Government access is significant in China when it comes to getting things done. The fact that Lucy Watkins has access to the Chinese ministry of education and can walk through the door as an accredited diplomat is important in developing our relationships with the Chinese Government and it helps in its support of Scottish academic institutions' activities. I found the significance of that Government relationship increasingly obvious when I visited.
How many people are in the Beijing embassy? Do you get proper support from them or do they just say, "She deals with Scotland, therefore we don't deal with Scotland"? What support do you get from the Foreign Office in general?
I get very strong administrative support from the members of the management team. Our arrangement with them means that they have responsibility for providing such support. They certainly do not say, "Okay, Lucy, get on with Scotland." They are helpful in a range of areas on which they are focused. For example, the embassy is doing a lot of work on the energy sector, and it is very helpful in ensuring that Scotland is involved in the discussions. I am also doing a lot of work with the culture and education section of the embassy on developing educational opportunities and ensuring that Scotland is being promoted through the right channels. The UK Trade and Investment team, which is based in the embassy, has strong relationships with Scottish Development International and is very supportive. Overall, we have a very supportive relationship with the rest of the embassy.
Are you a member of the UK civil service or of the UK diplomatic service?
No. I am not a member of the UK diplomatic service. I am on secondment from the British Council to the Scottish Government for this job.
I presume that you have diplomatic immunity. Do you have the status of a diplomat?
Yes. What I meant was that I have not been brought up through the Foreign Office system.
That is a benefit.
A couple of major events in China are coming up in the near future: the Beijing Olympics and a major world exhibition in Shanghai, which I think is in 2011. What involvement does the Scottish affairs desk have in promoting Scotland at those events?
People in China are talking about nothing other than the Beijing Olympics at the moment. The games are at the top of everybody's agenda, so we are obviously thinking about them. August and September will be a busy time in China. We need to consider how we ensure that Scotland can benefit from the Olympic opportunity without spending lots of resources to make little noise in what will be a noisy place. We are considering how Scotland can benefit from the UK platforms that are being put in place during that period. We are also considering how we can engage people from Glasgow, given that Glasgow is going to host the Commonwealth games. There are opportunities to have various meetings and share experiences in the context of the activities that are going on in August and September.
I emphasise that while our ministers have said that they do not intend to put any extra funding into the Shanghai world expo, that does not mean that they do not think that the event is significant. They will be looking to the FCO, which is providing the mainstream of funding for the British pavilion at Shanghai, and to the British Council, which is designing the content, to ensure that Scotland is absolutely represented in the context of the other countries within the UK.
It is worth getting your take on what might be seen as the downside of trading in China. I do not know whether you happened to see last night's ITV programme about the pirating of designer brands. Apparently, major companies such as Nike and Adidas have just given up, because they cannot fight it. Are there any particular implications for Scottish companies? I am thinking of whisky distillers and so on. Would you say anything to them about the possibility of their brands being ripped off in China?
On whisky in particular, one of the significant benefits that we get from the embassy is access to UKTI discussions with the Chinese Government on whisky and whisky counterfeiting. My understanding is that the Chinese Government has been supportive of the Scotch whisky industry and the Scotch Whisky Association in their attempts to stamp down on counterfeiting. However, given the scale of the issue and the potential for counterfeiting, progress is steady but not always immediate.
Again, this is SDI's field, but I think that the intellectual property issue is one of the issues that will constrain businesses from taking big steps in China. However, the Chinese Government is keen to resolve the IP issue, albeit over the medium term.
You have had various questions about individual targets. I will focus on one that has not been mentioned. Climate change is prominent in policy discussion—rightly so—and one of the Scottish Government's targets is:
Scottish firms are operating in China in that sector, but I do not know which ones—I have not brought details on that. Again, we want to review that target in the refresh plan to ensure that it is practical.
Are there any questions about the other targets, or any more general questions?
No.
Okay. I thank the witnesses for an extremely useful session.