High hopes for Cameron visit to China

Strength of delegation points to extent of Britain's aspirations

The ambitions of British Prime Minister David Cameron for his trade mission to China early next month are evident in the size and political clout of the entourage that he will bring with him.

Expectations for the visit are all the higher given that it is Cameron's first visit to China since the country's new leadership took office in March, and that he last time visited the country three years ago.

The delegation will include the ministers of foreign affairs, health, culture, environment, technology and business, and about 150 business leaders.

The chancellor, George Osborne, headed a business delegation to China two months ago.

During Cameron's visit, from Dec 2 to 4, he will meet Premier Li Keqiang and other top leaders. Besides Beijing, he will visit cities in eastern and western regions.

Analysts, business leaders and politicians say the trip reflects the British government's desire to cultivate closer trade and business links with the world's second-biggest economy and to capitalize on the thaw in Britain's relations with Beijing.

They also say the two economies are becoming increasingly complementary to one another and have huge potential to work more closely together.

Jonathan Fenby, an analyst on China and co-founder of Trusted Sources, a provider of research and consulting on emerging markets, says Cameron will try to strengthen political ties after the row over his meeting the Dalai Lama last year, and set the context for a continued economic relationship with Chinese investment in the UK and opportunities for British companies in China.

Guy Dru Drury, chief representative in China of the Confederation of British Industry, says: "The large UK business delegation supporting the Prime Minister's visit next month is looking to provide its technologies, expertise and services to China in a wide range of sectors, including healthcare, energy efficiency, professional services and the creative industries."

The confederation is the UK's premier business lobbying organization, providing a voice for employers nationally and overseas.

The organization speaks for more than 240,000 companies, including many in the Financial Times and Stock Exchange 100 and FTSE 350, mid-caps, SMEs, micro businesses, private and family-owned businesses and trade associations.

Drury says: "Building on the successful visit by the chancellor, George Osborne, and Boris Johnson, mayor of London, to China in October, our large and diverse delegation will help to reinforce the fact that not only are UK companies eager to do more business in China but our doors are firmly open to Chinese investment into the UK."

Over the past 18 months, Chinese investment has exceeded the total of the previous 30 years, the Chinese embassy in London says.

Since the beginning of this year there has been a surge of project investment. Chinese companies have invested or plan to invest in more than 10 big projects in Britain worth nearly $5 billion (3.7 billion euros). They include infrastructure, real estate and automobile manufacturing.

Paulo Barradas, executive director of Espirito Santo Investment Bank of Portugual, says Cameron's visit to China has created high expectations.

The delegation "will surely develop further Britain's relationship with China and pave the way for a long-term trade and investment partnership, including bilateral market opening", Barradas says.

Britain has been China's second-largest trading partner among all EU members since this year. China is Britain's third-largest trading partner after the EU and the United States.

From January to October, China-UK bilateral trade rose 7.5 percent to $56.1 billion, and the annual figure is expected to reach $100 billion by 2015.

China and Britain also signed a currency-swap agreement worth 20 billion pounds ($32.4 billion; 24 billion euros) recently that will further facilitate trade and investment. It was the first of its kind between China and a major developed economy.

Experts say the areas in which the two countries are likely to work together in the future are diverse, but will be particularly in financial services, energy and the creative industries.

The UK economy is built on free trade and a strong service sector, especially financial services. China, where the massive manufacturing sector is upgrading and outbound investment is speeding up, is a natural partner for Britain.

London has been pushing to become an offshore yuan hub. Last year the London yuan offshore market continued to grow, as did the products offered, especially in foreign exchange trading.

The City of London says that by the end of last year London had strong growth in trade-related yuan businesses. The volume of import and export financing was 33.6 billion yuan ($5.5 billion; 4.1 billion euros), double the amount at the end of 2011.

As China pushes on with reform and opening-up after the Third Plenum of the 18th of Chinese Communist Party Central Committee, there are more new opportunities for Britain to explore.

Wang Qing, a professor of marketing and innovation at Warwick Business School, says Cameron's visit is particularly significant because of its timing.

"It comes immediately after the Third Plenum, which set out an extremely ambitious goal for China for the next 10 years under the new leadership."

Barradas says: "There are some business areas where China and Britain can, and will, cooperate more in the future, such as infrastructure, energy and power."

China and Britain have signed a series of agreements on energy collaboration. The two governments are exploring opportunities for investing and working together in oil and gas, nuclear power and offshore wind farms.

Chinese investors have been heavily involved in the UK's energy sector and properties, and that is just the beginning, Wang says, adding that their appetite will only grow as the yuan continues to appreciate and asset prices in the UK become more attractive.

Fenby says: "I think UK firms should be looking at working on energy efficiency and environmental protection in China, given the great need for both."

Fenby suggests that getting rid of smog in London was less of a task than is cleaning up the air in northern Chinese cities, but it may have lessons.

When it comes to the creative industries, Wang says, Chinese interests in areas such as culture, fashion design and antiques, will also grow as the middle and upper classes in China become more discerning in their tastes and appreciate British heritage more.

The story of Atkins, a UK-based design, engineering and project management consultancy, whose business in China has grown over the past 40 years, supports this view.

Chris Birdsong, chief executive officer for Atkins' Asia Pacific business, says that in January it signed its largest multidisciplinary mainland project with a design contract for a new leisure zone in Karamay, a city in the Xinjiang Uygur autonomous region.

"Our hope for the trade mission will be to strengthen our existing business relationships, as well as building new ones with major investors and contractors operating both within China and in other regions. Exploring new opportunities with Chinese partners is an important part of our growth strategy."

Wang Mingjie contributed to this story.