EDITORIAL - Lessons from the UK

While the Americans continued to do damage to their global economic reputation with the ongoing political squabble over the budget and debt ceiling, George Osborne, the British chancellor of the exchequer, made hay in China this week. It's worth Jamaica's notice.

First, Mr Osborne announced moves that will make it easier for Chinese banks to operate in Britain. Instead of having to set up subsidiaries, with their own capital and funding requirements, Chinese banks will be able to open subsidiaries.

The upshot: The UK operations will be able to meet reserve and other prudential requirements that the UK authorities place on banks from the capital of their parents.

Another outcome of Mr Osborne's appeal to the Chinese is the direct, though limited, access that investors in London will be afforded to China's tightly regulated bond and share markets. Up to now, outsiders buying Chinese stocks and bonds have to use Hong Kong-based intermediaries, increasing transaction costs.

The British government hopes that with this facilitation of what, at least initially, will be wholesale Chinese banking business, London will become the main overseas hub for Chinese banking services and cement the city's place as the world's premier financial centre.

Another spin-off, Mr Osborne hopes, will be increased Chinese investment in the UK - something the British appear not too shy at grappling for.

Indeed, more than 500 Chinese firms are estimated to have poured billions of dollars worth of investment into Britain since China's emergence as a global powerhouse, and the flow does not appear to be slowing.

For instance, the Industrial and Commercial Bank of China is investing £650 million to develop a 150-acre business district around the Manchester airport. The project is expected to create 16,000 jobs over 15 years.

Not long ago, too, the Chinese property group, Wada, spent £700 million acquiring substantial property on the River Thames while it plans to build luxury apartments and hotels and skyscrapers. Another Beijing developer has announced a £1-billion project to redevelop the historic Royal Albert Docks in Liverpool. Other recent deals include the purchase, by a Chinese insurance company, of the Lloyd's building in London and the acquisition of nearly nine per cent of Thames Water by the Chinese sovereign fund.

Jamaica, take note

Our larger point for Jamaica is that potential Chinese investors are not short of individuals and countries courting their capital. And despite what we may have believed, these are not all in poor or middle-income developing countries such as Jamaica.

This brings us to the ongoing debate over the proposal of the Beijing firm, China Harbour Engineering Company, to develop the Goat Islands, off Jamaica's south coast, as a business/manufacturing and logistics hub, and the almost xenophobic response it ignited. The discourse moved quickly from the environmental concerns to the supposed bad behaviour of Chinese investors and marginalisation of Jamaicans from national assets.

The evidence of recent years is, however, clear. When it comes to substantial investment in Jamaica, the Chinese are the only game in town. Given our bad economic condition, xenophobia and economic ultranationalism are a potently bad combination.

By the way, that investment we sniff at, Britain is likely to tell it, "Come."

The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.