January 19, 2008 (LPAC) - British Prime Minister Gordon Brown has invited the China Investment Corporation(CIC), a $200 billion sovereign wealth fund, to use the City of London as its "overseas base," during his discussions yesterday with Chinese Prime Minister Wen Jiabao. The British press is blaring that the "China bashing" in the United States leaves an opening for Britain to make this plug for the City of London's "open door" policy, in contrast to what the Financial Times called "protectionist signals" from the U.S., France, and Germany. Brown said in Beijing yesterday: "This is a very substantial fund. It can be invested positively. I realize that in some countries it is controversial, but I have talked to Premier Wen Jiabao. We want Britain to be the No 1 destination for China's business as it looks to invest around the world."

The London Stock Exchange used Brown's trip to announce it is opening an office in Beijing, to encourage Chinese companies to list in London. At present, there are only six Chinese companies on the LSE main market, compared to 39 in New York.

Chinese Prime Minister Wen Jiabao responded to Brown's announcement at their joint press conference in Beijing yesterday, by reiterating that the CIC would only be investing about one-third of its capital abroad, some $60-$70 billion, the China Securities Journal reported today. "The amount of capital to be invested abroad is not as large, since we will continue to push forward the reform of other state-owned commercial banks, which would require further capital injections from CIC," said Wen. The CIC was set up in 2007 as an investment vehicle for what is just a very small portion of China's $1.5 trillion foreign exchange reserves. So far, the CIC has invested some $8 billion in Morgan Stanley and Blackstone Group LP.

Wen also addressed the "China bashers," emphasizing in the question and answer period that China has neither intention nor capability to threaten others. "We have our hands full with our own affairs," he said.

So far, Wen and Brown have signed eight agreements involving almost $800 million, in education, climate change, renewable energy and the development of sustainable cities. These are small, in contrast to the $23 billion worth signed by French President Sarkozy during his visit to Beijing in November. However, the Chinese and British sides also agreed to raise their already substantial $40 billion in trade to $60 billion by 2010. They will also upgrade the Sino-UK finance dialogue from vice-minister level to deputy prime minister level.