China Investment Corp (CIC), the country's US$200 billion sovereign fund, is considering investing in the UK, the Lord Mayor of the City of London disclosed Tuesday after meeting with senior CIC executives.
"CIC's investment in the UK will help other Chinese enterprises better tap overseas markets as the UK serves as a gateway to other European countries," said Ian Luder, the Lord Mayor of the City of London, a geographically small city of about one sq mile radius within Greater London and its financial services hub.
At the Boao Forum in April, CIC Chairman Lou Jiwei said the fund would consider investing in Europe this year, after avoiding the continent last year because of trade barriers.
Beijing-headquartered CIC didn't invest "a single cent" in European companies or assets last year, because the continent had put up barriers to limit the activities of sovereign wealth funds, Lou said.
"As an open economy, the UK will not restrict such ownership. If CIC decides to buy stakes in UK banks, it will be good news," said Luder.
"Meanwhile, with the appreciation of the yuan against the sterling, it is now an excellent time for Chinese companies to take advantage of low commercial property costs and locate their business in London," he said.
Meanwhile the China Construction Bank, one of the "big four" State-controlled banks, upgraded its London representative office into a subsidiary on Monday. The Agricultural Bank of China is also expected to follow suit, said Luder.
Though some people believe that Shanghai's emergence as a new global financial center will take away the luster of London and New York, Luder said he welcomes competition as it helps to expand the whole market.
"We need more rather than less global financial centers," he said. "To make Shanghai one step closer in becoming a truly international financial center, China needs to fill the skills gap and also increase its range of financial products.
(China Daily June 3, 2009)
