Financial News

  • 16 June 2014, 14:48

Chinese PM Flies In For 'Fruitful' UK Summit

The Chinese Prime Minister arrives in London today ahead of a UK-Chinese Summit on Tuesday at which 17 billion of trade deals are expected to be signed.

Li Keqiang's trip to the UK is his first since he became PM last year.

He is travelling with a large delegation of ministers and officials from China's ruling Communist Party.

The visit indicates a desire by both sides to move on from political differences which have caused tensions over the past two years.

China's Vice-Foreign Minister, Wang Chao, told Sky News the trip was of "great significance".

"It will advance China-UK relations in a positive way," Mr Wang said.

Premier Li will hold talks with David Cameron and will meet the Queen.

Reports last week suggested the Chinese government had threatened to call off the trip if an audience with the Queen was not arranged.

However, China's ambassador to the UK said that was "a misreading of the situation".

"It's not how China does diplomacy. We are more subtle," Liu Xiaoming said.

Premier Li will make several speeches to Chinese and British businesses and to think-tanks.

Aware the world is watching a slowing Chinese economy, Mr Li is likely to use London as a platform to reassure investors and governments globally.

GDP growth in the first quarter of 2014 was 7.4%, an 18-month low.

Foreign diplomats and economists have expressed some concern that provincial and regional economies are showing alarming signs of slowdown.

The coal-rich city of Taiyuan in Shanxi Province grew by 11.9% in the first quarter of 2013.

In the same period this year it grew just 0.1% largely because of a dramatic drop in the demand for coal.

At a provincial level, Hebei province, right next to Beijing, grew 8.2% in 2013.

In the last quarter of this year, its growth was half that.

The year-end growth target for China in 2014 is 7.5%, but the government has signalled a degree of flexibility in that target.

Joining Premier Li's delegation are more than 200 Chinese business leaders.

Ambassador Liu told a briefing in London that more than 40 deals will be signed, worth at least 17bn.

Trade between the UK and China reached 41bn in 2013.

Mr Wang said the UK is now China's third largest trading partner in European Union and has become a major destination for China's overseas investment.

He said the trip would be "fruitful ... with a warm atmosphere."

In an October visit to China, British Chancellor George Osborne signed deals securing Chinese cash for the next generation of nuclear power stations.

There has been considerable speculation Chinese funding may also help to build Britain's new high-speed rail link, HS2.

The Chinese have proved themselves to be a major player in the rail sector.

Britain's strengths in both the financial, services and consumer sectors will benefit as China shifts to a more consumer-led economy.

Health, education and green energy are all areas which could be boosted through further investment in China. The City of London is to become a major trading hub for Chinese currency.

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