Economies of China and the UK will benefit from closer ties

BEIJING - China and the United Kingdom will see bilateral trade and mutual investment boom in the coming years, experts and officials are predicting.

"Frequent high-profile visits between the two nations will continue to inject new vitality into bilateral trade and investment relations," said Sun Yongfu, director of the department of European affairs at the Ministry of Commerce.

Premier Wen Jiabao started his latest European visit on Friday in Hungary and arrived in the UK on Saturday ahead of his planned stop in Germany.

Special Coverage: Premier Wen's European Visit Related readings:  China signs $4.3b deals with UK  China-Britain trade targets $100b in 2015  Sound China-UK ties benifit entire world: Wen  Remove the barriers to investment: Ambassador  Chinese shoppers feel at home in UK stores

Agreements to be signed between China and the UK during Wen's visit will focus on regional trade and investment cooperation, service trade and avoidance of double taxation, while commercial agreements involve resource development, cooperation between banks and companies as well as architecture and design industries. The visit is a sign of the deep-rooted and wide-ranging economic ties between the two countries, Sun said.

The two nations signed 15 deals, worth $4.6 billion, when Vice-Premier Li Keqiang visited the UK in January and British Prime Minister David Cameron led a business delegation to China that yielded a host of deals last year.

China is the UK's second-largest trading partner outside the European Union. Bilateral trade in goods and services reached a record $63 billion in 2010. Total trade volume in goods surged by 17.4 percent year-on-year to more than $20 billion in the first five months of 2011, according to the Ministry of Commerce.

The UK has set a target of doubling its trade with China - reaching $100 billion by 2015 - and expanding investment in both directions.

As a leading financing and information hub, the UK has attracted about 400 Chinese companies to invest there and ranks as China's second-largest investment destination in the EU. China's non-financial direct investments in Britain were about $1.25 billion at the end of April.

"The UK market can be used as a springboard for Chinese companies because it will be easier for them to enter other EU member markets," said Cui Xinyan, a European studies researcher at the Chinese Academy of International Trade and Economic Cooperation.

At the same time, Chinese companies' investments can help create more jobs and contribute to a steady economy in the UK and offset its economic recession, she said.

However, the relationship is not without challenges. Last month, Chinese telecom equipment maker Huawei Technologies Co was denied a contract to work on a mobile network for the London Underground. Dan Chugg, political counselor at the British embassy in Beijing, said negotiations are continuing.

Media reports said Huawei's intention to participate in a previous plan to introduce mobile phone coverage to the London Underground failed because the city's tunnels were too narrow for the project to work.

But working together on such projects will benefit both countries, Cui said.

China and the UK are complementary to each other in a wide range of businesses. Chinese companies have the competitive edge in home and machinery appliances and textile enterprises, while British businesses are better at finance, green technology and cultural creative industries.