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China weighs up £105bn investment in “ageing” UK infrastructure

China could invest £105bn in UK infrastructure over the next decade, according to a new report.

The research from law firm Pinsent Masons and the Centre for Economics and Business Research (CEBR) suggests Britain could receive a huge chunk of Chinese outbound investment, particularly sectors such as transport, energy and property.

The report said the finance would help bring the UK’s “ageing and over-utilised infrastructure up to an international standard”.

China’s sovereign wealth fund, the China Investment Corporation (CIC), has already begun investing in UK infrastructure, taking a 10% stake in Heathrow Airport worth £453M.

Pinsent Masons and the CEBR forecast Chinese investment of more £43bn into UK energy projects by 2025, with property and transport expected to attract £36bn and £19bn respectively.

The news follows yesterday’s announcement of Government backing for HS3 in northern England, which is forecast to carry a price tag of at least £7bn. HS2 is currently priced at £43bn.

Richard Laudy, a specialist in global infrastructure at Pinsent Masons, said: “Our report finds that this level of investment is going to be a game-changer for the UK infrastructure. Over the past few years we have seen China’s role as an investor evolve from making indirect investments through sovereign wealth funds - Chinese businesses are now becoming co-funders, co-developers and co-contractors in major UK infrastructure projects. We are already seeing this happen - for example, Beijing Construction Engineering Group making a major investment in Manchester Airport City.

“With UK public finances still under pressure, uncertainty around government support for infrastructure is still a key concern for the infrastructure sector. If the UK wants to unlock Chinese investment to fill in the funding gap to modernise its aging infrastructure, the UK government will need to address issues around policy and further develop the pipeline for investment – delay and lack of clear commitment on policy will only create uncertainty for investors.”

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