Economic ties with UK on track for continued growth

China-United Kingdom economic ties are going in the right direction, and Chinese investment in the UK will maintain its robust momentum, the China-Britain Business Council told China Daily on Wednesday.

Meanwhile, the demand for high-quality products from the UK will be boosted by an expanding middle class, Chinese companies' move up the value chain and ongoing urbanization, its CEO said.

Chinese-UK ties are "growing strongly. But there is still a long way to go before we really seize all of the opportunities both for Chinese and UK companies," Stephen Phillips, CBBC's chief executive, said on the sidelines of the UK-China Partnership in Creativity and Innovation, jointly held by the council and Propeller TV, at the Third China (Beijing) International Fair for Trade in Services.

"Chinese companies are still at a very early stage in going international, and we will continue to see large investment in the UK in the next few years as more Chinese companies look outside China," he added. "The obstacles are actually very similar for Chinese and UK companies - that is, understanding the environment of the other country. Chinese companies think the UK is complicated, and vice versa."

The past 18 months have seen Chinese investment in the UK surpass that of the previous 30 years, Phillips said.

From 2003 to 2012, Chinese investment in the UK rose by 83 percent annually on average to $2.78 billion, accounting for 3.2 percent of China's overall outward direct investment in 2012. The UK is China's fourth-largest destination for overseas investment and the top destination, or the gateway, for Chinese investment in Europe, according to the United Nations Conference on Trade and Development.

"Chinese investment in the UK is broad-based. We have seen major investment in financial services, including Chinese banks, insurance and law firms," Phillips said. "Recently, we have seen a lot of investment in property, both corporate and individual investment. We are also seeing more interest from private companies in investing in technology-driven companies and UK brands."

Xu Weiping, board chairman and general manager of ABP (China) Holdings Group, is planning an Asian business park in London with a total investment of 1 billion pounds ($1.7 billion).

"The park serves as a platform to team up Chinese businesses and better tap into UK markets," Xu said. "The first phase will cover 1.5 million square feet with an investment of 300 million to 350 million pounds. Construction will start in October or December of this year and will be concluded at the end of 2016. The park is set to accommodate businesses in the high-tech, energy-saving and environmental protection sectors, as well as modern services."

In addition to investment growth, China's trade with the UK also highlights bilateral economic ties. In the first four months of this year, China-UK trade surged 20.6 percent year-on-year to $23.33 billion, compared with the 11.3 percent growth of China-Eurppean Union trade. China's exports rose by 14 percent to $15.85 billion, and its imports jumped 37.3 percent to $7.48 billion, according to the General Administration of Customs.

"The maturity of the Chinese market is driving the strong growth in UK exports to China. We are seeing a shift in China toward more consumption. Chinese companies and consumers are looking for more high-quality goods from overseas. ... We have seen this represented in many consumer sectors, like small companies selling food and drink such as jam, wine and cheese," Phillips said.

In addition to luxury brands, middle-tier brands are increasingly attracting Chinese consumers, which is "very encouraging because it's a much broader-based relationship", he added.

"In addition to the driver of expanding Chinese consumption, Chinese companies are moving up the value chain and becoming more innovative. And the UK can help Chinese companies move up the value chain," Phillips said.

"Another potential driver for strong trade growth is the continuing urbanization in China, creating opportunities for overseas companies having clean technologies and green technologies," he added.

http://www.ecns.cn/business/2014/05-29/116667.shtml