Tuesday October 28th 2014
A report by Pinsent Masons and the Centre of Economic and Business Research (CEBR) claims that Chinese investment in the UK energy sector could exceed £43billion in the next 10 years.
Between 2005 and 2013, China invested £11.7 billion in Britain. The world’s second-biggest economy is now set to invest £105 billion in Britain’s assets, with the largest beneficiary being the energy sector ahead of real estate and transport.
Head of infrastructure at Pinsent Masons, Richard Launy, believes that, while the need to modernise the UK’s major infrastructure rapidly increases, the anticipated influx of Chinese investment into UK infrastructure will be a “welcome boost” for the UK economy and, particularly, for the construction industry. He commented:
“Our report finds that this level of investment is going to be a game-changer for the UK infrastructure. Over recent years we have seen China’s role as an investor evolve from making indirect investments through sovereign wealth funds to Chinese businesses now becoming co-funders, co-developers and co-contractors in major UK infrastructure projects.”
“Over the next decade, we expect a significant increase in direct investment from the Chinese coming through in the shape of joint-ventures and strategic alliances.
“Four out of five of the world’s largest construction and engineering companies are now Chinese with a growing appetite for infrastructure investment and with the potential to invest vast amounts of capital in advanced economies in Europe.
“Entry by China into the UK market will create significant sector opportunities to provide expertise on how to operate in the UK market effectively – from labour market regulations to the planning process and how to operate with the framework of EU regulations.
However, there is uncertainty around the UK government’s support for infrastructure and public finances are under pressure. Pinsent Masons believe that there is a need for the UK government to address issues around policy if they want to unlock Chinese investment in order to fill in the funding gap to modernize the UK’s ageing infrastructure. On this topic, Mr. Laudy commented, “delay and lack of clear commitment on policy will only create uncertainty for investors.
“Although, the flow of investment from China has already started – we expect this to be the beginning of a major trend as a trickle of major Chinese investment turns into a wave over the coming decade.”