UK open to Chinese wealth fund investments

A worker walks past containers at the Longtan port in Nanjing, Jiangsu province, August 10, 2010.

LONDON (Reuters) - Britain's coalition government is open to investments by China's $300 billion sovereign wealth fund and is working on the possibility of the fund opening a London office, Business Minister Mark Prisk said on Thursday.

Prisk starts a five-day trip to China on Sunday, the latest in a series of British ministers to visit the Asian powerhouse since Britain's coalition government was formed in May with a strong focus on trade with emerging markets.

Prisk's visit to Shanghai, Beijing and Hong Kong will pave the way for a trip to China before year-end by a high-level government and business delegation led by Prime Minister David Cameron, Prisk told Reuters in a telephone interview.

That visit will be similar to the business mission Cameron led to India in July, during which British firms BAE Systems(BAES.L) and Rolls-Royce(RR.L) clinched $1 billion of contracts to supply Hawk military training jets to India.

The coalition, led by centre-right Conservatives, wants to boost trade, particularly with fast-growing emerging markets, to strengthen Britain's tentative economic recovery at a time when public spending cuts are likely to dampen domestic demand.

Former prime minister Gordon Brown told China in 2008 that his centre-left Labour government welcomed investments from Beijing's sovereign wealth fund, China Investment Corp (CIC), and invited CIC to open an office in London.

Prisk said the coalition is also well disposed towards CIC.

"Very clearly that sovereign investment fund is a major player in the market. We are very happy to look at those kinds of investments both by (it) but also by many of the Chinese businesses and many of the businesses in China that are looking to expand their European base," he said.

HOPES FOR "GOOD NEWS"

Asked about talk of CIC opening its first international office in London, Prisk said: "There are a number of initiatives, including that, which we are working on at the moment and we should have some good news on a number of fronts in the next few weeks."

Britain's welcome to the Chinese fund contrasts with French and German reservations about large sovereign wealth funds.

Prisk said that, during his visit, he would meet Chinese government officials, investors and small- and medium-sized British businesses that are already trading with China.

"It is very much about both exports and about bringing further Chinese investment into the UK," said Prisk, who is responsible for trade until Stephen Green, chairman of HSBC bank, begins work as trade minister in January.

Britain had a goods trade deficit of 18.9 billion pounds ($29.24 billion) with China in 2009 and a further 3.9 billion pound deficit with Hong Kong, according to official data.

Prisk said there was tremendous potential for Britain to boost its exports to China. The government particularly wants to encourage British small- and medium-sized firms to sell overseas.

The coalition's trade hopes took a knock on Thursday when official figures showed Britain's goods trade deficit with the rest of the world unexpectedly widened to a record high in July.

The coalition intends to publish a "manufacturing framework" and a growth plan for hard-pressed manufacturing industry just after it announces in October how it will cut public spending to rein in a record peacetime budget deficit, Prisk said.

The Conservative politician said his visit to Shanghai would focus on the high-tech sector. He said some companies may announce business deals during his visit but gave no details.

(Editing by David Cowell)