June 17, 2014 / 12:15 PM / in 4 years

Gas and currency deals crown Chinese premier's UK visit

* Trip is Li’s first to UK since taking office

* Trade, business deals are focus

* China keen to put rights row behind it

* UK wants more Chinese investment

By William James and Kylie MacLellan

LONDON, June 17 (Reuters) - A $20 billion liquefied natural gas deal and a move to strengthen London’s position in offshore yuan trading will crown a visit by Chinese Premier Li Keqiang to Britain on Tuesday.

In a trip aimed at burying a row over Tibet and deepening commercial ties between the world’s second-largest economy and Europe’s financial capital, Li met Queen Elizabeth and was due to hold talks with Prime Minister David Cameron.

Li, number two in the ruling Communist party, is expected to preside over up to $30 billion in business deals. Investors will be looking closely for any signals he may send about the future of Asia’s largest economy.

Oil major BP will sign a deal worth around $20 billion to supply China National Offshore Oil Corporation (CNOOC) with liquefied natural gas (LNG) cargoes, BP Chief Executive Bob Dudley said at a conference in Moscow.

“It is a 20-year supply agreement on LNG. It is a fair price for them and a fair price for us. It is a good bridge between the UK and China in terms of trade,” Dudley said.

Also on the table is a deal to make China Construction Bank (CCB), the country’s second-largest lender, the first clearing service for offshore trading of the Chinese currency in London.

London, which dominates the $5-trillion-a-day global foreign exchange market, is seeking to fend off challenges to its position as the leading offshore yuan centre in Europe.

As China promotes the use of its currency in international trade, Hong Kong remains by far the largest centre for offshore yuan deposits. Deposits in Taiwan, Singapore and Macau also dwarf those in European capitals. New York lags far behind.

Bank of China (Hong Kong) and Industrial and Commercial Bank of China are the clearing banks for all yuan transactions in Hong Kong and Singapore, respectively.


China, whose $9 trillion economy is over three times the size of Britain‘s, wants to use the visit to put differences with London over Tibet behind it.

Britain’s relations with China took a nosedive in 2012 after Cameron met the Dalai Lama, the Tibetan spiritual leader who Beijing says is a separatist. Ties have recovered somewhat since, and Cameron visited China last year.

But tensions remain.

Beijing warned London on the eve of Li’s visit not to lecture it on the subject if it wanted good economic ties . And British Deputy Prime Minister Nick Clegg said on Monday that the people of China were politically shackled to a Communist one-party state.

“We can’t ignore the large scale and systematic human rights abuses which still continue in China to this day,” Clegg, who leads the Liberal Democrat coalition partners of Cameron’s Conservatives, told reporters.

China views Britain, the world’s sixth largest economy and home to the only financial capital to rival New York, as Europe’s most open place to do business. Its firms are keen to invest in major nuclear and high-speed rail projects.

In an attempt to attract more of China’s big-spending tourists, Britain’s government said it would make its notoriously complex visa system easier to navigate. (Writing by Guy Faulconbridge and Andrew Osborn; Additional reporting by Ben Blanchard and Aizhu Chen in Beijing,; Saikat Chatterjee in Hong Kong, Vladimir Soldatkin in Moscow,; Oleg Vukmanovic in Milan and Nina Chestney in London; Editing by Mark Trevelyan)

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