A US$20 billion liquefied natural gas deal and a move to strengthen London’s position in offshore yuan trading were to crown a visit by Chinese Premier Li Keqiang (李克強) to Britain yesterday.
In a trip aimed at burying a row over Tibet and deepening commercial ties between the world’s second-largest economy and Europe’s financial capital, Li met Queen Elizabeth II and was due to hold talks with British Prime Minister David Cameron later yesterday.
Li, No. 2 in the Chinese Communist Party, is expected to preside over up to US$30 billion in business deals. Investors will be looking closely for any signals he may send about the future of Asia’s largest economy.
Oil giant BP is to sign a deal worth about US$20 billion to supply China National Offshore Oil Corporation with liquefied natural gas (LNG) cargoes, BP chief executive Bob Dudley said at a conference in Moscow.
“It is a 20-year supply agreement on LNG. It is a fair price for them and a fair price for us. It is a good bridge between the UK and China in terms of trade,” Dudley said.
Also on the table is a deal to make China Construction Bank (CCB, 中國建設銀行), the country’s second-largest lender, the first clearing service for offshore trading of the Chinese currency in London.
London, which dominates the US$5-trillion-a-day global foreign exchange market, is seeking to fend off challenges to its position as the leading offshore yuan center in Europe.
As China promotes the use of its currency in international trade, Hong Kong remains by far the largest center for offshore yuan deposits. Deposits in Taiwan, Singapore and Macau also dwarf those in European capitals, while New York lags far behind.
Bank of China (Hong Kong) (香港中國銀行) and Industrial and Commercial Bank of China (ICBC, 中國工商銀行) are the clearing banks for all yuan transactions in Hong Kong and Singapore respectively.
China, whose US$9 trillion economy is more than three times the size of Britain’s, wants to use the visit to put differences with London over Tibet behind it.
Britain’s relations with China took a nosedive in 2012 after Cameron met the Dalai Lama, the Tibetan spiritual leader who Beijing says is a separatist. Ties have recovered somewhat since then and Cameron visited China last year.
However, tensions remain.
Beijing warned London on the eve of Li’s visit not to lecture it on human rights if it wanted good economic ties. And British Deputy Prime Minister Nick Clegg said on Monday that the people of China are politically shackled to a communist one-party state.
“We can’t ignore the large scale and systematic human rights abuses which still continue in China to this day,” Clegg, who leads the Liberal Democrat coalition partners of Cameron’s Conservatives, told reporters.
China views Britain, the world’s sixth-largest economy and home to the only financial capital to rival New York, as Europe’s most open place to do business. Its firms are keen to invest in major nuclear and high-speed rail projects.
In an attempt to attract more of China’s big-spending tourists, the British government said it would make its complex visa system easier to navigate.
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