There is much that the UK could learn from the rapid expansion of the Chinese economy in recent years, but unless the government adopts a proper strategy for wealth creation and re-balances the economy British firms will lose out, warns a report published today (Tuesday) by the TUC.
The Way of the Dragon considers the spectacular growth since the 1950s of the East Asian tiger economies, along with China, to examine what lessons ministers in the UK might learn from the way in which these governments have helped develop industry and encouraged economic output.
The TUC report – which is being launched at a seminar at Congress House later today – accepts that what has worked in China, Singapore and South Korea won’t necessarily translate to the UK. It says that the ‘Asian tigers’ don’t always treat their workers well nor are some of them too keen on independent unions. However the report warns that if the UK economy is to continue to grow, we cannot afford to ignore the active industrial policies of our competitors in the East.
It argues that with the global economy likely to be dominated in future by the three large economic blocs of the US, China and Europe, the UK must remain part of Europe. Not only would an exit from the EU weaken our influence on the world stage, it would also severely damage our export potential to China and its emerging markets.
The report says that aside from putting a more active industrial policy into practice, the government should also be encouraging greater numbers of Chinese students to study here and persuade more UK schools to offer Mandarin classes to pupils.
Politicians across the UK political spectrum are now agreed on a more interventionist approach from government towards industry. The Way of the Dragon says that if ministers are serious about re-balancing the economy away from an over-reliance on financial services, they must roll up their sleeves and adopt a much more pro-active approach towards developing certain sectors of the economy.
The Way of the Dragon says that South Korea spends five times as much on research and development as most European countries. It also notes that China is set to replace the US as the world’s largest economy the year after next – unsurprising when the Chinese economy was able to deliver 10 per cent GDP growth a year in the ten years since the year 2000.
The report says that across East Asia the prevailing consensus for the governments of Singapore, South Korea, Taiwan and Hong Kong in the post-war years was one of active engagement to develop their economies.
China’s is currently working from its twelfth five year plan, says the report. This entails the government actively trying to diversify its industry away from heavy manufacturing into more specialist industries like biotechnology and specialist IT, encourage a larger services sector and reduce pay inequality.
Commenting on the report, TUC Assistant General Secretary Paul Nowak said: “China believes strongly in the role of the state in planning what has been rather phenomenal economic activity in recent years. But while it is never going to be possible to duplicate that country’s success in boosting economic growth and encouraging industry over here, there is still much for UK politicians to learn from.
“Identifying key industries where government support could help emerging firms become world leaders, and encouraging UK companies to look for business opportunities within China’s very detailed current five year plan would be a start.
“Encouraging greater numbers of Chinese students to study at UK universities would also help encourage a greater understanding of the UK amongst the next generation of the country’s business leaders. And getting schools to offer as many Mandarin classes as they do French and German lessons would help set up our young people well for a future in business too.”
The Way of the Dragon makes a number of recommendations including:
NOTES TO EDITORS:
- The event to launch The Way of the Dragon takes place on Tuesday 15 April at Congress House, Great Russell Street, London WC1B 3LS from 10.30am-noon. The seminar will be chaired by Linda Yeuh, the BBC’s Chief Business Correspondent and author of China’s Growth: the Making of an Economic Superpower. Speaking at the event will be Martin Jacques, Senior Fellow Cambridge University and Visiting Professor at Tsinghua University, Beijing (author of When China Rules the World: The End of the Western World and the Birth of a New Global Order), Terry Scuoler, CEO of the manufacturers’ organisation EEF, and Paul Nowak, the TUC’s Assistant General Secretary. Media are welcome to attend the seminar and should contact the press office to register.
- The Way of the Dragon is available at https://www.tuc.org.uk/sites/default/files/WayOfTheDragon.pdf
- All TUC press releases can be found at www.tuc.org.uk
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