China

The UK is one of the largest foreign investors in China, and the largest EU investor, with over 5,480 UK-invested projects at the end of March 2007 with an FDI value of £2.2 billion at the end of 2006, slightly lower than the Indian total. As with India there is significant UK investments into the Chinese manufacturing sector, which accounts for more than half of all UK investment in China. (View UK FDI analysis by sector for 2006)

Key points are:

• However, the data for China is more inconsistent over time, with the UK investment position fluctuating between £1.8 and £3.2 billion during the last five years. This could reflect unreliability in the data, caused by changes in the sample of companies from year to year, or it could suggest that significant investment and disinvestment is relatively common for UK companies in relation to China.
• The proportion of UK investment excluded for reasons of confidentiality is also highly variable over time. In 2004, practically all UK investment in China could be allocated to its relevant sector but not for 2006 using UK ONS statistics.
• GHK have calculated an alternative 2006 dataset for China which suggests that mining and quarrying is the most significant sector for UK investors in China, accounting for some 42% of the total invested by UK companies. The figure is excluded from the ONS data for 2006, but qualitative evidence suggests that UK companies are still investing significantly in Chinas mining and quarrying sector.

The other key Chinese sectors for UK investment are the manufacture of chemical, plastic and fuel products, food processing, and ‘other manufacturing’.