Lord Wei of Shoreditch is the Chairman of the All Party Parliamentary Group for East Asian Business and a non-executive Director of the Manchester-China Forum. The views in this article are his own and not those of any organisation he represents.
Following the recent visits in the autumn by the Prime Minister, Chancellor and various Ministers and business leaders from the UK to China – and as we enter the year of the Horse – it is perhaps a good time to take stock of the hoped-for increase in investment into the UK from China. Whilst the civil servants and businesses involved in last year’s visits were busy working on deals to announce and contracts to sign, an independent group of experts at Roland Berger have analysed, on behalf of the APPG for East Asian Business, every major investment from China over the last ten years and interviewed businesses and stakeholders involved in the process to build a comprehensive picture of what is going on, what remaining barriers to such investment activity exist, and to what the future might hold.
The APPG for East Asian Business report, published today, has much in it to encourage us on top of the recent general increase in exports, and is timely given the Prime Minister’s recent call for more businesses to “reshore” back to the UK. At the same time, it highlights a number of areas where more work is needed.
Firstly, we are doing better than we think when compared to competitor nations in attracting investment, and the future prognosis is looking positive. Chinese investment into the UK is poised to grow exponentially which is good for jobs and growth. Credit here is due to the government and UKTI, with its increased focus on trade.
Second, there is a bit more work to be done to make the UK the natural locality for global Chinese headquarters, as also highlighted by a recent McKinsey entitled Urban World – particularly by making it easier for foreign students and foreign managers of job-creating Chinese businesses to settle and travel here, whilst tightening the screw on truly illegal immigration and benefit tourism, often originating from elsewhere in Europe.
But the major finding so far is that, while progress is being made and the future is positive, as it stands not everyone is going to have a share in the future growth and jobs dividend from Chinese investment because the lion’s share has been going into London and the devolved administrations. Sixty percent of Chinese inward investment to the UK goes to London. This compares to 46 per cent for the top region in France, and only 16 per cent for the top region in Germany. The report finds that more could be done, since the abolition of Regional Development Agencies, to bring investment into the North and West and into areas of major cities that need regeneration.
The work carried out in Manchester recently, with its major announcement on the Airport City, is one example of how a regional focus – led by the private sector, but with strong local and central government support – can yield results. More could be done to encourage such activity across the rest of the country, to help attract investment both large and small into projects that need them. Cities such as Liverpool, Leeds, Bristol, Birmingham and boroughs such as Newham have also pioneered approaches to UK-China trade promotion in collaboration with their local business leaders, and their efforts need to be further supported and replicated elsewhere.
The future for Chinese investment into the UK is looking good. We just need to do more to ensure that every region and, by extension, every citizen gets to benefit from this coming investment boom.