When Chinese companies invest in UK, it will be for ‘good reason’

It’s been more than five years since China’s Alibaba Group Holding announced a $US2 billion investment into British pharmaceuticals manufacturer Reckitt Benckiser.

The move sparked widespread concern in the US, where the company is headquartered.

“We don’t think there is any question that this is a bad decision by the Chinese government, and I think it is a mistake in the long run,” Andrew Haldane, a former US ambassador to China, told the ABC in 2014.

But in a world where multinationals are increasingly reliant on cheap labour and a low tax base, the decision may have been worth the price. 

“This is a great example of why multinationals have been so focused on the UK over the past decade,” Haldanes former boss, Tony Phelan, told Al Jazeera.

“They’ve been buying up the British manufacturing base, and it’s the UK that is the largest employer of Chinese workers in the world.”

But as well as creating new jobs in the UK, the investment will also help bolster British manufacturing, according to the UK government.

The UK has also made strides in attracting Chinese investment.

A Chinese state-owned conglomerate is investing more than $US50 billion ($76 billion) in UK infrastructure projects.

And in 2017, the government announced that it was going to increase its investment in Chinese companies, to £500 million ($621 million) by 2019. 

As a result of the deal, the UK’s pharmaceutical sector is set to triple its exports from the US to China by 2021, according a report by UK research group IHS Global Insight.

The deal also comes at a time when the UK is also struggling to cope with an epidemic of coronavirus, which has killed more than 30,000 people across the US and Canada in the past few months. 

The Chinese investment in the country comes amid a broader shift away from the UK in the Chinese economy, which is now largely dependent on cheap manufacturing labour and the low tax rate of the US.

In the past year, China has been working hard to diversify away from its traditional manufacturing base to the US for export.

This shift is being driven by China’s growing ambitions to expand its presence in the health sector, where it has an advantage over other countries such as India.

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