Chancellor Hammond opens UK-China free trade deal talks

UK-China free trade deal: The UK’s new Chancellor of the Exchequer Philip Hammond has begun discussions with China about the possibility of forging an ambitious free trade deal which could see major Chinese banks and businesses being granted greater access to the UK economy. In an interview with the BBC, Hammond said that it was time for the UK  to explore “new opportunities” across the world, including with China which is already one of the country’s biggest inward investors.
“What we now need to do is get on with it in a way that minimises the economic impact on the UK economy in the short term and maximises the benefit in the long term,” Mr Hammond said, admitting that there had been “global disappointment” about the Brexit vote.
His remarks follow reports in the Chinese state media  earlier in the month that the Ministry of Commerce in Beijing was keen to open talks with the UK about a free trade deal.
Encouraged by the UK’s relative willingness to accept foreign investment into strategically important sectors including nuclear energy, high speed rail, airports and utilities, Chinese companies have already been enthusiastically investing in the UK’s infrastructure sector, not just to  generate long-term and sustainable returns but also increasingly  to gain experience of operating infrastructure projects in mature economies.
Until recently, Chinese investment has tended to be restricted to financing alone. In 2012,  for instance, the state-run China Investment Corp sovereign wealth fund bought an 8.68% stake in Thames Water Utilities Ltd and a 10% stake in Heathrow Airport Holdings, a year after the Cheung Kong Infrastructure Holdings bought the UK utility company Northumbrian Water for £2.4bn. 
Since then, however, the  tactics have changed and Chinese companies are now increasingly bidding for contracts to use the UK’s infrastructure sector as a springboard to demonstrate their technical expertise and expand globally.
Among the most high-profile of these has been Beijing Construction Engineering Group’s (BCEGI) £800m investment in the Airport City project in Manchester. China’s strategy of using such projects as stepping stones to greater involvement in the country’s economy were underlined last October when President Xi used his visit to the UK to launch a £130m ‘China Cluster’ for Far East businesses at  Manchester Airpfort as well as a new direct flight service from Manchester to Beijing.
BCEGI has now started preparatory work on the first phase of the £700m Middlewood Locks mixed-used joint-venture development in Salford.