RUTH SUNDERLAND: In China, opportunities to pounce on western companies are a way of advancing political interests – it’s time we woke up
- British politicians have been naive over Chinese raids on UK national assets
- Until recently, ministers were extremely relaxed about China’s involvement
- During David Cameron years as PM, China was courted as an investor
British politicians have been permissive to the point of naivete in their attitudes to Chinese raids on UK national assets.
Until recently, ministers were extremely relaxed about China’s involvement in such key sectors as nuclear power, communications and energy supply.
The issue has come to the fore this weekend at HSBC, the UK’s biggest bank. Its leading shareholder, a Chinese insurance company part-owned by the Communist state, has demanded HSBC dismember itself, by splitting off its Asian business.
Time we woke up: Until recently, ministers were extremely relaxed about China’s involvement in such key sectors as nuclear power, communications and energy supply
In comparison with a multi-billion pound international finance powerhouse like HSBC, the fate of Newport Wafer Fab, a microchip factory based in Wales, may seem a niche interest. Certainly, in City terms, the £63m deal to sell NWF to a Chinese-owned rival is small beer.
But it will be the first big test for the new National Security and Investment Act, brought in this year to safeguard the country’s strategic interests. The decision Business Secretary Kwasi Kwarteng takes on NWF will have a huge impact on the prosperity of the UK for decades to come.
Unfortunately, the situation is already a mess. NWF has been sold to Nexperia, a Dutch company whose parent is the Chinese group Wingtech. That should never have been permitted. However, courtesy of the new Act, that sale can still be unpicked, which is exactly what should happen.
NWF ran into difficulty during Covid because it fell through the Government safety nets. This, according to observers, gave Nexperia an opening to strong-arm it into a takeover. Be that as it may, it is astounding that the deal was waved through. It raises competition concerns, since it gives the Chinese, who via Nexperia own another facility in Manchester, control of around 65 per cent of large-scale UK power chip manufacture. A third plant in Greenock, near Glasgow, is owned by a US company.
That leaves the UK in a parlous situation for sovereign chip production at a time when every other major economy is ramping up, not selling off.
Wisely so, given chips are used in everything from smart phones to washing machines and electric cars.
Some fear that Wingtech’s acquisition of NWF is an opportunistic, short-term move to tide it over until a new facility is opened in Shanghai in a couple of years. That is speculation but the stakes are very high.
Before the takeover, NWF was engaged in research in sensitive areas including defence cybersecurity, 5G telecoms and robotics. It was also the only independent open-access facility of any scale in the UK.
The handling of the deal has been shambolic. Boris Johnson last year asked national security adviser Sir Stephen Lovegrove to examine the transaction. But MPs on the foreign affairs committee said so few details had been provided that they were ‘left with the unfortunate conclusion that no review has taken place’. That is truly shocking.
A report last month claimed Lovegrove believed it did not merit intervention. The Government says it has made no decisions.
In the Cameron years, China was courted as an investor. Under Theresa May and then Johnson, the climate chilled. Even so, ministers welcomed Jingye of China when it bought British Steel in 2019.
The UK tends to see takeovers such as that of NWF through a commercial lens, sometimes clouded by greed or expediency. But in Beijing, opportunities to pounce on western companies or to finance infrastructure projects are seized upon, as a way of advancing political interests.
Time we woke up.