China’s rise creates important opportunities and challenges for UK interests. Some of them are listed below.

How can the UK economy maximise the benefits it gains from China’s rise, and minimise the adjustment costs?

China is already the fastest growing market for UK exports and this trend should continue, even in the face of a serious global economic slowdown. But the ‘scientific development’ agenda presents potentially significant opportunities for our service sector as well. China’s sovereign wealth funds, and even more so its corporations, are also a potential source of very large flows of inward investment to the UK. But we may be hampered by an economic backdrop which is significantly more challenging than in recent years, leading to stronger forces of economic nationalism on all sides.

In a climate where restrictions on market access remain, and the process of economic reform is not yet complete, we should try to make deeper inroads into China’s market. We will help British businesses make the most from the opportunities China’s growth offers. And we will put the right domestic economic and social policies in place to respond to the challenges.

How can we work with China to hold back protectionism and keep globalisation on track?

The global economic downturn makes effective international co-operation even more important. China presents a challenge to whole industries and sectors in developed economies, while its large current account surpluses reflect global economic imbalances.

We should engage China fully in the international financial institutions, promote the domestic benefits of a market-driven exchange rate policy, manage global economic imbalances and maintain consensus support for free trade, including through increased market access.

How can we work with China to manage global pressures on resources?

China’s demand for oil, minerals and other commodities to support the growth it needs for development is adding to global aggregate demand and increasing the pressure on these and other natural resources.

We should co-operate with China on the basis that the best solutions to global resource pressures are collaborative, transparent and market-based. We should build shared approaches with China and the EU, given our shared interest as net energy importers.

How can we help China to move to lower carbon growth and more sustainable development?

China’s growth is pulling hundreds of millions of people out of poverty. But it also poses a monumental sustainable development challenge. China has set itself brave targets for increased energy efficiency and renewables, but it is investing in energy infrastructure faster than any country in history and has already overtaken the US to become the world’s largest carbon emitter. The decisions it makes on energy production in the next five years could lock in emissions trends for the next thirty. The same applies to the development of its transport system and building stock. China and the EU could blaze a low carbon trail for the global economy, if China and our EU partners grasp the opportunity that low carbon growth presents.

We should demonstrate that low carbon choices need to be taken soon and are integral to economic recovery and development, and show China that the UK and EU are ready to help in ways that support our mutual interests. China’s ambition to promote the economic benefits of a resource-efficient, sustainable growth model will encourage an active, responsible approach to a comprehensive and ambitious post-2012 climate change agreement based on the principle of common but differentiated responsibilities.

How can we work more closely with China to achieve the MDGs?

China’s economic impact across the developing world is growing fast, especially in Africa. China strongly supports the MDGs. China alone has been responsible for 75% of global poverty reduction over the last 20 years. It has also shown it wants to be part of the global effort to achieve the MDGs, signing the Call to Action and taking part in high-level discussions in New York in 2008, for example. But achieving the MDGs remains a daunting challenge for the whole international community.

We should keep working more closely with China on Africa, demonstrating why good governance, sustainable development, donor co-ordination and aid effectiveness improve development outcomes and will help secure China’s own rapidly growing stake in the developing world.

How can we work more closely with China for wider peace and security?

China is increasingly active as a permanent member of the UN Security Council and is the largest contributor to UN peace support operations of any permanent member. Its position on key international challenges such as Iran, Sudan and Burma can be decisive in determining whether the international response is effective.

We should encourage China to define its interests broadly, allowing the emergence of unified international approaches on the key regional security and humanitarian challenges of our time. We should also encourage China to continue providing more capabilities and funding for international peace support operations, and co-operate to manage regional tensions peacefully.

How can we bring China into global governance structures?

Cutting across many of these challenges is the need to reshape international institutions (including the UN Security Council, the UN’s conflict prevention machinery, the G8 and the International Financial Institutions) to bring them into line with modern realities of power. Ensuring that China’s role in global governance reflects its weight and influence will require consensus among other key international players.

We should demonstrate that strengthening the international system is in all our interests. We should also encourage an approach of responsible sovereignty in our discussions with China, acknowledging that in a globalised world all of us depend on each other.