July 24, 2018 / 9:36 AM / in 5 months

China says hopes Britain provides fair investment environment

BEIJING (Reuters) - China hopes Britain can provide a fair investment environment for foreign firms and oppose any sort of protectionism, the foreign ministry said on Tuesday in response to proposed tougher British rules to protect national security.

Britain is planning to create new powers to block or unwind foreign takeovers amid concerns that investment in certain sectors of the economy such as defense and technology could compromise national security.

The decision to tighten the screening of foreign investment rules marks a further shift in policy for the world’s fifth-largest economy which has traditionally been one of the most open markets to global mergers and acquisitions.

Britain is pressing ahead with the changes in parallel with similar efforts in other western economies such as Germany and Australia amid growing levels of Chinese investment.

Asked about the proposed new rules, Chinese Foreign Ministry spokesman Geng Shuang said he hoped Britain could “objectively view companies’ normal commercial activities” and provide a fair investment environment for foreign firms in the country.

“We hope the British side can take actual steps to promote trade and investment liberalization and convenience, and take actual steps to oppose any form of trade and investment protectionism,” he added, without elaborating.

Prime Minister Theresa May has taken a more cautious approach towards deals in Britain since becoming prime minister in 2016, a shift that has coincided with a global boom in takeovers this year.

One of May’s first actions as prime minister in July 2016 was to pause the multibillion-pound Hinkley Point nuclear power plant project, which is being built by French state-controlled utility EDF (EDF.PA) and which China is helping to finance.

She ultimately approved the deal but said her government would take a more cautious approach over similar foreign investments in the future.

China has long appreciated Britain’s open investment environment for Chinese firms, especially in relation to what China has viewed as a more protectionist approach from some other Western countries, like Germany and the United States.

Britain’s new foreign minister, Jeremy Hunt, will visit China next week, where he will meet his counterpart Wang Yi as well as Chinese Premier Li Keqiang.

Reporting by Ben Blanchard; Editing by Christian Schmollinger

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