China keen to fund country's major infrastructure projects
Posted by APM on 7th Jul 2014
Britain’s major infrastructure projects could soon be directly funded by China.
The China Development Bank (CBD), a wholly owned subsidiary of the Chinese Government, has signed a Memorandum of Understanding (MoU) with the City via the representative body, The CityUK.
The MoU will encourage lending in the UK as well as trading in China’s currency, the renminbi, which will open up trade opportunities in China to British businesses.
China is understood to be particularly interested in funding the £42.6bn HS2 project and the next generation of nuclear power stations.
Speaking to BBC business news Sir Gerry Grimstone, chairman of The CityUK, said that the CBD were interested in three specific sectors.
“They are interested in nuclear, high speed rail and telecommunications,” he said. “HS2 was one of the things they specifically mentioned. Knowing the finance is available is an important part of any project. This is an important development.”
Government has previously said that the HS2 route would be funded by the taxpayer but a large investor could be allowed to come in to run the service or to build stations and ancillary connecting services.
Plans are for the first part of the 250mph line to Birmingham, which is due to open in 2026.
Prime Minister David Cameron has called the trade deals between China and the UK as ‘central’ to revitalising the economy.
On the first day of Chinese Premier Li Keqiang’s recent visit to the UK, £14bn trade deals were signed.
One deal makes BP a supplier of liquefied natural gas (LNG) to China. The deal – signed with China National Offshore Oil Corporation – is worth more than £11bn and will run over 20 years.
Bob Dudley, BP chief executive, said: "It is a fair price for them and a fair price for us. It is a good bridge between the UK and China in terms of trade.”
Having the CDB invest in the UK is big news – it is one of the largest players in infrastructure development loans worldwide. It spends billions of pounds annually in Asia and Africa and is now eager to extend its influence to Europe.
Prime Minister David Cameron said: "The UK is the most popular destination in Europe for Chinese investment with more Chinese investment into the United Kingdom in the last 18 months than the whole of the last 30 years combined.
“We have signed deals worth more than £14bn, securing jobs and long term economic growth for the British and Chinese people.”