Why the chancellor wants China's cash

Mainland China 100 Yuan notes Will China be investing more in British infrastructure?

Perhaps the most important cause of our economic malaise is that for years as a nation we have been living beyond our means, in deficit with the rest of the world, buying from other countries far more than we produce, till our indebtedness became unsustainable.

By contrast China has been consuming far less than it produces, accumulating vast surpluses.

So as we work down our debts, the hope of the government has been that the Chinese could be persuaded to invest some of their vast surpluses in our infrastructure, in a way that would ease the pain of our economic slowdown and would yield a decent return to China over the long term.

That's why the Chancellor of the Exchequer was today so delighted that China's sovereign wealth fund, China Investment Corporation, which controls more than £250bn - has bought a stake of almost 9% in London's water and sewage business, Thames Water.

It is a significant moment, in that the deal is CIC's first investment of any sort in the UK.

But that significance should not be overstated. China is buying a small stake in a long established stable business, currently controlled by an Australian investment firm, Macquarie, rather than taking a risk on improving the fabric of the UK.

The transaction will only turn out to be important if it is the priming of a financial pump that then gushes a flow of Chinese money into British roads, rail, hospitals and the other things that our indebted government is struggling to afford.

Robert Peston, economics editor Article written by Robert Peston Robert Peston Economics editor

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  • rate this

    Comment number 159.

    You couldn't make it up!

    They WANT Chinese buying up GB plc??????

    Is anyone in charge any more.......................

  • rate this

    Comment number 158.

    As we don't make anything for the Chinese to buy whilst just about everything in our shops is made in China, then the only way to balance the trade is to sell them our infrastructure and utilities. Once they have bought the whole country, then what do we do? I wonder if there would be a market in Beijing for an English take-away?

  • rate this

    Comment number 157.

    When Thatcher and Sid got us to sell everything off I hope folk realised exactly what was going to happen in the years to come.
    I did.
    Fat load of good it has done me however.
    Despite not taking any of the sell off money I am still paying over the odds for utilities.
    And to think; we used to own them...
    Enough to make Bazelgette turn in his grave...

  • rate this

    Comment number 156.

    and not as much listen to what they say (they didn't do that well by listening to us) as watch what they do differently. If Chinese investment in any UK economic subject spells changes that can be tried and tested here and copied when successful, then we will have a lesson well learnt.

  • rate this

    Comment number 155.

    (153 ctd.) Our contributions to overall state of the planet are numerous, but dispersed logistics must be considered the most important. Unfortunately we are our own worst enemies. By propagating simplified ideas, by getting lost in our internal struggle we created a situation where it might be of much benefit for us to open to the world (China, Germany, Japan)


Comments 5 of 159



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