Chinese investment into the UK is flourishing, says new white paper

A new white paper suggests the UK-China trade and investment relationship is strengthening, and ties will grow in importance as post Brexit uncertainties fade

A new white paper jointly released by the TMF Group and China-Britain Business Council (CBBC) examines the present and future prospects and challenges of Chinese investment in the UK and what promises to be a new 'special relationship'.

The white paper is entitled 'China-UK Investment: Strategies for success in the new 'golden age''.

The paper argues that the UK is attractive to Chinese companies with global ambitions. As a major international financial centre and the world's biggest foreign exchange trading hub, London plays a key role in China's push to internationalize its currency, the renminbi, and for its banks and financial institutions to expand globally. Other factors underpinning the UK's appeal as an investment destination have been that it is a traditional defender of free trade, has a liberal economic environment, and currently has a relatively weak currency.

Wincy Wong, director of consultancy solutions at TMF Hong Kong, says: "In the first half of 2018, the UK attracted US$1.6 billion in investment from China, and making it the most popular European destination after Sweden. As a mature, services-oriented economy, the UK offers a range of investment opportunities that correspond to China's strategic priorities This alignment is set to drive further investment and partnerships in sectors like education, healthcare, energy, logistics and transport."

Felix Ndeloa, director of consultancy solutions at TMF UK, says: "Despite the broadly positive picture there are several forces that could impact future investment trends negatively. Chinese companies may overlook the regulatory and compliance complications of investing in the country. These include an intricate tax regime and stringent rules around employment and data protection. These issues argue for Chinese firms seeking the support of a knowledgeable local partner who can help ensure their operations are compliant and continuously up to date across taxation, accounting, employment and data policy - especially as factors like Brexit seem likely to rapidly shift the picture in some areas. Securing such a partnership will free investors to concentrate on the more strategically important tasks of cultivating their UK presence and building relationships with local enterprises and the community."

Weifeng Ma, director, financial & professional services and China Outbound at CBBC adds, "Uncertainties surrounding Brexit could temporarily impact investment activity, but in the long run CBBC is confident that the UK's investment environment will prove attractive to Chinese investors. As the UK creates new trade and investment relationships after leaving the European Union, China will become an even more important partner."