For example, Beijing’s state sovereign wealth fund, CIC, has used part of its £300 billion in assets to snap up 8.7 per cent of Thames Water. That is on top of its 10 per cent stake in Heathrow. If a new airport materialises in the Thames Estuary, Chinese investment will certainly be sought – not to mention for HS2, wind farms and a new sewer network for London.
MG Rover, Manganese Bronze (the black-cab maker) and the company that produces Weetabix are among other investments in the Chinese portfolio – though a bid for United Biscuits, home to Jaffa Cakes and McVitie’s digestives, failed. Wanda, the firm behind the Nine Elms project (which has annual revenues of £15 billion), has also purchased Sunseeker, the UK’s leading luxury yacht-maker. Its chairman, Wang Jianlin, celebrated on a stage shaped like a boat with a troupe of dancers in glittering dresses behind him. “We wanted to buy 30 Sunseeker yachts because we are planning to build three marinas here in China,” he explained. “So then we thought it would be a better deal if we just bought the company.”
In all, some 500 Chinese companies have invested in Britain, not counting certain long-standing Hong Kong firms that have been here since before the hand-over. The Chinese see Britain as being on a growth path, and value the legal standards here as well as the openness of our economy. Mr Osborne, keen to take advantage of this, has laid out plans for London to become the international centre for trading in the Chinese currency, the renminbi.
There are other explanations for China’s interest, of course. Some companies hemmed in by fierce competition and price controls at home think they can enjoy bigger profit margins by investing abroad. Others want to acquire technology, management and marketing expertise. For property firms, Britain is something of a bargain compared with the soaring price of land in big cities on the Chinese mainland – right now, according to Wanda, London is cheaper than Beijing.
Yet this week’s back-slapping cannot hide some more fundamental issues. For example, it is clear who is in the driving seat of the British-Chinese relationship: this current entente follows Beijing’s decision to remove Britain from the 18 months of purdah imposed after David Cameron and Nick Clegg met the Dalai Lama. However much Messrs Osborne and Johnson talk of China valuing Britain, the power is tilted very much Beijing’s way. And the exclusive focus on economics gives the impression that Britain has, in effect, given up seeking a meaningful political relationship with a regime that is going to play a growing global role. The Chinese have been allowed to set the parameters on the level of concern they will allow Britain, along with other foreign powers, to express about their human rights record, Tibet or other sensitive matters.
There also the question of how far we should let certain Chinese investments go. National security concerns have impeded the expansion of the telecommunications giant Huawei, given constant allegations – especially in the US – that it is connected with the Chinese military (which the company stoutly denies). And would involvement in nuclear power be a step too far? Also, how large a stake should state enterprises from the People’s Republic be allowed to build up in our key industrial sectors?
Then there is the issue of reciprocity. Having an open market is good for the inward investment Britain needs – but China, with its 1.3 billion population and relatively underdeveloped market, offers a huge opportunity for our businesses to invest in turn. Yet managers of British and other Western firms report increasing difficulty in operating freely, and recent crackdowns over alleged corruption have mainly targeted foreign enterprises.
Our politicians should not simply be relieved to be out of Beijing’s doghouse, as they welcome the rush of Chinese money. During their trip, the Chancellor and the Mayor need to press for British companies to have the kind of freedom to operate and expand in China that Chinese companies enjoy here. They must make clear that this relationship has to be a two-way street – if it is not already too late.
Jonathan Fenby is the author of 'Tiger Head, Snake Tails: China Today, How it Got There and Where it is Heading’ and 'The Penguin History of Modern China’