UK’s Osborne courts Chinese investment in high-speed rail

British finance minister George Osborne will open bidding during a visit to China on Thursday on £12 billion of contracts to build a high-speed rail line, the latest effort to bring Chinese cash to Britain.

Mr Osborne will also seek Chinese backing for £24 billion of investment projects in northern England. Inviting bids on seven contracts to build the first phase of the high-speed rail link between northern England, the central Midlands and London, the British government said it would encourage Chinese firms to link up with domestic companies.

In remarks released by his office, Mr Osborne said Britain and China were entering a “golden era of co-operation”. He has led a delegation of senior ministers and business representatives on a week-long trip to China to strengthen economic and financial ties. The push for investment from the world’s second-largest economy has been criticised by some who say it exposes Britain to risks in the Chinese financial system and ignores concerns about human rights.

Mr Osborne, who wants to make China Britain's second-largest trading partner after the United States, has responded by saying he disagrees with Beijing on rights issues but wants to engage.

Mr Osborne has already promised £2 billion of support for a Chinese-backed nuclear power plant in Britain and agreed steps to link up China's equity markets with the City of London. The £43 billion-pound rail project, called High Speed 2, has divided opinion in Britain because of its rising costs and the potential impact on the countryside and local communities. The proposed route would link London to Birmingham, and the northern cities of Manchester and Leeds.

The first phase is due to be completed in 2026 and the second phase in 2033. The project has attracted a growing number of joint-venture partners such as Carillion, Kier and Eiffage and possible collaborations between firms like Ferrovial, BAM Nuttall and Morgan Sindall and Costain and Skanska. The Chinese had expressed their interest in the project early on.

China Railway Group sent a letter to officials and industry executives in Birmingham in early 2014 offering to finance a section, according to a Birmingham Airport spokesman and local media reports. Calls and a fax to China Railway Group were not immediately answered. Beijing's leaders are heavily promoting China's high-speed rail exports after it built the world's longest network at home in less than a decade. Its firms have aggressively competed for deals in Mexico, Indonesia and Russia.

Last week, a consortium comprising of units of Chinese state rail firms said they would support the construction of a high-speed railway between Las Vegas and Los Angeles. Mr Osborne will also invite Chinese investment in a series of projects dubbed the 'Northern Powerhouse', designed to spur development in northern England, where growth has lagged London and the southeast. Among the key investment opportunities being touted are building 10,000 homes in Manchester and regenerating a 130 hectare site in Leeds.

“As we continue to work more closely with China, we have an unprecedented opportunity to secure significant investment into some of our most ambitious projects across our Northern Powerhouse,” Mr Osborne said in a statement.

Reuters