Memorandum submitted by Foreign and Commonwealth
Office (China)
VII PROMOTING THE
UK'S COMMERCIAL
INTERESTS
Trade Promotion
115. China's size and rapid development
make it a market of immense potential. If present trends continue
it is likely to become the world's largest economy within the
next 30 years. UK direct exports to China in 1999 were £1.2
billion, a more than 40 per cent increase over 1998, and exports
via Hong Kong are estimated at an additional £635 million.
China is our fourth largest export market in the Far East. UK
imports from China have grown strongly too, rising in 1999 to
£3.5 billion. As a result, we have recently overtaken the
French to become China's second largest European trading partner,
with two-way direct trade amounting to about £4.7 billion
per year. However the UK's export performance remains less strong
than that of our main competitors and the UK continues to run
a significant visible trade deficit with China.
116. The UK is however a major investor
in China. Indeed, Chinese statistics show that the United Kingdom
is the largest European investor in China; 1999 saw British companies
invest £5 billion in this market, over 50 per cent more than
their nearest European competitors, the Germans.
117. China is one of British Trade International's
top campaign markets. Financial support for missions and exhibitions
has increased sharply over the last three years, as has the number
of commercial officers, particularly in the Consulates General
in Shanghai and Guangzhou. As mentioned above, a new Consulate-General
in Chongqing in south-west China has opened this year.
118. This work is supported by the China
Britain Business Council, of which the FCO is one of the official
sponsors. The Council currently has a membership of over 200 British
companies active in the China market, and maintains five offices
in China, and its London headquarters acts as a clearing house
for tailored market information enquiries about the China market.
It also maintains a regional office in Glasgow, working closely
with Scottish Trade International.
Export Credit
119. China is the largest market in terms
of exposure for the Export Credit Guarantee Department (ECGD).
The full range of ECGD facilities is available for British exports
to and investments in China. These are subject to normal ECGD
terms and conditions. The OECD Export Credit Agencies (ECAs) have
now harmonised premium rates for sovereign risk business, which
follow a minimum benchmark rate.
Inward Investment
120. China is a priority market for the
Invest in Britain Bureau (IBB), a joint FCO/DTI department, with
the number of known Chinese companies registered in the UK standing
at over 100. China, as a major recipient of inward investment,
is keen to globalise. Recent statements from president Jiang Zemin
and Minister for Trade Shi Guangsheng have encouraged the larger
Chinese enterprises to invest overseas. There is growing interest
in investing in Europe and in the UK in particular. The majority
of Chinese investment in Europe is either in service or trading
companies, but there is evidence of Chinese companies seeking
to manufacture in Europe; they already do so in the United States.
121. The IBB has a close relationship with
the Chinese Ministry of Foreign Trade and Economic Co-operation
who have been helpful in identifying potential investors for the
United Kingdom. The IBB has been actively marketing the UK in
the richer eastern coastal areas for two years, with a small number
of projects arising from the four IBB seminars. A number of commercial
staff at the Embassy in Beijing and at the Consulate Generals
in Shanghai and Guangzhou are dedicated to IBB work.
122. More information about HMG's trade
promotion effort in China and the work of British Trade International
and the China Britain Business Council will be submitted in a
separate memorandum by British Trade International.
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