Wednesday 17 January 2018 11:08 am

Chinese investment into UK doubles despite lower global spend

Chinese investment into the UK doubled during 2017 to a record high as investors jumped at the chance to buy coveted British assets at cheaper prices, according to a study to be published today.

Foreign direct investment (FDI) into the UK from China reached $20.8bn (£15bn) during the year, up from $9.2bn in 2016, according to analysis by law firm Baker McKenzie.

The surge in investment was driven by China Investment Corp’s £10.7bn acquisition of warehouse firm Logicor, while anecdotal evidence suggests the fall in the value of the pound since the Brexit vote in June 2016 has boosted deals.

Tim Gee, London M&A partner, said: "We've seen a steady increase in Chinese FDI into the UK, culminating in last year's record high. Weak sterling and a renewed confidence in Chinese investors have been key factors in driving much of this activity."

Since 2013 Chinese investors have driven a six-fold increase in investment in the UK.

The jump in investment contrasted to lower spending elsewhere, with Chinese FDI overall falling for the first time since 2006.

Chinese FDI into Europe rose by 76 per cent thanks to the delayed completion of ChemChina's record $43 billion takeover of Swiss agribusiness company Syngenta, but with that timing quirk taken out underlying investment fell by 22 per cent.

Average deal sizes in Europe more than halved compared to the previous year, an effect of capital controls, Baker McKenzie said.

Capital controls also impacted investment into the US, although activity picked up in the second half of the year. Meanwhile, protectionist measures were responsible for two-thirds of the $12bn in cancelled deals over the course of the year, Baker McKenzie estimated.