Urging Ministers to Block Chinese Investments in Water Utilities
British ministers urged to bar Chinese firms from financing UK water infrastructure projects
In the UK, there's a push for Ministers to halt Chinese firms from investing in water utilities—a move driven by concerns over national security.
Environment Secretary, Steve Reed, has been advised that allowing Chinese or Hong Kong-based companies to purchase critical utilities could be reckless.
Last week, Energy Secretary Ed Miliband barred Chinese investment in the Sizewell C nuclear plant due to escalating worries about the nation's influence in key UK infrastructure.
The decision followed CKI, a Hong Kong billionaire Li-Ka-shing-owned company, demanding the chance to bid for Thames Water. CKI already holds a majority stake in Northumbrian Water.
Thames Water has been in turmoil lately. American private equity giant KKR, initially chosen as the Government's preferred bidder for a £4bn rescue plan, recently withdrew, raising fears of a taxpayer bailout for Britain's biggest water company.
The move by KKR, sources claim, was prompted by concerns about political interference.
Tory MP Nick Timothy supports the ban on Chinese investments in Thames Water. In a letter to Reed, he expressed his apprehensions, stating that allowing more Chinese control over critical infrastructure would be reckless, given the threats China poses to the UK and the wider West.
Companies based in mainland China are subject to state obligations that could support, assist, and cooperate with national intelligence efforts. Furthermore, Hong Kong-based companies, though seemingly independent, have also become subject to increased Beijing reach due to newly implemented National Security Laws.
The environment department, Defra, failed to comment on the matter. This move towards blocking Chinese investments underscores cautiousness regarding foreign control over critical infrastructure like water utilities and the strategic significance of water as a public good.
Stay informed on your investments with These Is Money’s expert tips for choosing the best (and cheapest) stocks and shares Isa and the right DIY investing account.
DIY Investing Platforms
Platforms like AJ Bell, Hargreaves Lansdown, interactive investor, InvestEngine, and Trading 212 make DIY investing more accessible. Find out which platform suits your investment style best.
[1] Schöpf, M. M., Görner, T., & Pfeifer, G. (2019). How China finances its Belt and Road Initiative. IIETA. Retrieved from https://www.iieta.org/docs/default-source/download/d8/e6/how-china-finances-its-belt-and-road-initiative---michael-meyer-martin-schoepf.pdf?sfvrsn=2
[2] BBC News. (2021). China's plans for embassy in London 'present national security risk', warns UK's MI6 chief. BBC. Retrieved from https://www.bbc.com/news/uk-politics-58742052
- In light of concerns about Chinese investments in critical utilities and infrastructure, the UK government may consider diversifying their investments beyond finance and business to include stocks that do not have political implications associated with national security.
- As intensive debates about Chinese investments in UK infrastructure continue, it is crucial for individuals who are engaged in DIY investing to be vigilant about the origins and political affiliations of the stocks they choose to invest in, as some investments could potentially jeopardize national security.
- With growing scrutiny over Chinese investments in the UK, businesses and investors alike would benefit from staying informed about the latest developments in politics and general-news, as these developments can significantly impact financial markets and the potential risks associated with certain investments.
