Li Keqiang

Let’s make a deal: Li Keqiang seals HK$183b trade pact on visit to Britain

HK$183 billion in trade announced during Li Keqiang's visit to Britain - including a nuclear power pact - are further proof of country's rise

PUBLISHED : Wednesday, 18 June, 2014, 10:19pm
UPDATED : Thursday, 19 June, 2014, 11:01am

Beijing's latest trade deals with Britain will do more than get liquefied gas to China and Chinese nuclear reactors to the UK.

The deals illustrates dramatically how much China has changed: from economic basket case a few decades ago, to an envied position of exporting advanced technology to the cradle of the Industrial Revolution.

London is the ... international financial market and a natural partner to China

The two most controversial agreements will allow Chinese firms to own and operate a Chinese-designed nuclear station and to build and operate rail lines. The Chinese have a mixed safety record on high-speed rail.

The agreements were among trade deals worth £14 billion (HK$183 billion) agreed during the visit of Premier Li Keqiang , which prompted Prime Minister David Cameron to declare Britain was playing a part in the rise of China, which he called a defining event of the 21st century.

China would start direct trade between the yuan and the British pound today, the country's foreign-exchange trade platform said, in another step on its push to internationalise the currency.

Sterling and the yuan will be directly swapped without using the US dollar as an intermediary, China's Foreign Exchange Trade System said yesterday.

China has long had direct currency trade with the United States, and in recent years has added Japan's yen, the Australian, New Zealand and Canadian dollars, Russia's rouble and the Malaysian ringgit to the options.

In addition, British energy giant BP says it will sign a pact worth about US$20 billion to supply China with liquefied natural gas. And Royal Dutch Shell signed a comprehensive cooperation agreement with China National Overseas Oil Corporation (CNOOC).

London has moved to stem criticism of cooperation in the highly sensitive area of civil nuclear power by saying it is part of an overall agreement to tackle climate change, and China and Britain also signed a joint statement on climate change.

British climate change secretary Ed Davey wrote in The Guardian about China's contribution to aiding the environment, saying: "For the first time ever, the UK and China have released a joint statement, committing our governments to work even more closely together on a response to climate change.

"It's important because it is only the second time China has done this. The only other country with which China has agreed a statement on climate change is the US."

In a joint statement about high-speed rail, the two governments said: "Both sides agree to promote substantive cooperation between the UK-China on rail, including high-speed rail in areas including design, engineering, construction, supply operation and maintenance on projects in China and the UK."

The £11.8 billion BP gas-supply contract was one of a series of deals unveiled by major British firms during Li's visit.

The BP deal will provide state-owned CNOOC with liquefied natural gas (LNG) for 20 years.

Royal Dutch Shell also extended an agreement with CNOOC to work on energy projects around the world, including LNG.

Shell chief executive Ben van Beurden said the partnership with CNOOC had been fruitful so far, and that the firms were "committed to growing the business together".

In the nuclear deal, engineering company Rolls-Royce signed a memorandum of understanding with Chinese reactor manufacturer SNPTC to cooperate on civil power projects.

Rolls-Royce currently supplies emergency diesel generators to almost 40 per cent of all nuclear reactors in China and 70 per cent of the safety-critical equipment. It employs 55,000 staff in 45 countries, including almost 2,000 in China.

The London Stock Exchange also signed agreements with the Bank of China and the Agricultural Bank of China to strengthen the Chinese yuan offshore market in Britain, as well as to help provide access to cash for Chinese companies.

Exchange chairman Chris Smith said: "London is the world's most international financial market and a natural partner to China in its ambitious global development."

In a personal touch, Cameron gave Li a copy of the shooting script for the first episode of Downton Abbey, signed by the show's creator.

Li had expressed interest in visiting Highclere Castle, where the drama is shot. Cameron also gave Li a special £10 lunar gold coin - made by the Royal Mint and designed by the artist Wuon-Gean Ho - celebrating the Chinese year of the horse.

Agence France-Presse, The Guardian