New research has found that the Chinese Communist Party has quietly acquired £134 billion of British assets, from nuclear power plants to private schools and pizza chains; and that nearly 200 British companies are either controlled by Chinese investors or have taken stakes as minority shareholders.
A new Sunday Times research study reveals for the first time the true scale of Chinese corporate control of key British sectors, including energy, defense, infrastructure and transport, in addition to the growing interest of Chinese investment in healthcare, schools and technology.
Chinese companies have a strong interest in the UK’s energy strategy
Some of the big money Chinese investments are in the energy sector, particularly nuclear power. Communist state-owned China Guangdong Nuclear Corporation (CGN, CGN) has bought a 33.5 percent stake in the Hinkley Point C power station in Somerset, the first new nuclear facility to be built in the U.K. in more than two decades, with France’s EDF as the main investor.
CGNPC, which has been blacklisted by the U.S. for helping to acquire U.S. technology for Communist military use, is involved in the construction of the proposed nuclear power plant at Sizewell C in Suffolk in the U.K., along with France’s EDF. CGNPC will take a 20 percent stake in the development of the nuclear power plant.
CGNPC also plans to build a third nuclear power plant at Bradwell in Essex, a plan that has upset China hawks because CGNPC wants to take a 66.5 percent majority stake and use its own reactor technology.
In addition, China Investment Corporation (CIC), the Communist Party’s sovereign wealth fund, has bought large stakes in British oil and gas companies and in renewable energy. CIC is also interested in Cadent Gas, the UK’s largest gas distribution company, which serves 11 million British homes and businesses.
Chinese companies increase bets on biotech companies during pandemic
Chinese investors have been particularly attracted to biotech companies developing high-tech medical services during the pandemic.
Chinese venture capital firms have been quietly buying up portfolios that include key British companies, including gene sequencing company Oxford Nanopore and cancer biology firm Immunocore.
Sensitive Government Data May Have Been Sold to Chinese Companies
China’s increased influence in the U.K. tech sector through mergers and acquisitions has long been in the spotlight; in 2017, British chip design firm Imagination Technologies was acquired by Canyon Bridge, a private equity fund funded by the Chinese Communist government, for £550 million.
London-based data center giant Global Switch has been sold to what is now Chinese steel giant Shagang Group. global Switch says it is a property company that denies its owners access to sensitive British government data stored within its systems.
Chinese companies buy up many British landmarks as landlords
Chinese companies have also developed a keen interest in British transportation assets. CIC owns a 10 percent stake in Heathrow Airport, worth £1.7 billion. Driverless car startups FiveAI and Oxbotica have also received investment from Chinese companies.
Landmark buildings in many UK cities are also now helping Chinese owners earn huge rents – for example, Hong Kong-based Zhongyu Landmark acquired Cheesegrater Tower for £1.2 billion in 2017. £16.7 million in rental income alone is expected in the first six months of 2020.
Inclusion of 17 private schools education is the new playing field
The UK education system is a new arena of wrestling. Chinese investors now control at least 17 private schools in the UK.
Chinese education firm Boshiwa acquired CATS Academy, which has schools in Cambridge, Canterbury and London, for £150 million in 2019; three schools acquired in 2020 include Abbots Bromley in Staffordshire.
Chinese investors hold half of HSBC’s shares
According to research firm Argus Vickers, China’s holdings in the UK’s 100 largest listed companies have now risen by 30% to £57bn compared to 2015.
The value of FTSE 100 shares held by the Communist Party’s central bank and others has reached almost £14 billion. Britain’s HSBC topped the list of sellers, with nearly half of the London-based bank’s shares held by Chinese investors, worth a total of more than £42 billion.
Conservatives favor pushing for takeover law reform
Neil O’Brien, a Conservative MP and co-founder of the China Study Group, said the latest research showed the scale of Chinese ownership of British companies.
He favors the U.K. moving forward with reforms to takeover laws for Chinese companies. “It is vital that takeover law reform enables us to distinguish between investments that are beneficial and those that raise security concerns, as is the case in other countries’ laws.” He said.
Investment rules don’t reciprocate British companies can’t enjoy Chinese companies’ treatment
Communist authorities have been restricting foreign investors from taking stakes in their key infrastructure or high-tech industries, and British companies cannot invest in China’s nuclear industry, yet China can be a major investor in the British nuclear industry.
For some so-called reform and opening areas, the CCP also limits the size of investments that can be made by non-Chinese companies, for example, in the telecommunications sector, where at least a 50 percent stake by Chinese partners is required.
The British government’s March defense review said that both China and the U.K. benefit from trade and investment, but also warned that China (the Communist Party) poses “the greatest national threat to Britain’s economic security.
Steve Tsang, director of the China Institute at the School of Oriental and African Studies at the University of London, said the U.K. views trade with China commercially, but “the Chinese (Communist) government sees it as part of its national influence, which can be used for political, national interest and diplomatic purposes without hesitation.
George Magnus, an associate fellow at Oxford University’s China Center and author of Red Flag Alert, said British companies are not given the same freedom to invest in China, which (the Chinese Communist Party) has strict regulations on overseas investment.
“There’s no reciprocity in that regard, there never has been.” He said. “Our technology companies don’t get the same rights to operate in China as Chinese companies do in Europe or the United States.”
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