LONDON – Britain has assuaged its hunger for economic ties with China after finance minister George Osborne came away from a trip to the Asian powerhouse with a range of investment deals.
From easing visa restrictions to building on recent currency cooperation and winning Beijing money for investment in British nuclear power plants, the chancellor of the exchequer can claim to have smoothed relations with the emerging economic power.
He in part managed to win over a Chinese government that had rebuffed Britain after Prime Minister David Cameron met the Dalai Lama — the exiled spiritual leader of Tibet — last year.
The chancellor’s trip coincided with one made to China by London Mayor Boris Johnson. The pair are seen as potential rivals for the leadership of the Conservative Party should Cameron come unstuck before or after the next general election in 2015.
In a speech at Peking University, Osborne insisted “there is no country in the West more open to investment — especially from China” than Britain. “I don’t want Britain to resent China’s success, I want us to celebrate it. I don’t want us to try to resist your economic progress, I want Britain to share in it.”
Osborne on Thursday said he would allow Chinese companies to take majority stakes in nuclear power projects across Britain.
The British government said the initial Chinese stakes in nuclear power stations were likely to be minority shares, but added, “Over time, stakes in subsequent new power stations could be majority stakes.”
The announcement comes amid reports that China General Nuclear Power and French energy giant EDF have agreed on a controversial deal to build a new atomic power station at Hinkley Point, southwest England.
Howard Archer, chief U.K. economist at IHS Global Insight consultancy, said the nuclear tie-up made sense for Britain’s indebted economy. “With the government strapped for cash, there are obvious major attractions in attracting Chinese investment into projects such as the building of the Hinkley Point nuclear station,” Archer said. “It is plainly evident that China will become ever more important as a potential market for U.K. firms,” he added.
Also last week, Beijing Construction Engineering Group signed a deal with British firms to develop a business district around Manchester airport. The development of Britain’s third busiest airport — described as one of the largest construction projects in Britain since the 2012 London Olympics — will cost £800 million ($1.30 billion).
Britain loosens visa restrictions
Osborne used his trip also to announce plans to make it easier for China’s citizens to obtain British visas as it seeks a bigger share of the multibillion-dollar Chinese traveler market in the face of stiff European competition.
Chinese tourists visiting the European Union using selected travel agencies will no longer have to file a separate application to visit Britain, which is not part of the EU’s Schengen Area for border-free travel.
Business travelers will be able to apply for a “superpriority” visa, which will be processed within 24 hours rather than a week.
Some 210,000 visas were issued to Chinese nationals in 2012, adding around £300 million to the British economy as designer label-hungry Chinese shoppers snapped up goods.
Plans enabling Britons to invest up to 80 billion yuan ($13.1 billion) in China’s heavily restricted capital markets — with the aim of making London a major trading hub for China’s currency — also emerged during Osborne’s trip.
In June, the Chinese and British central banks signed a currency-swap deal with a maximum value of 200 billion yuan to promote bilateral trade and investment as well as the use of the yuan in global trade and finance.
“A great nation like China should have a great global currency,” Osborne said, adding, “More trade and more investment, means more business and more jobs for Britain.”
Kathleen Brooks, research director at trading group Forex.com, said the latest announcement was “mostly symbolic” owing to the relatively small amount of investment agreed.
However, she added, “It is a step in the right direction, as it is further developing Britain’s relationship with China. And the timing is expedient, as China may be looking for a partner to diversify out of the U.S. and avoid their political troubles.”
China on Thursday welcomed the resolution of the U.S. debt ceiling deadlock, saying it will contribute to global economic stability, but Beijing’s official news agency poured scorn on U.S. politicians.
China meanwhile has the world’s largest foreign exchange reserves, most of them held in dollars, and is the largest foreign holder of U.S. Treasury bills with $1.28 trillion, according to the latest available figures from Washington.