China’s state planning agency has issued a one-of-a-kind guide for Chinese investors interested in Britain, following a Downing Street push to attract £50bn of foreign capital to finance UK infrastructure projects.
 

On Tuesday, Oliver Letwin, the UK Cabinet Office minister and Prime Minister David Cameron’s intellectual troubleshooter, will unveil the 40-page guide at a ceremony in Beijing alongside the National Development and Reform Commission, China’s powerful state planning agency.

 

This marks the first time the NDRC has issued a country-specific guide for Chinese investors and underlines the lengths that London is going to in its efforts to secure new money for its creaking transport and energy systems.
 

The report highlights 18 Chinese firms that have already ventured into the UK., although it glosses over the difficulties encountered in deals such as SAIC’s fraught £1bn run at MG Rover.
 

Britain ranked fourth among Chinese investment destinations in 2012, thanks to £1.7bn ($2.8bn) in real estate deals as well as corporate deals such as Bright Food’s purchase of a 60 per cent stake in Weetabix.

 

Mr Cameron has always been open about his attempts to attract investment from China and elsewhere into the UK, saying in 2013 that he was “not embarrassed” that the China Investment Corporation, a sovereign wealth fund, owned stakes in Thames Water and Heathrow airport.
 

“I think it’s absolutely great,” he said. “Tell the other Chinese investors to come to London and spend your money.”

 

Last week, the UK Treasury rolled out the red carpet for sovereign wealth funds and other private investors, releasing a list of £50bn of projects requiring outside investment. Britain has already seen investments from some midsized and private Chinese companies as well as larger investments by state owned enterprises and CIC. State oil companiesPetroChina and Sinopec have invested in North Sea oil or refining, and CIC took a stake in Thames Water in 2012.

 

Last December, Mr Cameron travelled to Beijing to promote Britain as an investment destination, along with chancellor George Osborne and Boris Johnson, mayor of London.
 

Mr Johnson has secured promises of Chinese money for the rebuilding of Royal Albert Dock in east London and the reconstruction of the Victorian Crystal Palace in the south of the city.
 

The visit by the Tory party’s three most senior politicians marked the end of a prolonged political chill after Mr Cameron was photographed meeting the Dalai Lama in London, to the anger of Beijing. Chinese investment into the UK soared nonetheless.
 

Their trips coincided with several new investment deals, including a promise by the state-owned Industrial and Commercial Bank of China to fund a £650m enterprise zone in Manchester airport.
 

China has encouraged its firms to “go out” for well over a decade, to secure resources, gain brands and experience, and invest the excess cash thrown up by 35 years of market reforms.
 

As part of a broader line-up of bureaucratic reforms designed to increase efficiency, overseas investments of under $1bn no longer need Chinese central government approval. Previously the NDRC had to sign off on outbound investments in mining or resources of over $300m, and other deals valued at more than $100m.
 

The change is expected to ease the process of investing abroad for midsized or provincial firms.
 

But that can mean potential pitfalls for companies inexperienced operating in a different legal system, dealing directly with labour unions or navigating environmental checks. Many would-be Chinese investments have foundered due to higher labour costs than investors are used to at home.
 

The guide’s authors provide basic advice that could nonetheless help avert future headaches. Tips include checking out the free information offered by UK investment promotion bodies, and hiring professional firms to advise on legal or tax liabilities.

 

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