Brown extends hearty welcome to mainland sovereign fund
British Prime Minister Gordon Brown has invited the mainland's sovereign fund to invest heavily in his country, despite global worries that the mainland's ample cash could be a source of controversy.
'This is a very substantial fund. It can invest positively,' Mr Brown said in Beijing after a meeting with Premier Wen Jiabao. 'I realise that in some countries it is controversial, but I have talked to Premier Wen about that.'
Mr Brown suggested that China Investment Corp, which manages the mainland's US$200 billion sovereign wealth fund, open an office in London to facilitate deal-making.
Touting Britain as an investor-friendly market with efficient rules and transparency, Mr Brown said he hoped Britain would become Chinese businesses' top choice for overseas investment.
His remarks are a boost to the mainland's efforts to increase fund outflows from its massive US$1.5 trillion in foreign exchange reserves.
Mr Wen said that Beijing would earmark US$60 billion to US$70 billion worth of capital to invest abroad.
Allaying concerns that the fund would be used for political purposes, Mr Wen reiterated the government would step aside on deliberations because 'the investment facility is entirely commercial'.
He added that US$60 billion of the fund had been injected into domestic commercial banks to support their restructuring.
After CNOOC's failure in 2005 to acquire energy firm Unocal Corp because of US political concerns, Beijing was taking a cautious stance on overseas moves, analysts said.
'As far as CIC goes, in the short term, with a limited team in place, most of the allocated US$200 billion is likely to be spent on recapitalising banks,' said Stephen Green, a senior economist with Standard Chartered Bank. 'There does not seem to be much reason to be worried.'
Seeking to consolidate economic ties, Mr Brown and Mr Wen expect Sino-British trade to expand to US$60 billion by 2010 from US$40 billion last year. Yesterday, they witnessed the signing of deals on education, clean-energy development and climate change.
Entrepreneur Richard Branson, who is travelling with Mr Brown, said he was planning a number of businesses on the mainland including a clean-energy company.
The London Stock Exchange also set up a Beijing representative office yesterday, hoping to lure more Chinese companies to the exchange with lower costs and a flexible regulatory framework.
'Our exchange will provide a different liquidity pool and investor base for Chinese companies, especially as their global ambitions grow,' said Clara Furse, its chief executive.
The exchange is the third leading equity bourse to have opened offices in Beijing in the past two months, after NYSE Euronext and Nasdaq.
There are six Chinese companies trading on the main board and 62 on AIM, a board for smaller firms.
