Summit call on how to tackle booming China

Jun 30 2005 by Nic Paton Print This Article

Businesses need to start seriously addressing the economic challenge to the West posed by the booming Chinese economy, Britain's TUC has said.

The union body has called on the Government to host a special manufacturing "summit" to examine how industry can better prepare itself to tackle the threat to companies and jobs posed by China.

In a report, the TUC's chief economist Ian Brinkley has suggested employers are wrong to think they can compete with the Far East by forcing down labour costs or blocking new workplace rights.

The only effective response is to put more money into skills, research and development and innovation, he has argued. Firms also needed to look at how their European competitors have responded.

Companies in Germany Ė often cited by UK employer as among the most heavily regulated in Europe Ė have won export markets in China at a time when UK exports have struggled, he pointed out.

German manufacturers have nearly doubled exports to China by value in the past five years, a growth rate of more than five times that of the UK. France and even Italy have been more successful than the UK, he stressed.

"China is a growing economic force, but we cannot meet its challenge by becoming even more of a low regulation, low tax economy," said Brinkley.

"Firms in other European countries have shown they can sell to China and take advantage of its new wealth.

"Chinese competition certainly poses real threats to many UK firms, and too few employers are doing enough to ensure manufacturing's long-term survival," he added.

China has been growing in economic strength ever since the 1980s, when it moved into low-cost industries such as textiles.

But in the past decade it has switched to the production of industrial machinery and telecommunications equipment, said the TUC.

In the past few years, there has been a rapid expansion of Chinese companies producing goods such as office machinery and computers and electrical machinery, it added.

From 2000 to 2004 UK manufacturing lost more 720,000 jobs (18 per cent of its workforce), with the biggest losses occurring in textiles, clothing and footwear, electrical and optical equipment, industrial machinery, minerals and metals.