What they offer us is a deep pot of money that is also an addictive remedy for past under-investment and a shortage of domestic players, especially in infrastructure and industry. Boris Johnson, franker than Osborne, speaks of “projects that simply wouldn’t happen” without Chinese support. It’s no coincidence that as soon as the Grangemouth petrochemical plant in Scotland was threatened with closure last week by its owner Ineos, the whisper was of Scottish ministers seeking a Chinese buyer. As it happens, Ineos already has a 49 per cent Chinese partner in its oil refinery next door.
What else do the Chinese already own over here? It’s an eclectic catalogue, from the iconic Richard Rogers-designed Lloyd’s building in the City to Manganese Bronze, the manufacturer of London’s black taxis, and Gieves & Hawkes, the Savile Row tailor. There are Chinese stakes in Heathrow, in Manchester’s “airport city”, and in Thames Water. One Chinese tycoon is promising to rebuild Crystal Palace, another plans a seven-star hotel on London’s South Bank. The Weetabix brand on your breakfast table belongs to Bright Food of Shanghai. And in London’s nascent property bubble, though all the talk is of money from Greece and the Middle East pouring into our safe-haven bricks and mortar, it was Chinese buyers who (according to Savills) snapped up more than a quarter of new-build buy-to-let properties in the capital last year.
The impetus for it is simple enough. China has at least $3.4 trillion of foreign exchange holdings accumulated as a result of its success as an exporter, and has been on a mission since the turn of the millennium to invest in ways that generate better returns, in know-how and connections as well as dividends, than the low-yielding US Treasury bonds of which it is already by far the largest non-US holder. China also recognises that its low-cost manufacturing prowess has not created global brands or cutting-edge technologies: those it has to buy abroad.
Much of this spree has happened through state-owned entities according to a strategy directed by Communist Party leaders – most apparent in efforts to corner supplies of mineral and energy resources from Africa and elsewhere. But much of it is also, as one China consultant put it to me, “more higgledly-piggledly and opportunistic”, often reflecting the whims of new-rich tycoons and the troubles that cause corporate assets to be put up for sale in the first place, rather than their attractions: witness the last‑ditch disposal of the crippled MG Rover car group in 2005 to Nanjing Automobile.
Some of China’s overseas investing looks odd to Western eyes. We might ask what Gingko Tree Investment Co, a subsidiary of China’s state foreign exchange regulator, is doing investing half a billion pounds in UK student housing. And some really have been interpreted as sinister – at least by US congressmen, if not by our own ministers.
The concern here relates to China’s lack of respect for intellectual property and patents, and its allegedly world-beating skills in the field of cyber-hacking. A case in point is Huawei (pronounced by wags “Who Are We?”), which is now the world’s biggest manufacturer of telecoms equipment and which has UK operations in Ipswich and Banbury. As a supplier to GCHQ in Cheltenham, Huawei had to go to great lengths to prove that its kit does not incorporate hidden chips designed to eavesdrop on our state secrets. The company has also had to deny rumours of a close connection to China’s People’s Liberation Army, declaring itself to be wholly owned by its workforce. In the US, Huawei has struggled to win contracts with the federal government and mobile networks; in the UK the company’s black boxes are everywhere, and David Cameron used a post-Olympic announcement of a £1.3 billion Huawei investment programme as his cue to declare that “the UK is open for business”.
He’s right: the UK has always been open for business – certainly more so than the protectionist and inward-looking US. Our car industry, brought to its knees in the Seventies, was transformed in the Eighties and Nineties by the arrival of Honda, Toyota and Nissan from Japan and BMW from Germany. It’s now fighting fit again and its export champion is Jaguar Land Rover, enjoying a renaissance under the ownership of Tata of India. It was Tata that also took on the challenge of what was left of our steel-making industry by acquiring Corus, the descendant of state-owned British Steel. Meanwhile, London has long welcomed financial input from all over the world and is the destination of choice for Russian oligarchs and Gulf sheikhs. This is globalisation at work, and there can be no doubt that Britain is a net beneficiary.
But is there cause to be especially wary of the Chinese, who are likely to loom larger and larger in our economic lives in the decades ahead? Campaigners for higher standards of business behaviour will remind us that China is an autocracy that pays little heed to the rule of law or freedom of speech; in the Transparency International index of perceived corruptness it ranks 80th in the world, just above Serbia and 63 places below the UK; its commercial reputation in poorer countries is rapacious; its environmental record is shocking; its contracts and company accounts sometimes seem barely worth the paper they’re printed on.
That list applies to many countries besides China – but in an imperfect world, we sometimes have to trade with unsavoury partners, while doing our best to keep our own hands clean. What we can say, in chorus with Osborne and Johnson, is that Chinese money flowing into the British economy is broadly to be celebrated. But there are sectors where it would not be appropriate beyond the level of passive minority shareholdings. In retail banking, the Chinese rely on uncompetitive state institutions that may be insolvent by Western standards – so they’re hardly ready to take control of ours. In the defence and aerospace sectors, and in bioscience, we still have secrets to protect.
Ministers and mayors are right to put out the welcome banners at Heathrow, but we’re so open for business these days that it’s worth asking whether we have the apparatus or the will to stop any foreign investor from taking a step too far. And the test of that question might be whether we’d want our next new nuclear reactor to be 100 per cent owned by China.
Martin Vander Weyer is business editor of ‘The Spectator’