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16 | 20TH - 26TH NOVEMBER 2015 | UTILITY WEEK Finance & Investment Country profile T he UK is the number one destination for foreign investment in Europe. China is the third largest investor in the world and has invested more globally in energy than in any other sector. Is this an invest- ment match made in heaven? Chinese investment in the UK is grow- ing, with investment in British infrastructure estimated to have been £11.7 billion between 2005 and 2013. Pinsent Masons expects the UK to soon rank third out of 144 countries for attractiveness to foreign investment from China. Partner Richard Laudy welcomes this increase in Chinese investment, saying it could be a "game changer" for the UK. "What sets China apart from many other investors is that China is willing to shoulder construction risk as a key part of its invest- ment in Britain's infrastructure, whereas many other investors are not," he says. This is evidenced by the country's recent invest- ment in EDF's controversial Hinkley Point C new-build nuclear project. At the end of last month, it was announced that China General Nuclear Power Group will take a 33.5 per cent stake in the £18 billion development costs for Hin- kley as part of a wider deal paving the way for the Chinese nuclear firm to develop a sec- ond new nuclear plant at Sizewell. It will also take a two-thirds stake in a venture building a nuclear plant in Essex, and the reactor for that project will be designed by the Chinese company. The agreements together are set to reignite the UK's floundering nuclear ambi- tions, for better or worse. But the nuclear agreements are just part of a much larger deal struck during president Xi Jinping's state visit, which will see more than £30 billion invested in the UK, includ- ing £2 billion to manufacture electric buses and £50 million for a fleet of zero-emission- capable cabs. Chancellor George Osborne, particularly, is keen to deepen the UK's commercial rela- tionship with China. Having visited the country in late September, he says Britain should "run towards China" to boost the UK economy. "For the UK a key part of our economic plan is precisely to develop our links with these new emerging economies, of which of course the outstanding example is China," he argues. The Office of National Statistics says net earnings from direct investment in the UK increased from £48.9 billion in 2012 to £54.3 billion in 2013. Earnings have been on an upward trend since the 2008/09 economic downturn and this year, the Organisation for Economic Co-operation and Develop- ment says stock reached £1 trillion, the third largest absolute value of any country in the world. Despite a reduction in global foreign direct investment flows by 11 per cent in 2014, net foreign direct investment inflows into the UK increased by more than 50 per cent. China is now third largest global investor aer Japan and the US, with a total outward investment of more than $90 billion (£60 billion). Chinese economic growth may now be slowing down – the latest GDP figures show a growth rate of 6.9 per cent in Q3 2015, down from 7 per cent in Q2 and significantly down from the 10 per cent average of the past thirty years – but it remains the second largest economy in the world. The Interna- tional Business Times notes that, despite the slowdown, British authorities have con- tinued to seek stronger economic ties with China as it still represents nearly a quarter of the world's growth. Increased trade is likely a safe investment for Britain, experts say, as China remains strong despite slow growth. UK Trade and Investment says the coun- Perfect partners The UK loves foreign money while the Chinese love to invest overseas – surely a match made in heaven? By Lois Vallely. CHINESE INVESTMENT IN THE UK ★ UKPN. 100% bought for £5.8bn in 2010 ★ NGN. 75% stake bought for £1.4bn in 2004. Stake raised to 88% in 2009 for £76m ★ WWU. Bought for £645m in 2012 ★ Northumbrian Water. Bought for £4.8bn in July 2011 ★ Southern Water. Bought for £62.6m in December 2007 ★ Kemble Water (Thames Water parent company) 9% bought for c£500m in 2012 UTILITY NETWORKS ★ = Cheung Kong Group ★ = China Investment Corporation BIG UTILITY INFRASTRUCTURE PROJECTS China General Nuclear Power Corporation (CGN) 33.5% Hinkley Point C project October 2015 £6bn 20% Sizewell C October 2015 tbc 66.5% Bradwell B October 2015 tbc China Harbour Engineering Company Swansea Bay Tidal Lagoon July 2015 £300m China Investment Corporation bought a 10% stake in Heathrow Airport Holdings (owner of Heathrow, Stansted, Southampton, Glasgow and Aberdeen] in 2012. Osborne and president Xi Jinping