Chinese money flows into UK

Updated: 2015-02-02 07:31

By Cecily Liu(China Daily)

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"As for nuclear power and high-speed railways, China's technology and experience are abundant. China can prove its strength in both fields by taking part in the UK projects," says Zhou Xiaoming, minister counselor with the economic and commercial office at the Chinese embassy in London.

"In such projects, China's expertise is building them quickly and maintaining quality."

In addition to energy and transport projects, many Chinese real estate and construction companies have invested heavily as both investors and contractors in greenfield and redevelopment projects in the UK.

Beijing Construction Engineering Group's 800 million pound investment in the Airport City Manchester project is one such high-profile project. The Chinese construction company will take on a 50-50 split of the project's construction with UK construction company Carillion.

Another is the Chinese developer Advanced Business Park's $1.51 billion project to transform 14 hectares of the historic Royal Albert Dock in London into an office complex over the next decade.

Alongside these large-scale infrastructure investments from China, many Chinese construction companies, project design companies and supply-chain related companies plan to grow into the UK.

These include China Building Technique Group Co, a construction company that is a subsidiary of the China Academy of Building Research Architectural Design Institute, known to champion innovative building methods.

Another is CIMC Modular Building Systems, which supplies modular building units to UK projects.

Before the Labour Party came into power in 1997, most UK infrastructure projects were funded by the government. Since then, however, there has been greater demand on the central and local governments to find private sector money for projects, says Julia Court, co-head of construction at the law firm King & Wood Mallesons.

This trend accelerated after the 2008 recession, when there was greater pressure on public sector spending in the UK. This coincided with China's emergence on the international scene as an investor, Court says.

With the UK government recognizing the important role Chinese investors could potentially play in the nation's infrastructure sector, UK Trade and Investment has been active in China promoting these opportunities to Chinese investors.

Court says the UK's infrastructure sector is an attractive investment target because of its relative stability and long-term sustainable returns. On average, the returns for both public sector utility infrastructure and private sector infrastructure projects range between 8 and 15 percent.

The returns for greenfield projects, which are new construction projects, are likely to be higher because of the risks associated with building a new project.