China: Beckett woos the Peking money men

Labour laid out its stall in Peking yesterday to persuade Chinese companies to invest in Britain. Margaret Beckett, President of the Board of Trade, launched a multimedia show for businessmen and officials, promising a `warm welcome'. Teresa Poole reports on attempts to win a new source of East Asian investment for Britain.

The investment trail between China and Britain has so far been a one- way street, but Ms Beckett yesterday made a pre-emptive strike, preparing for a day when Chinese companies will follow in the footsteps of their Japanese and South Korean counterparts and seek a foothold in Europe.

"I know that it will not be long before your enterprises are ready to compete globally," she told a conference hall full of invited Chinese. "Your presence in the United Kingdom will be most highly valued and I very much look forward to welcoming more Chinese enterprises into the UK in what I consider your real gateway to Europe."

So far there are about 30 small Chinese investments in the UK, ranging from the Inner Mongolia Erdos Cashmere Group to the Bank of China. But China has a total of 5,500 overseas projects worldwide, the majority in Asia and Australia, and the British government is trying to catch the eye of Peking ahead of its European rivals, even if any significant investment is still several years away.

Britain is also well aware that the economic meltdown elsewhere in East Asia will reduce projects from other countries including South Korea and Japan.

China's emergence as a country with money to spend was evident at the weekend, when 30,000 Pekingers flocked to a two-day exhibition mounted by 100 UK universities and training colleges to attract Chinese students. Such was the unexpected interest that most of the prospectuses had run out by Saturday lunchtime. One provincial cadre from central China even rang up the British embassy recently saying he was interested in sending his daughter to Gordonstoun.

The exhibition was part of the "Britain in China 1998" campaign, which will cover everything from the Royal National Theatre's performance of Othello in Peking to a planned visit by Tony Blair, the Prime Minister, later this year. The idea is to raise Britain's profile among the Chinese, most of whom still ask visiting Brits about the fog in London.

Ms Beckett stressed that her visit was a "fresh start" to Sino-British relations, now that the Hong Kong handover was out of the way. Robin Cook, the Foreign Secretary, arrives in Peking on Monday, when he will have to make clear what Britain's new human rights-oriented foreign policy will mean for China.

UK emphasis this week was firmly on the commercial relationship, although no new deals were signed by the British businessmen on Ms Beckett's mission. She admitted that, while Britain was by far the biggest foreign investor in China, its trade performance "could perhaps do better", given the substantial trade deficit with China.

British exports to China are far behind those of Germany, France and Italy, although they did increase 26 per cent in the first 10 months of 1997 to pounds 738.7m. Imports of Chinese goods into the UK during the same period were pounds 2.04bn.