A significant wave of Chinese investment has flowed into the UK over the past two decades, amounting to over $100 billion, with a strong focus on energy, technology, and transport sectors. However, the UK government’s recent decision to seize control of British Steel from its Chinese owner, Jingye, has reignited calls for closer scrutiny of Beijing’s economic influence in the country, according to Financial Times.
The scale of Chinese investment in the UK is substantial, with Beijing’s state-owned and private companies deeply embedded in key industries, including nuclear energy, telecoms, and transport infrastructure. While the flow of investment has slowed since its peak in 2017, China’s influence remains significant, sparking concerns about national security and supply chain vulnerabilities.
According to figures from the Rhodium Group, more than a third of Chinese spending in the UK has been directed at strategic sectors such as energy, technology, and transport. This has led to calls from senior figures in the UK’s Labour Party to examine Chinese ownership in critical areas. They warn that Chinese involvement in sectors like nuclear energy and transport could compromise Britain’s economic security.
Energy, in particular, has accounted for nearly a fifth of all major Chinese investments in the UK since 2005. Notable projects include wind farms off the coast of Scotland and gas networks in Wales and Northern Ireland. The involvement of state-owned enterprises in such projects raises concerns due to their ties to the Chinese government.
Derek Scissors, a senior fellow at the American Enterprise Institute (AEI), emphasized the risks posed by state-owned Chinese enterprises. “The size and expertise of these companies make them attractive partners for large-scale energy and infrastructure projects,” Scissors explained. “But the downside is the potential for Chinese state influence over critical national infrastructure.”
Leading Chinese state investors include China Investment Corporation (CIC), which holds significant stakes in UK assets such as Thames Water (8.7%) and Heathrow Airport (10%). Another major player is China General Nuclear (CGN), which holds a minority stake in the Hinkley Point C nuclear power station in Somerset. CGN had also been slated to collaborate with French energy giant EDF on a proposed new nuclear plant in Bradwell, Essex, but the UK government has now moved to block this investment amid growing concerns over Beijing’s influence.
In addition to state-owned enterprises, Chinese private investors have made significant inroads into the UK’s real estate and manufacturing sectors. Geely, a private Chinese conglomerate that owns Volvo Cars, has acquired UK-based brands such as the black taxi-maker LEVC and sports car manufacturer Lotus, both of which operate factories in the UK.
However, the tide of Chinese investment into the UK has receded in recent years. Figures show that Chinese Foreign Direct Investment (FDI) into major UK projects was just 3% of its 2017 peak in 2023. This decline has been attributed to a combination of factors, including a less welcoming regulatory environment in the UK and tighter capital controls imposed by Beijing. Private Chinese investors, in particular, have been deterred by the poor performance of UK property assets, many of which lost value following large-scale investments in the mid-2010s.
Armand Meyer, a senior research analyst at Rhodium Group, noted that “heightened scrutiny” from British regulators has played a role in curbing Chinese investments in recent years. However, he also pointed out that the UK had historically been one of the top destinations for Chinese funding, especially in infrastructure projects. “The UK has attracted more infrastructure investment from China than most other OECD economies due to its relatively open stance toward foreign ownership in strategic sectors,” Meyer said.
Despite the slowdown in investment, China’s footprint in the UK remains significant, especially in sectors crucial to national infrastructure. The UK faces a challenge in managing the legacy of Chinese acquisitions made before stricter investment screening regimes were introduced. As Financial Times reports, this complex web of investments raises questions about the long-term implications of Chinese involvement in critical UK industries and the potential risks to economic security.
