China set to invest £105bn into UK infrastructure claims report

CHINA is set to invest £105bn into UK infrastructure by 2025 according to a new report from law firm Pinsent Masons and the Centre for Economics and Business Research.
 
The report, ‘China Invests West: Can Chinese investment be a game-changer for UK infrastructure?’, finds that of the £105bn, the leading recipients will be the energy, real estate and transport sectors.

The UK energy sector will be the biggest target for Chinese capital, with investment in projects including nuclear energy, wind power generation and photovoltaic power generation could be set to reach £43.5bn by 2025. The real estate and transport sectors could receive £36bn and £19bn respectively over the next decade.

Earlier this year Chinese investors were rumoured to be pumping £280m into a rail improvement scheme in the West Midlands connected to the HS2 high speed rail project.

The proposal involves building connections from the proposed HS2 interchange in Birmingham to Birmingham Airport and to outlying towns and cities including Coventry and Peterborough.

The scheme is believed to involve the reopening of a Stonebridge railway line which closed in the 1930s and then building a connection to the airport which would allow passengers to check in at the station and travel to their gates.
 
Richard Laudy, head of infrastructure at Pinsent Masons, said: “As the need to modernise UK’s major infrastructure gets greater by the day, the projected influx of Chinese investment into UK infrastructure is expected to be a welcome boost to the construction industry in particular and UK economy as a whole.  

“As a foreign investor China is going to become increasingly important for UK infrastructure by 2025.  This means UK-China partnerships need to grow over the next decade.  
 
“Our report finds that this level of investment is going to be a game-changer for the UK infrastructure.  Over the past few years we have seen China’s role as an investor evolve from making indirect investments through sovereign wealth funds – Chinese businesses are now becoming co-funders, co-developers and co-contractors in major UK infrastructure projects.”

The report, in addition to identifying the level of Chinese investment capital projected into UK infrastructure over the next 10 years, expects China to use its vast domestic manufacturing capability and capacity to export equipment and materials for UK infrastructure and real estate projects where it is providing investment.  This development is expected to change the landscape of the infrastructure industry in the UK as the Chinese enter the supply chain over the next 10 years.  

“Over the coming decade, we expect a significant increase in direct investment from the Chinese coming through in the shape of joint-ventures and strategic alliances. Four out of five of the world’s largest construction and engineering companies are now Chinese with a growing appetite for infrastructure investment and with the potential to invest vast amounts of capital in advanced economies in Europe.
 
“Entry by China into the UK market will create significant sector opportunities to provide expertise on how to operate in the UK market effectively – from labour market regulations to the planning process and how to operate with the framework of EU regulations,” he added.