Chinese Investment in the UK: Regulation is the Key Issue

Made in China we get, but how about owned by China as the superpower ratchets up investment in the UK?

Made in China we get, but how about owned by China as the superpower ratchets up investment in the UK?

It is certainly a question to ponder over the breakfast Weetabix (Chinese-owned) or a meal with family or friends at Pizza Express (also Chinese-owned).

There has been remarkably little debate about the consequences of China buying into the economic soul of the nation. Meanwhile, its investors snap up businesses and reportedly even plan buying private schools.

Some prominent politicians are mildly queasy about the prospect of Chinese investment in crucial infrastructure projects, such as the HS2 rail link and the Hinkley Point nuclear power station. There are already significant stakes in water suppliers and other crucial aspects of the UK economy (pizza notwithstanding)

Bernard Jenkin, a prominent Conservative backbencher, has asked for the publication of a National Security Council review promised by the Prime Minister into the risks of giving China a piece of British nuclear power. Why has it not been released? Has it even taken place?

Perhaps it is all rather too obvious to even need spelling out. Ownership and investment always buys influence. On that basis the Chinese must have a great deal already. We hardly need a report to tell us what is plain.

That influence is bound to grow. The country's investment in the UK has risen by 85 per cent every year for the last five years. One survey predicts that £105 billion will be put into the UK economy by China over the next decade.

This is, of course, an immensely valuable prize. The money will create jobs and improve assets from which we all will benefit.

What will be important in the years ahead is not the political decision to allow investment, where the focus currently lies. It will be ensuring that our regulatory authorities are sufficiently alert, inquisitive and demanding of standards. The true mark of a mature, capitalist economy is as much about regulation as opportunity.

This is all about investment. We need it, they can supply it. China is investing in the UK because we are a large, stable and wealthy economy.

China also wants to project economic power. Britain did the same through its empire, and shares the instinct, even if most of its projection these days is done through the overseas aid programme. So the world has always turned.

There are practical considerations, too. We are rather broke, but with high expectations. The unfortunate truth is that any ambitions for cleaner energy and better transport links as the population increases need money from somewhere..

Then there is our sense of place which should make us less sceptical. We cannot both want to be in a global economy, but somehow apart from the free flow of capital. After all, UK companies invest abroad, too, and want as much freedom as possible to do so.

China is at least unlikely to default or fail. It is hard to imagine tumbleweed blowing through a half-built Hinkley Point reactor.

On balance, we should as an open economy rely on power to scrutinise. Our regulators have not always seemed alert to problems before they arise, whether monitoring care of the vulnerable or financial services.

Political focus should not be on who is keen to invest in us, but on how keen we are to regulate them when they get here. However tasty an investment looks, the key is ultimately its delivery, which is something every pizza eater knows.


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