Beijing warms to 'welcoming' Britain

BEIJING - Business comes first for China in deciding to cease its year-long snub of Britain.

China, which is coaxing its enterprises to expand overseas, likes Britain for being more open and welcoming than elsewhere in Europe and the United States.

Chinese telecoms giant Huawei, for instance, which received accusations of espionage and dumping in the US, announced on Wednesday its plans to invest US$200 million (S$248 million) in building a new research and development centre in Britain, which is the most popular destination in Europe for Chinese investments.

"China also hopes that Britain would play a role in making other European countries more open towards Chinese investments," Sino-Europe expert Li Jingkun of the Chinese Academy of Social Sciences told The Straits Times.

Sino-British ties had been frosty since British Prime Minister David Cameron and his deputy Nick Clegg met in London with the Dalai Lama in May last year.

The meeting irked the Chinese, who see the exiled Tibetan spiritual leader as a dangerous separatist, and suspended or downgraded ministerial visits with Britain. Its then legislature chief Wu Bangguo cancelled a visit to Britain last year, and Mr Cameron's visit to China this April was also spiked.

Analysts say Britain's lower costs of doing business and relatively low property prices also explain China's red-carpet treatment for London Mayor Boris Johnson and Finance Minister George Osborne, when they visited China this week.

"Some (Chinese) companies hemmed in by fierce competition and price controls at home think they can enjoy bigger profit margins by investing abroad. Others want to acquire technology, management and marketing expertise," wrote China observer Jonathan Fenby in the British daily The Telegraph on Monday.

Also, Beijing hopes that London's global financial hub status could aid its yuan liberalisation efforts. This could be seen in a deal signed on Tuesday granting London an 80 billion yuan (S$16 billion) initial quota for institutional investors to use yuan to invest in China, making it the next offshore yuan trading centre after Hong Kong.

Dr Li believes China is also encouraged by Britain's efforts to boost people-to-people exchanges, like its pledge to relax its harsh visa regime that had turned away Chinese tourists and businesses.

Among the changes announced this week, those visiting the European Union will no longer have to file a separate application to visit Britain while businessmen can apply for a "super-priority" visa that will be processed within 24 hours instead of a week.

Analyst Qu Bing believes that with both sides now willing to set aside politics, ties should remain warm till at least Britain's next general election in May 2015.

"Given that Mr Johnson and Mr Osborne are viewed in Britain as the potential next premier, the political environment for both countries to work together should be quite secure," he told the Chinese Financial News portal this week.

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