China News Will Bolster Chancellor's Autumn Statement

One headline this morning is likely to put the biggest smile on the Chancellor's face - news that China is keen to back investment in UK plc.

Before we even get to the Chancellor's Autumn Statement tomorrow some of the key headlines are already leaked - but that's modern politics.

We know rather gloomy economic numbers are on the way, so the Chancellor is trying to improve the mood music ahead of his speech.

We know infrastructure spending of up to £30bn is set to be the centrepiece alongside the proposed £40bn line in cheaper credit to business.

But one headline this morning is likely to put the biggest smile on the Chancellor's face - news that China is keen to back investment in UK plc.

Writing in the FT this morning, Lou Jiwei - Chairman and Chief Executive of China's massive $410bn sovereign wealth fund, the China Investment Corporation - says: "The UK is one of the most open economies in the world, a position bolstered by its sound legal system. PPP is a regular form of infrastructure development that should be encouraged and replicated in other developed countries."

So China has indicated a willingness to use the UK as the first port of call for major capital investment in 'old Europe'

The EU Commission will be fizzing. It is less than a month since Klaus Regling - head of the European bail out fund, the European Financial Stability Facility (EFSF) - was sent home from his mercy dash to China with a flea in his ear. No immediate support for the EU fund was coming from Beijing.

So why the Chinese confidence in the UK and not mainland Europe?

Simply put the UK's policy of encouraging inward investment, the so-called Hague doctrine of getting the Foreign Office to 'bat for Britain', seems to be bearing fruit.

The UK has been steadily sharpening its investment message and it is likely this will be further bolstered with more resources for inward investment agency UKTI in the Chancellor's statement tomorrow.

All this in comparison to the rather nebulous and unclear timescale and financial return commitments being asked of the Chinese from the EFSF.

Who would write a blank cheque? Certainly not the inscrutable Chinese, nor any other prudent investor.

Before patting themselves too firmly on the back, UK politicians should also note the Chinese welcome for PPP - the public private partnership - where the UK has been a global leader.

Recently politicians of all colours have attacked its cousin PFI, the private finance initiative. That scheme certainly had serious flaws, with taxpayers enjoying more of the financial burden than they deserved, but we should do well to remember UK PPP schemes remain world class, something the Chinese clearly recognise. We need to encourage a revival in PPP.

It looks like the Chinese may just have done that.

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