The National Museum in Beijing unveiled a new exhibition recently of the gifts received over the years by the Chinese government from foreign heads of state and dignataries.
It’s a fascinating assemblage, dating back to presents given to Mao Zedong, as well as including those more recently given to President Xi Jinping. WiC was not altogether surprised to discover that the costliest and most elaborate gifts tended to come from African despots, as well as the ever-cordial Kim family of North Korea. However, we were also struck by some of the British cadeaux. Some presents were functional, such as the silver cigarette box given to Deng Xiaoping by Margaret Thatcher. Others were more quirky, like the 10 Downing Street inkhorn, courtesy of Tony Blair.
However, it was the gift from current prime minister David Cameron that caught our eye. An embossed water jug, it looked simultaneously the least imaginative and least expensive of the hundreds of offerings received by the Chinese state. Indeed, in a period in which relations between Beijing and London have been strained – mostly owing to the taboo subject of Tibet – the unimpressive jug offered an apt symbol of diplomatic discord.
But things look to be taking a more promising turn, after two frosty years in which China made plain its displeasure with the British government. Instead of a jug, there was a more practical gift bestowed last week in a sign London is making much more of an effort to win Chinese favour. As we reported in WiC211, visa restrictions for the Chinese are to be greatly relaxed to encourage more tourists and businesspeople to visit Britain. This was welcomed as a gesture of goodwill (the Chinese greatly resented the onerous requirements of the previous visa regime, which they thought “treated them like criminals” according to a British tourism executive).
The timing couldn’t have been better, coming as it did just days before UK finance minister George Osborne’s trip to China.
And Osborne arrived in Beijing this week with other sweeteners too. According to the Financial Times, the Chancellor of the Exchequer unveiled a bold new measure that the newspaper described as “rolling out the red carpet for Chinese banks”. The FT reported that a newly announced policy will help them “to expand in London, offering to break down regulatory barriers to reinforce London’s position as a global renminbi hub”. The move is a potential game-changer as it promises to allow China’s biggest banks to run their wholesale operations through branches. That will permit the big state-owned banks like ICBC and Bank of China access to “the vast resources of their main operations in Beijing,” says the FT, and also ensures they will be “largely subject to Chinese regulation”.
Currently these banks operate their London operations as subsidiaries, which means they are subject to tight controls in areas like capital cushions and liquidity buffers. They say that this restricts their growth and the amounts they can lend. British financiers have long agreed that this has the unwelcome effect too of holding back London’s ambitions to become an offshore banking centre for China’s currency, the renminbi. Apparently, Osborne has declared it his “personal mission” to ensure that the British capital doesn’t miss out on fulfilling this role.
The chancellor told an audience in Beijing that “a great nation like China should have a global currency” and that London – as the global leader in foreign exchange trading – was the logical place to develop further usage of the renminbi outside China. The FT adds that Osborne believes his new initiative to open the door to big Chinese banks “will be seen as proof that Britain is prepared to do whatever it takes to attract Chinese investment and business”.
In a speech at Peking University Osborne continued the charm offensive. “There are some in the West who see China growing and they are nervous,” he said. “They think of the world as a cake – and the bigger the slice that China takes, the smaller the slice they will get. I utterly reject this pessimistic view. If we make the whole cake bigger, then all our peoples will benefit. I don’t want Britain to resent China’s success, I want us to celebrate it. I don’t want to resist your economic progress, I want Britain to share in it.”
Osborne – who wants to double Britain’s trade with China to $100 billion by 2015 – added that no other country in the West is more open to Chinese investment. To that end, a couple of major deals accompanied his visit. Announced first: a partnership between British firms and Beijing Construction Engineering Group will develop a 160-acre site near Manchester Airport costing £800 million ($1.28 billion) and generate five million square feet of business space. Possibly even more significant: another partnership, this time between France’s EDF and the Chinese General Nuclear Power Group to build the first new nuclear plant in the UK since 1995, at Hinkley Point.
Also on the trip with Osborne was Boris Johnson, the London mayor, intent on attracting investment for the capital. He too had something to cheer, as Chinese investors pumped £3 billion into developing London property (most of the money is going into the Royal Albert Dock and the regeneration zone at Nine Elms).
Slightly more controversial was the most recent Chinese foray into London real estate. That followed the news last week that the privately-owned Shanghai Zhongrong Group wants to spend $800 million rebuilding Crystal Palace. Its billionaire owner Ni Zhaoxing says his ambition is to resurrect the Victorian cast iron-and-glass masterpiece that burned down in the 1930s. Johnson sounded excited too, calling the project a “brilliant, original and simple vision” with the idea to put the structure on a hill in the same London park where it once stood for 80 years. “South London will once again acquire a world class cultural attraction,” is Johnson’s verdict.
The original Crystal Palace was built to house the 1851 Great Exhibition and Ni says the new version will include a concert hall, a convention and exhibition centre, and naturally a “six-star” hotel. But local residents have already been expressing their concerns. Some worry about the loss of the park’s open space, others that the project will morph into a casino. Design and culture critic Stephen Bayley told Marketplace, a radio show, that the Chinese replica could end up being “muddled kitsch”, not unlike the attempt to recreate Austria’s Hallstatt in Guangdong (see WiC114).
Who is Ni, the developer who promises his new Crystal Palace will be “a jewel in the crown for the UK and the world”? According to Chinese magazine The Capital, he was born in 1956 in Zhejiang province and emblematic of the entrepreneurial drive that has powered China’s growth in recent decades. Like many of the tycoons WiC has profiled over the years he left school at 15. In his case, he then toiled in the fields as a farmer till the age of 25, the point at which he had saved enough funds to open a small factory. In 1991 he founded the Zhongrong Group to invest in property. His initial capital was just Rmb10,000 ($1,639), but Ni had soon built nine apartment blocks in the city of Hangzhou.
His big break came in 1999 when the Asian financial crisis sent the Shanghai real estate market into the doldrums. Ni bought three plots of land “overgrown with weeds” in the nascent Lujiazui financial district in Pudong, a move that The Capital terms as a stunning gamble. He then began construction of his first high-end commercial project, Zhongrong International Mall. Eventually Ni would construct 300,000 square metres of mall and office space in Lujiazui, solidifying his mogul status (he’s now worth Rmb7.75 billion according to Forbes).
Ni’s dreams of reviving Crystal Palace are in keeping with other projects he has on the go. For example, he’s spending Rmb10 billion on a giant tourism development at the base of the Wuyun Mountain near Hangzhou (on completion it will feature a conference centre, museum, hotel, mall and office space). And in what the Cambodian government terms “a wonder second only to Angkor Watt” Ni is also building a 3.5 million-square metre mega resort there too.
Other major complexes are slated for Hainan island and Dalian.
Ni is involved in more than just property. He’s also in the oil business: since 2005 a subsidiary has been buying up land in Canada, to drill for light crude. Another subsidiary – New York Capital Energy Corporation – also won approval from the US Department of Energy to become a major shareholder in Crimson Exploration, an American oil firm. It has expertise in drilling for shale oil, owning 95,000 acres of claims in four US states. This month it completed a merger with Contango Oil and Gas, creating a company with $1 billion of proven reserves.
He’s also branching out into financial services in Hong Kong (although we should clarify that his Zhongrong Group has no connection to Zhongrong Trust, whose problem loans we detailed in WiC177.)
The cigar-loving Ni looks to be just the sort of cash-rich businessman that Mayor ‘Bo Jo’ is keen to entice to London. As such, Johnson will be hoping that planning permission goes through as smoothly and that Zhongrong can begin its reincarnation of the Victorian landmark on schedule in late 2015.
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