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Government Gazette

Britain welcomes China’s wealth fund

CHINA: Britain’s doors are open to China’s sovereign wealth fund, finance minister Alistair Darling said on Tuesday, speaking after a report that an arm of the Chinese state has taken a nearly 1 percent stake in BP.

Darling’s comments after economic talks in Beijing echoed those made by Prime Minister Gordon Brown in a visit to China earlier this year, though they came at a more sensitive time as China tightens security after unrest in Tibet.

The potential heft of China’s sovereign wealth was illustrated on Tuesday when British newspapers reported that a state fund had built a stake of just under 1 percent in BP Plc, the oil major that is Britain’s largest company.

At about $2 billion, the stake is worth a tiny fraction of China’s $1.68 trillion held in foreign exchange reserves.

“Our belief in open markets and free trade is reflected in the UK’s openness to inward investment, including from sovereign wealth funds,” Darling told reporters.

“And we welcome the creation of the Chinese sovereign wealth fund and its potential for investing in our country,” he said.

Although details were unclear, the BP investment had the hallmarks of the State Administration of Foreign Exchange, an arm of the central bank that manages China’s foreign exchange reserves. SAFE has also bought into French oil major Total .

Another Chinese state investment body — the China Investment Corp, or CIC — has generated more attention since its launch last year.

On Brown’s visit to China in January, he pitched for the new $200 billion sovereign wealth fund to open an office in London. Darling did not refer to progress on that front, though Chinese domestic media have reported that CIC is recruiting staff for a London office.

Darling met Chinese Vice-Premier Wang Qishan, whose portfolio covers trade and finance.

Wang made no mention of any of the Chinese state investment funds, focusing his comments on broad economic cooperation.

“We agreed that the two countries should take active steps to oppose trade and investment protectionism,” he said.

Wang said Beijing invited British banks and financial institutions to do business in China and, in particular, encouraged them to venture into the country’s poorer central, western and rural regions.


Gamin Gamata - Presidential Community & Welfare Service
Ceylinco Banyan Villas

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