Vince Cable: We can't let visa rules keep the Chinese away

February 3, 2014 12:30 PM
Originally published by UK Liberal Democrats

We're making it easier for Chinese tourists and business people to visit this country, but more needs to be done.

key_Vince_Cable.JPGThere were colourful celebrations in the West End yesterday to usher in the Chinese New Year. But what will the Year of the Horse bring for our relationship with China?

China's enormous importance is increasingly well understood. I want to ensure that Chinese visitors - be they tourists, business visitors, students or family members - are made welcome in the UK. The number of visitors from mainland China has been rising steadily, from 89,000 in 2009 to 179,000 in 2012. Preliminary figures for 2013 (to the end of the third quarter) are already at 160,000, suggesting a record year.

This is good news for business - especially in London, which attracted almost 60 per cent of Chinese visitors in 2012. Overall, Chinese visitors are expected to spend £1.2 billion in the UK this year - they can buy genuine luxury goods in the UK at a third of Chinese prices. Chinese visitors spend three times as much as Arab, Russian or other big spenders.

Impressive as these figures appear, they hide a less flattering story. Britain does much less well than Germany or France. This is because we have earned a reputation in China of having an unwelcoming, bureaucratic visa regime which treats Chinese visitors as potential illegal immigrants or worse. That is unfair, and the system is much improved. But damage has been done and we are paying the price, just as hostile rhetoric around Indian students has put off those wanting to come to study at our universities (and pay full fees).

The visitor issue is, however, part of a bigger trade picture. In the early days of the Coalition Government, the Prime Minister agreed with then President Hu Jintao a bilateral trade target of $100 billion per annum by 2015 - requiring us to double our annual exports to China to $30 billion.

We are broadly on track to meet this target. Chinese imports predominate over British exports but there is some sign of rebalancing. We have a specific objective of promoting London-based financial institutions as the largest global centre for trading the renminbi outside China and Hong Kong.

That is not to say that there are no problems. There are. Intellectual property protection and cyber security remain sensitive issues. In knowledge-based economies trade is no longer simply a matter of arms-length transactions but involves people moving to and fro to perform services overseas or exchange ideas.

In particular, foreign students who come here to attend university often forge lasting bonds. For example, it recently emerged that a top Chinese central banker had studied at Cambridge, an experience which left him with a deep affection for Britain. And students represent a substantial "export" industry for the UK, bringing in substantial earnings, with London again leading the way (there are around 11,000 Chinese students in the capital's universities).

This is not a one-way street. Numbers have also grown of British students going to mainland China from almost 57,000 in 2009 to almost 84,000 last year.

In addition to students, there is a lot of scope for exchanging ideas and for research collaboration. The Prime Minister recently announced a joint £200 million UK-China partnership. And when I was last in Beijing I was asked to speak at the Chinese equivalent of the Royal Society, where there was a great appetite for joint research.

If economic and cultural links with China are to strengthen, the implications are clear.

First, the UK needs to do more to encourage our young people to learn Mandarin at school and study in China itself more often.

Second, we must publicise the fact that the UK welcomes Chinese visitors -tourists, students, researchers, entrepreneurs and potential investors. That means dispelling the very damaging image of our visa system - for, despite a 40 per cent rise in visas issued to Chinese nationals in the year to September 2013, negative impressions remain, by contrast with other European countries.

The reality is that 96 per cent of Chinese customers who apply for a visa now get one, with an average time of seven days. We now have 12 visa application centres across China, more than any other country outside Asia - and we are expanding the network ahead of peak summer demand. We offer guidance in premium services for businesses, travel agents and educational institutions. And there will soon be a facility to extend Schengen countries' visas to the UK.

As for our broader relationship with China, we are looking to the long term. It will involve two-way flows of investment. Our Government fully supports the agreement reached last November to launch proper negotiations on an EU-China investment agreement. The opportunities are substantial for UK companies winning high-value business in life sciences, creative industries, infrastructure and financial services. We want more firms to do the same.

Any sensible relationship with China has to be based on long-term commitment. China was, after all, the world's dominant economic power for centuries before it was left behind by Western expansion. It is now re-emerging. My own visits to China have persuaded me that this is both inevitable and, overall, a force for good, lifting hundreds of millions out of poverty.

China faces major challenges: severe environmental problems; painful restructuring away from heavy, export-based industry to domestic consumption and services; a banking and shadow banking sector badly needing reform; accommodating dissent. But there is now enormous momentum, and skilful management, behind China's progress. We would be well advised to embrace rather than reject the Chinese.

Meanwhile, London is reaping the benefits. In the past few years there has been significant investment in London, including Huawei setting up its global capital and credit management centre here, and Shanghai Pudong Development Bank establishing a London office. Long may this continue.