How deep are Britain and China’s financial ties?

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China is a serious investor within the Hinkley Point nuclear energy plant in Somerset

The financial relationship between the UK and China has grown considerably over the previous 20 years.

In 1999, China was the UK’s 26th greatest export market. It now sits in sixth place.

Trade between the 2 international locations hit a report excessive final 12 months, with massive infrastructure initiatives and schooling enjoying main roles.

But as tensions rise between London and Beijing – following the UK authorities’s U-turn on utilizing Huawei telecoms 5G tools within the nation’s networks – the ties which have benefited each nations might now be below menace.

Trade

Last 12 months, China was the UK’s sixth largest export market, value £30.7bn, in line with the Office for National Statistics (ONS).

This was a report excessive, up from £23.4bn in 2018, and the fourth year-on-year improve in a row.

In the opposite route, China was the UK’s fourth largest supply of imports, value £49bn, additionally a report excessive.

Infrastructure

China additionally performs an more and more vital function within the UK’s infrastructure, together with its nuclear energy capabilities.

China General Nuclear Power (CGN) is partly financing the constructing of the £20bn Hinkley Point nuclear energy station in Somerset.

The state-owned Chinese group additionally has an possibility to purchase 20% of one other deliberate plant, at Sizewell in Suffolk, and a majority stake in an entity wanting into a number of extra nuclear energy initiatives.

China’s state-run sovereign wealth fund China Investment Corporation (CIC) has an 8.7% stake in Thames Water, together with a 10% stake within the agency that owns London’s Heathrow Airport.

China additionally has a stake within the UK’s North Sea oil manufacturing by way of the China National Offshore Oil Corporation (CNOOC).

Chinese college students

The variety of Chinese college students at UK universities has greater than trebled since 2006, in line with the National Institute of Economics and Social Research (NIESR).

Tuition charges from Chinese college students add as much as not less than £1.7bn a 12 months throughout universities and unbiased faculties.

Experts have warned that UK universities will battle financially if China imposes a ban on its college students coming to Britain.

“As Chinese college students account for the biggest physique of international college students, the monetary impression could be massive”, mentioned a spokesman for Shanghai-based market intelligence agency Emerging Strategy.

“Universities might want to modify their prices or discover new methods to generate income.”

But the British Council has downplayed fears of a mass exodus of Chinese college students.

“Long-term planning to review overseas is unlikely to be affected by short-term political relations. The UK has all the time been one of many prime locations for Chinese college students,” a spokesman instructed the BBC.

Takeovers

China has been energetic in lots of high-profile acquisitions within the UK, leading to billions of kilos flowing into Britain.

In March, British Steel was taken over by China’s Jingye Group in a transfer anticipated to save lots of greater than 3,000 jobs.

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China’s Jingye Group is taking up British Steel

The Chinese agency mentioned it will make investments greater than £1bn to assist modernise the steelworks.

Other notable takeovers embrace black cab maker LTI, which was purchased by Chinese carmaker Geely, and Wolverhampton Wanderers soccer membership, which was taken over by Chinese conglomerate Fosun International.

Technology

Technology agency Huawei’s funding within the UK is a high-profile and a long-standing one, relationship again to 2005.

While Huawei will not be concerned within the rollout of latest 5G tools, it nonetheless has involvement in present telecoms infrastructure.

While a lot of the discuss has been round Huawei, it is not the one know-how firm that the UK and China share hyperlinks with.

China’s thirst for prime tech UK firms noticed it take over chipmaker Imagination Technologies in 2017.

The overwhelming majority of the money for the acquisition got here from the Beijing-backed China Reform funding fund.

UK companies in China

While many of the circulation is cash into the UK from Chinese firms and government-backed entities, there are some huge UK corporations doing enterprise in China, a rustic of 1.four billion individuals with rapidly-growing disposable incomes.

Significant British firms are unfold throughout sectors corresponding to power, automotive manufacturing, prescribed drugs and monetary providers

Last 12 months, China’s ambassador to Germany threatened “penalties” for its carmakers if Huawei was blocked from Germany’s 5G networks, elevating considerations that Beijing might use such ways in opposition to different international locations’ pursuits.

“Chinese residents are immediate to observe boycotts primarily based on nationwide pursuits dictated by the social gathering,” mentioned a Shanghai-based spokesman for market intelligence agency Emerging Strategy.

But Steven Lynch, managing director of the British Chamber of Commerce in China instructed the BBC that he was optimistic that such a state of affairs might be averted.

“We hope that British automotive producers who each import autos into China and manufacture domestically is not going to be focused for the UK authorities’s determination,” he mentioned.

The pro-business group warned that British telecoms and IT firms may additionally probably be in danger.

But Mr Lynch added that the 2 international locations ought to be capable of “maintain sturdy commerce and funding within the coming months regardless of the difficult political surroundings”.

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