Jiajia Liu, lecturer in Asian business at Alliance Manchester Business School and panellist at the Pro Manchester Economics Conference
Investment from China over the last decade has been transformed, become much more sophisticated and far-reaching. At the time of changing patterns of growth in China and UK’s proposed exit from the European Union, Chinese investment into the Greater Manchester area has posed both interesting opportunities as well as challenges.
To begin with, one needs to appreciate the size and importance of private sector Chinese investors in the UK, and the potential predicament they face – with China’s total debt reaching over 250% of its GDP in 2015 and the danger of its housing bubbles bursting, a lot of individual and private sector investors became increasingly nervous about keeping their funds at home – they are looking for safe havens in a stable capital market with a predictable ROI of around 3-5% per annum. Manchester as a major city in one of the most developed countries with a stable economy and sophisticated and transparent financial system, and with a property market with great growth potential, presents a perfect fit to the bill. This explains the influx of Chinese buyers into the market over the last 24 months (http://www.bbc.co.uk/news/business-36086012). The challenge/peril of this kind of inward FDI, however, is that although patient enough, it often lacks ‘expertise’ and is risk averse – Chinese individuals and private firms tend to shun from the kind of investment that would truly benefit the British economy in the long run – investment in manufacturing, infrastructure construction and high- technology sectors. What’s more, future investors may be put off by the weakening of pound sterling against the basket of currencies, making the influx a short-term phenomenon.
Looking ahead, it is high time that the policy makers of the GMCR area should work very closely with strategic experts on China and on industrial policy to deploy a sustainable and articulated strategy to attract, retain and utilise the kind of ‘strategic investment’ from China.