Britain is increasing efforts to encourage Chinese trade and investment in the country while welcoming more mainland tourists and students, a senior official said.
“In recent years, we have attracted more investment from Chinese businesses than Germany, France and Spain put together, which is very important for us,” British Minister of State for Trade and Investment Lord Francis Maude told EJ Insight in an exclusive interview.
About, 40 percent of the top 250 companies in the world have headquarters in London compared with 8 percent for Paris.
Britain wants more Chinese firms to invest in the country and set up regional headquarters in London, he said.
Maude was in Hong Kong a week before Chinese President Xi Jinping’s five-day visit to London which starts Monday.
Maude also visited several tech companies in Shenzhen including Huawei Technologies and attended an event for small and medium-sized enterprises in Shanghai.
Last month, Chancellor of the Exchequer George Osborne showcased £24 billion (US$37 billion) worth of investment opportunities in the north of England at an event in Chengdu which was attended by major Chinese investors.
Infrastructure and regeneration investment projects include the Atlantic Gateway, a series of projects connecting Liverpool to Manchester, and Science Central, a cutting-edge development in the heart of Newcastle.
“We have already seen Chinese companies invest in Manchester airport and Royal Albert Dock, to name just two, and Hong Kong companies are following suit,” Maude said.
Knight Dragon Developments Ltd., privately owned by New World Development (00017.HK) chairman Henry Cheng Kar-shun, is developing Greenwich Peninsula in London, Britain’s single largest regeneration project. It is twice the size of the King’s Cross development.
Cheung Kong Property (01113.HK), controlled by Li Ka-shing, is developing Chelsea Waterfront, a riverside residential project on the north bank of the Thames.
Li also owns a controlling stake in Northern Gas Networks Ltd., Wales & West Gas Networks (Holdings) Ltd. and UK Power Network Holdings Ltd. through Cheung Kong Infrastructure (01038.HK) and Power Assets Holdings (00006.HK).
No zero-sum game
Last month, a Xinhua commentary titled “Don’t let Li Ka-shing run away” was published before it was removed a few hours later.
It criticised Li for withdrawing assets from China when the country is experiencing an economic downturn.
A subsequent article in People’s Daily said Li will “regret” leaving as China will get stronger and better.
In September, Li issued a statement denying the accusations.
He dismissed criticism that he is “unpatriotic”, saying he dedicated “a vast amount of my personal time and effort to advancing initiatives that benefit China and her people”.
Maude declined to comment on the issue but said it is not a zero-sum game when Hong Kong companies relocate some of their investments to Britain.
“I know these Hong Kong companies are deeply embedded in the mainland China economy while they all operate internationally and are always looking for opportunities,” he said.
“We welcome investment from Hong Kong and Chinese companies. We don’t see that it has to be at the expense of their investment in China. We strongly support their commitment to invest in China.”
Hong Kong companies will be able to bring their experience in Britain to China in future, he said.
In fact, many British companies are excited about China’s “One Belt, One Road”, a proposed economic corridor spanning Asia, the Middle East and Europe, and would like to contribute their expertise, he said.
“We were a very early supporter of the Asian Infrastructure Investment Bank [AIIB] and we will continue to be a strong supporter,” he said, referring to the China-led institution that could rival the Asian Development Bank.
AIIB was formally signed in June by 50 prospective founding members.
Hong Kong’s role
Maude said Hong Kong has an important role in enhancing trade and investment between China and Britain.
More than 560 British companies have offices in Hong Kong, about 120 of which run their Asia Pacific regional operations from there, Maude said.
Hong Kong partners, agents and distributors are well placed to help British businesses with complex business culture and language issues and offer ready-made trusted networks, he said.
“Hong Kong remains an important regional headquarters for many UK financial institutions. British investment in Hong Kong, which is conservatively valued at over £33 billion, makes up 35 percent of total UK investment in Asia,” he said.
“Around half of all British goods exported to Hong Kong are re-exported to the mainland.”
Britain has doubled its exports to China over the past few years thanks to growing domestic consumption.
However, China’s imports from Britain fell 17.2 percent to 90.1 billion yuan (US$14.22 billion) in the first nine months from the same period last year while exports grew 4 percent to 260.7 billion yuan, according to China’s General Administration of Customs.
For the same period, China’s total imports fell 15.1 percent while total exports dropped 1.8 percent.
Although growth is slowing, China is still a fast-growing economy, he said.
British companies, including high-end automotive brands such as Jaguar Land Rover and Rolls Royce are trying hard to promote their products in China.
Medical and pharmaceutical products, power generating machinery and equipment, metalliferous ores and scrap metal, general industrial machinery, equipment and parts also seeing strong demand in the mainland market.
Britain has been encouraging Chinese mainlanders to visit, study, work or buy property in the country.
“We want as many mainland Chinese tourists to come to London as possible,” Maude said.
“We have improved our visa system but sometimes perspective does not keep pace with reality. People think it’s difficult to get a visa to visit Britain.”
“London is also a very attractive place for people to buy property. There is a huge amount of construction going on, so the supply of properties in London is growing enormously but we need to grow much more,” he said.
“Property prices in central London are high and that can be a problem for young people who want to own a property there. But London is a big place. More and more properties are being built.”
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