Prime Minister's trade visit opens doors for Chinese investors into HS2

At a joint press conference with UK Prime Minister David Cameron on his trade visit to China, Chinese Premier Li Keqiang spoke of "enhanced cooperation" between the two countries. As well as sharing its expertise, China is willing to "purchase equities and stocks" in some UK projects, Keqiang said.

Infrastructure law expert Kate Orviss of Pinsent Masons, the law firm behind Out-Law.com, welcomed a "very clear and positive statement" in advance of this week's Autumn Statement and update to the National Infrastructure Plan.

"As the UK Government opens its door to further economic infrastructure investment from China in major rail and energy projects, it's welcome news that David Cameron clearly sees greater Chinese investment as a means to unleash the firepower of our own Government to make capital investment in our aging infrastructure," she said.

"How considerable that firepower is remains to be seen: the Government needs to use the launch of the latest National Infrastructure Plan as a means of outlining a real pipeline of opportunities to bring the economic benefit of investing in our infrastructure to the country as a whole," she said.

This week, Cameron is conducting the UK's largest ever Chinese trade visit, which he plans to use to "deepen a lasting partnership for growth and reform". One of the priorities for his visit is to encourage the EU and China to negotiate a free trade agreement, which the Government claims could benefit the UK economy alone by up to £1.8bn every year.

More immediately, the Chinese ministry responsible for authorising all major overseas investments is to sign an agreement encouraging greater investment into the UK from Chinese companies as well as supporting more investment from British companies into China. This deal will be the first of its kind between China and a European economy. An agreement is also due to be signed between the Standards Association of China and British Standards Institution to permit the mutual adoption of British and Chinese standards on products that will be supplied across both markets.

Last week, the Prime Minister said that he would welcome Chinese investment in High Speed 2 (HS2), the proposed high-speed railway between London and the north of England. The initial London to Birmingham section of the line is currently scheduled for completion in 2026, with a proposed second phase of the project connecting the line to Manchester and Leeds envisaged by 2033.

"I'm very interested in what's happening in terms of high-speed rail in China," Cameron said last week during a visit to a Chinese exhibition at the V&A Museum. "It seems to be an absolute high-speed revolution taking place, and I'm looking forward to travelling on a high-speed train when I'm in China. In terms of HS2, I very much welcome Chinese investment into British infrastructure."

However, infrastructure law expert Kate Orviss sounded a note of caution.

"The interesting question is will the cash come with strings attached and will the Chinese want to bring their supply chain and technology with them," she said. "How will that sit with UK contractors and UK standards respectively?"

Meanwhile, alternative investment company Prequin is reporting increasing interest in EU infrastructure projects from investors looking for more stable long-term assets. Investment in infrastructure funds has more than tripled to €9.1 billion this year, from 13 closed funds, according to research by the company. The majority of these funds either met or exceeded their fundraising targets, Prequin said.