ISSUES
: Business and Trade
Chapter 2: Corporate responsibility
26
Is Chinese investment into the UK at
record levels?
By Joseph O’Leary
“There has been more inward investment from
Chinese companies in the last 18 months, than in the
last 30 years combined.”
Reported on BBC
Today
Programme and from a
government press release in January.
This morning the Chinese Premier, Li Keqiang, wrote
a
Times
piece on China’s economic development and
the significance of its trading relationship with the UK.
It hasn’t been all praise for the UK lately however; at the
weekend the Chinese ambassador reportedly remarked
that Britain now lags behind its German and French
neighbours.
Amidst the conflicting perspectives, a familiar claim
emerged from the BBC’s morning coverage. UK Trade
and Investment, which made the claim put out by the
Government earlier this year, didn’t provide Full Fact
with the details of where it was from, but offered itself as
the source we could attribute the claim to.
We haven’t been able to trace reliable figures to support
the claim. Those that do exist indicate the UK is a
significant target for Chinese companies compared to
other countries, and that recent years have seen several
large examples of Chinese investment. But on only one
indicator – investment which involves significant equity
gains – are there obvious numbers to support the claim.
The Foreign and Commonwealth Office (FCO) separately
commented that there was “virtually zero” investment
prior to a few years ago, and so gave the view the claim
is plausible.
£1.7 billion of Chinese investment to the UK
in 2012 – but the figures are unreliable
This is the FCO’s interpretation of figures it was given by
the ChineseMinistry of Commerce, statistics it describes
as “not perfect”. So we found in other ways: the figures
were not obviously available on the Ministry’s website,
let alone details of how they were calculated. What’s
more, while it comments that these are significant rises
since 2010, we’re given little idea of the picture before
then.
Nevertheless, on these numbers the UK is placed as high
as fourth in the world for receipts of Chinese investment,
behind Hong Kong, the USA and Kazakhstan.
That throws up another problem with the data though: it
doesn’t necessarily reflect which countries end up with
the money. The FCO comments of the money sent to
Hong Kong: “nearly all of this money will go on to third
markets but it’s not clear where”.
This happens across the world too. The British Virgin
Islands come fifth in the world for receiving foreign
direct investment (a particular type of investment which
is more than just gaining equity in a foreign company).
But the UN and others admit that countries like this aren’t
primarily the final destination of investment. They go via
financial centres for tax or administrative purposes.
So even with reliable figures from China, this wouldn’t
necessarily give the full picture either.
Barclays, BP and Weetabix the biggest
recent cases
We can get some idea of how this investment might
break down through figures put together by the American
Enterprise Institute and the Heritage Foundation. They
compile a list of actual occasions in which a Chinese
investor has sent funds to the UK.
Among the larger examples, the China Development
Bank’s 2007 purchase of 3% equity in Barclays, the
SAFE investment company’s 2008 investment into BP
and most famously the 2012 takeover by Bright Foods
of Weetabix. These combined sum to some £4 billion
worth of investment in UK companies.
This list won’t necessarily be exhaustive, but it does put
some solid examples to the abstract numbers.
Direct investment at historically high levels
Alternative figures put together by the Office for National
Statistics give us a picture of foreign direct investment
over time. This only counts cases where the investor
gains an ‘effective voice’ in the target: defined as holding
10% equity. That’s why its figure for 2012, £193 million
of investment in 2012, is so much lower than the others
on offer.
There are figures on this measure going back to 2003,
and here they do show record levels for the most recent
year compared to every previous on record combined.
While this does give some credence to the claim, it
still isn’t the data we were pointed to. Until we know
more about the Chinese figures, in particular having a
timeseries for recent years, we can’t say how accurate
the central claim is, or whether there’s more context
needed.
16 June 2014
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