China Inward Investment – Critical Infrastructure and Security Sensitive Industries

Despite the recent recession and financial crisis the UK has emerged as Europe’s prime destination for Chinese investment. Chinese investors invested twice as much into the UK since 2012 as they did over the past seven years. Some estimates believe that that this could even be more than the total from the previous three decades.

Chinese investors have ownership of UK airports, cereal maker Weetabix and even in North Sea oil. It is also likely that the Chinese will invest in the Hinkley Point C nuclear power plant, which is forecasted to produce over 7% of the UK’s electricity by 2023.

However, the deepening economic ties with China have caused debate amongst British politicians who are concerned about opening critical energy and telecoms infrastructure to Chinese companies. In the US Huawei, a private Chinese firm that has strong links to the Chinese government has been kept out of the US telecoms market for security reasons. As the Chinese continue to invest in the UK will the UK government decide to place restrictions on Chinese companies investing in critical infrastructure, security sensitive businesses and natural resources? Currently this is not clear but Campbell Ventures view is that some restrictions will become inevitable in the future. However, it is not clear when and which industry sectors will be ring fenced first.

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