China and the UK are planning a RMB10 billion joint investment fund, according to sources at Bloomberg. Details of the equity split have not yet been decided; however, the fund is apparently set to focus on areas such as infrastructure, agriculture, and hi-tech industries.
China and the UK have bilateral trade of just under £60 billion, of which UK exports to China last year were worth £16.8 billion and imports from China were £42.3 billion, according to a British Parliament November Briefing on China-UK trade, which can be downloaded here.
However, much work needs to be done by British institutions to bring the stated fund’s aims of increasing bilateral trade in infrastructure, agriculture, and hi-tech. Actual British exports to China are not sympatico with the intentions, and have instead been concentrated on major, government involved British industries such as automotive and energy. In 2016, the UK’s single largest export to China was road vehicles, valued at £3.7 billion; this represented 28 percent of all UK goods exports to China. Other British goods exports to China included petroleum and petroleum products, valued at £1.6 billion (12 percent of goods exports), medicinal and pharmaceutical products, valued at £0.9 billion (6 percent of goods exports), and power generating machinery, valued at £0.7 billion (5 percent of goods exports). Combined, these four products groups comprised 51 percent of all the UK’s goods exports to China, suggesting much more needs to be done to stimulate British businesses in the SME, farming, and IT sectors, which are not areas generally targeted by entities such as the China-Britain Business Council (CBBC), which is itself part British government funded.
“There needs to be a rethink on how to expand the reach of the CBBC into more entrepreneurial sectors of British industry”, says Chris Devonshire-Ellis. “The organization appears dominated by civil servants and while fine as a G2G and corporate bridge, lacks focus on new technologies and SME’s. It has become mutually exclusive while not addressing the new challenges faced by British businesses wishing to engage with China. However, the introduction of an OBOR fund, provided it can be managed in an appropriately entrepreneurial way rather than be absorbed by major corporates, is a step ahead in the right direction.”
Dezan Shira & Associates have been handling British investment into China for the past 25 years, with the firm handling hundreds of millions of pounds of British investment into China and Asia. About 18 percent of China Briefing’s total annual readership of some 2 million page views are from the UK, with the firm being one of the strongest SME serving presences for British business in the region.
Silk Road Briefing is produced and written by Dezan Shira & Associates. The firm provides governments and corporate businesses worldwide with strategic, legal, tax and operational advisory services to their SMEs and MNCs investing throughout Eurasia and has 28 offices across China, India, Russia and the ASEAN nations, and partner firms in Central Asia. We have specific and long term experience in China and the OBOR countries. For assistance with OBOR related issues, please contact the firm at email@example.com or visit the practice at www.dezshira.com