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China's investment in UK will be 'explosive'

By Ding Qingfen in London (China Daily) Updated: 2013-01-04 07:56

High-end products, infrastructure are targeted sectors, diplomat says

China's investment in the United Kingdom will continue its "explosive" growth, with high-end manufacturing and infrastructure leading the way, a senior diplomat predicted.

"The UK is the most open economy, and also the most market-oriented," in Europe, said Zhou Xiaoming, minister counselor of the Chinese embassy in the UK.

China's investment in UK will be 'explosive'
Chinese companies have been answering the call from some members of the European Union for capital.

In 2011, the UK was the third-largest EU destination for Chinese investment, following Luxembourg and France, according to the Ministry of Commerce.

China's overseas direct investment in the UK in 2011 was $2.5 billion, it said.

But Zhou said the real figure was far more as Chinese overall investment in the UK experienced "explosive" growth.

"It is estimated that the Chinese capital that flew into the country in 2011 reached $6.5 billion," said Zhou.

And the momentum will probably be sustained in the coming years, he said.

The past year also saw some key mergers and acquisitions.

In May, Shanghai-based food and beverage group Bright Food agreed to pay $1.7 billion, including debt, for a 60 percent stake in UK cereal maker Weetabix.

Reports in December said China Gas Holdings agreed to buy London-listed Fortune Oil's gas business in China for $400 million.

"Chinese capital mainly went to the service, energy, food and mining industries," said Zhou.

And "high-end manufacturing and infrastructure will be hot spots" for Chinese companies, he added.

Executives of China Investment Corp, a $410 billion sovereign wealth fund, have repeatedly said that the company will seek infrastructure deals in the UK.

They agreed to buy a 10 percent stake in Heathrow Airport in October.

This follows closely on the fund picking up a stake in Thames Water last year.

"We could say the UK is the most open market worldwide, especially in the infrastructure sector, and this means huge business for China," said Zhou.

From 2011 to 2015, the UK is expected to need capital worth about $325 billion for the infrastructure sector, he said.

As a country that is proud of innovation and design, the UK is a "good place" for Chinese manufacturers to set up research and design departments, Zhou said.

"We have already seen some domestic manufacturers establish their R&D centers in the UK," he said.

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