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Chinese FDI into UK swells to $20.8b in 2017

By Cecily Liu | China Daily | Updated: 2018-01-18 07:22
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A man feeds swans at Hyde Park in London, Oct 15, 2015. [Photo/VCG]

Chinese foreign direct investment into the United Kingdom more than doubled from $9.2 billion in 2016 to $20.8 billion in 2017, despite uncertainties over Britain's pending exit from the European Union.

The figures, which were put together by law firm Baker McKenzie and research consultancy Rhodium Group, show that China's FDI into the UK grew rapidly during the past four years-from $3.2 billion in 2013.

FDI refers to greenfield investments and completed acquisitions that result in an equity stake of 10 percent or higher.

"We have seen a steady increase in Chinese FDI into the UK, culminating in last year's record high," said Tim Gee, London mergers and acquisitions partner at Baker McKenzie. "Weak sterling and a renewed confidence (among) Chinese investors have been key factors in driving much of this activity."

One deal that boosted the total in 2017 was the $14 billion purchase of the London-based warehouse company Logicor by Chinese sovereign wealth fund China Investment Corporation, which is known as CIC. Logicor, which owns around 50 warehouses in the UK and other European countries, was sold to CIC by Blackstone's real estate arm.

Gee said his team expects Chinese investment in the UK to continue in 2018.

"Unlike the EU and the US, the UK has not signaled any meaningful toughening of foreign investment screening and the door is very much open to foreign investors," he said.

In comparison, the US government has rejected some significant would-be Chinese acquisitions, the most recent of which being the rebuffing this month of Ant Financial's intended $1.2 billion acquisition of US money transfer company MoneyGram International, which was blamed on national security concerns.

Meanwhile, data showed consistent growth of China's FDI in economies involved in the Belt and Road Initiative, especially in sectors including transport, utilities, logistics and infrastructure.

China's FDI into European countries involved in the B&R region grew from less than $1 billion in 2015 to more than $16 billion last year.

Overall, Chinese FDI into Europe grew by 76 percent, to a total of $81 billion in 2017, thanks largely to ChemChina's record $43 billion takeover of Swiss agribusiness company Syngenta, which was completed in May 2017. Without that deal, Chinese FDI into Europe would have fallen by 22 percent, to $38 billion.

Significant European countries experiencing big year-on-year declines in Chinese FDI include Germany, Spain and France, with declines of 84 percent, 79 percent and 58 percent, respectively. However, these economies did experience increased activity during the second half of 2017, with more deals pending, especially in Germany and Spain.

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