TOKYO -- Britain will remain open to investments from China after the UK quits the EU next year, despite mounting concerns over national security risks and allegations of industrial espionage, a senior government minister told the Nikkei Asian review.
However Greg Clark, secretary of state for business, admitted that scrutiny of Chinese investments would intensify as the UK reforms its powers to block foreign acquisition of security sensitive assets.
While Beijing has not been identified as the focus of the new powers, officials have confirmed privately that this is the case. Earlier this week, the government warned UK telecom companies to choose suppliers carefully when building next generation networks, in a veiled reference to Chinese equipment makers.
Clark was in Tokyo to reassure Britain's Japanese investors that their concerns over the UK's withdrawal from the EU would be addressed in new proposals presented to cabinet this week.
He said the UK would remain "unashamedly enthusiastic" about foreign direct investment after Brexit, including from China. However, the UK had to "keep its systems of scrutiny up to date" to be able to continue to welcome" such investment.
The U.K.'s openness to continued Chinese investment marks a significant difference to the policy being pursued by the U.S. under President Donald Trump, who has barred trade with Chinese companies amid allegations of intellectual property theft and spying. Mike Pence, U.S. vice president has accused China of "economic aggression."
Clark insisted that the UK's more open approach to Chinese investment was not a mistake. "Our enthusiasm and commitment to overseas investment has been the hallmark of the UK economy," he said.
Chinese investment in the U.K. is increasing rapidly. In 2017, foreign direct investment from China came to $20.8bn, against a total of $28.8bn for the 16 years to 2016, according to Baker & McKenzie, the international law firm.This is still dwarfed, however, by investment from Japan, which accounted for foreign direct investment of $69 billion in 2016.
Japanese investment could be under threat however amid continuing uncertainties surrounding the terms of the U.K.'s departure from the EU.
Japanese companies have been particularly vocal in their criticism of the confusion over the process for the UK's withdrawal. Panasonic announced last month it was moving its European headquarters to the Netherlands because of Brexit, while Toyota, Nissan, Mitsubishi Electric and Hitachi have all warned of the consequences of quitting the EU without a clear deal on the terms and conditions for trade with Europe.
Clark said the proposal presented to cabinet this week on the terms of the U.K.'s exit from the EU would address their concerns.
He admitted that Britain's attraction to these foreign investors had been its easy access to Europe. In particular they had voiced concerns about potential "friction" or delays at the border with Europe from new customs arrangements after Brexit. They had also sought reassurance that there would be no revision to the terms once agreed.
The proposals still have to be approved by the cabinet and then agreedwith Europe. However, he said: "We will be able to reflect that they have been listened to," he said. "I am increasingly confident that we will be able to secure a deal that will allow that trade to continue."
"Over the weeks ahead I expect we will be able to do a deal and it will be in line with what our partners in Asia hope for.