China-UK trade in robust growth despite euro crisis

15 january 2013

LONDON – Despite the difficulties brought about by the euro debt crisis and slowdown of the world economy, China and Britain have achieved exceptional growth in bilateral economic and trade relations in 2012.

Bilateral trade in steady growth

The bilateral trade in goods between the two countries reached $63.1 billion in 2012, surging 7.5 percent compared with the previous year, the statistics from the economy and commerce section of the Chinese embassy in Britain showed.

China’s exports to Britain rose by 4.9 percent to $46.3 billion, and import from Britain jumped 15.5 percent year on year to $16.8 billion, with growth ranking first among major trade partners in the European Union (EU).

“This is not easy win,” especially under the difficult situation last year when the demand from EU countries shrank, trade protectionism escalated especially there had been negative growth for several successive months in the China-EU trade, said Zhou Xiaoming, minister counselor for economy and commerce in the Chinese embassy in Britain.

Last year, Britain was the only country among China’s major trade partners in the EU to pose a positive growth in trade with China, while the bilateral trade between China and the EU, Germany, France and Italy dropped.

China now mainly exports machinery, electronics, plastics, furniture and shoes to Britain, while Britain’s main exports include motor vehicles, chemical products and food.

A year of investment for China in Britain

In 2012, Chinese firms gathered steams in investing in Britain eyeing the global role of the country as a financial center and technology sources.

According to statistics, Chinese firms completed some 10 investment, merger and share participation deals in Britain last year, with the total value exceeding $8 billion, exceeding the total value made in the 2009-2011 period.

Major merger and acquisition projects conducted in Britain last year cover such sectors as infrastructure, food and energy.

The investors include China’s sovereign wealth fund China Investment Corporation, Brightfood, Sinopec, CNOOC and Huawei, whose investments have expanded from traditional financial services to food production, high-end manufacturing and aviation.

China Investment Corp. (CIC) bought 8.68 percent stake in British utility company Thames Water at $1.8 billion in January, a 10 percent stake in the operator of London’s Heathrow Airport at $720 million in November, expanding its investments in British infrastructure.

Shanghai-based Bright Food Group, one of China’s leading food groups, bought 60 percent stake of Weetabix, a cereal maker in Britain at a cost of 1.15 billion dollars, which is regarded as the largest overseas acquisition by a Chinese food company.

Sinopec, Asia’s largest oil refiner, announced in July that it had reached an agreement through its subsidiary with Canadian company Talisman Energy Inc. to acquire a 49 percent equity interest in Talisman’s assets in the North Sea for $1.5 billion.

China’s telecom equipment giant Huawei Technologies announced in September that it planned to invest $2 billion to expand its operation in Britain in the next five years and the move is expected to create up to 700 new jobs.

Chinese retailer Bosideng, China’s largest maker and distributor of down clothing, opened its first overseas flagship store in London last year.

Zhou regarded many of the merger and acquisition deals made in Britain by Chinese companies as playing a demonstrating role and breakthrough.

At the same time, figures from the Chinese side show that Britain’s direct investment in China reached $18.1 billion in January-November 2012, ranking second in the EU only after Germany with the investment in China at $20.6 billion.

Huge potential in economic, trade cooperation

In recent years, Chinese companies have made much headway in expanding cooperation area in Britain, extending from traditional finance, trade and telecom to high-end manufacturing, infrastructure, brand cultivating and R&D.

Speaking at a seminar on China’s opening-up and globalization in London late last year, Zhong Shan, Chinese vice minister of commerce, said China and Britain have complementary economies.

Britain boasts rich experience in developing service industry and technical innovation, while China, as an emerging economy, has released strong potential of market need, posing great prospects of cooperation between the two countries.

Zhong suggested enhanced cooperation in high-end manufacturing, infrastructure investment, low-carbon and green economy, and small and medium-size enterprises.

Looking forward to 2013, Zhou Xiaoming believed that the two countries would achieve sustainable growth in the two-way trade this year.

“The Sino-British economic and trade ties are hopefully to make new advancement in the new year so long as the two countries can make full use of the opportunities existing at the present time and exploring potentials,” Zhou pointed out.