This morning we reported that the £1bn Sino-UK trade package was a bit short of detail other than a £1m deal to sell breeding pigs to the Chinese. Downing St has since updated its announcement to include a few other deals beyond the porcine arrangement.
They include an agreement to let Unilever expand its manufacturing in China, as well as clearance for a Diageo takeover of a Chinese company.
Here is their announcement:
* An agreement between BG Group and Bank of China to access a new credit facility of up to $1.5 billion that will allow the group to expand their business in China.
* An agreement between Seamwell International and China Energy Conservation and Environmental Protection Group (CECEP) to roll out UCG (Underground Coal Gasification) projects in China.
* Approval of Diageo’s bid to take a majority shareholding in Quanxing Group, a Chinese white spirits group based in Sichuan Province.
* Co-operation between Arup and one of the world’s largest civil engineering groups, the China Railway Engineering Corporation (CREC), to exploit market opportunities in the Middle East, Africa, South America and East Asia.
* Reopening of the Chinese market for UK poultry exports. The market is worth around £10 million to the UK annually and this development will help to safeguard jobs and livelihoods.
* A deal to supply 800 breeding pigs to China, worth more than £1 million, and the approval of 5 more UK establishments for the export of pig meat, worth more than £25 million.
* An agreement which allows Unilever to significantly increase manufacturing capacity in China, a market in which Unilever already makes $2bn of sales annually.
The leaders also agreed to strengthen co-operation between the UK and China in the following areas:
1. Trade in services
Both countries agreed to closer co-operation on bilateral trade in services. This will provide a good platform for dialogue on key issues of importance to UK companies and it will underpin the new UKTI strategy to encourage more innovative and high growth UK companies to explore opportunities for trade and investment in dynamic emerging markets such as China. The service sector is an area where the UK has a world class reputation and enjoys a growing trade surplus. It is an area of growing demand in China. UK services exports to China have increased at an average of 17-18% over the last 10 years.
2. Inward investment
An agreement to increase Chinese foreign direct investment in the UK, particularly in infrastructure after the National Infrastructure Plan identified a need for £200 billion worth of investment in the UK.
3. Dialogue on economic growth
An annual ministerial dialogue will be established to identify areas where the UK and China can co-operate to promote mutual economic development. Minister for Trade and Investment Lord Green will meet with Ministers from China’s National Development and Reform Commission to engage on issues such as business regulation and inward investment.
4. Regional cities
UK Trade and Investment (UKTI) and the Chinese Ministry of Commerce will work together to support increased engagement by UK companies in China’s regional business centres, enabling them to branch out between Beijing and Shanghai.
5. Double taxation
A UK-China Double Taxation Agreement (DTA) has been signed which will cut withholding tax on dividends paid to direct investors from 10 to 5%. UK companies will also benefit from a reduction in China’s taxing rights over capital gains they make in China and from the removal of China’s right to tax many types of technical fees. Furthermore, the DTA also cuts the maximum permitted withholding tax on royalties. The Agreement generally follows the OECD Model Double Taxation Convention.
6. International development
Both countries also agreed to work together on international development issues to achieve our shared objective to meet the Millennium Development Goals, in particular by sharing skills, expertise and resources. This co-operation will focus on issues such as health, climate change, peacekeeping, food security and conflict. This Agreement provides a firm commitment to hold an annual international development dialogue at official level.
7. ‘People to people’ dialogue
A new high level dialogue will be established to develop closer ties between our people. Annual Ministerial meetings held alternately in the UK and China will cover a broad range of cultural issues and enable us to step up our work together in areas such as education provision, scientific research and innovation and culture, all of which help generate revenue in the UK from the Chinese market.