Former UK prime minister David Cameron is pushing ahead with a troubled scheme to raise a $1bn China investment fund despite a hardening of the British government’s stance against Beijing.
Named the UK-China Fund, the private sector initiative is intended to seek partnership opportunities between the two countries in technology, healthcare, energy and manufacturing.
When announced 30 months ago, it was billed as Mr Cameron’s most ambitious commercial undertaking since leaving office in July 2016 after losing the EU referendum.
People close to the former prime minister told the Financial Times that he was still pursuing the fund. “It would be wrong to say [it has been] abandoned,” said one.
But now the venture faces major headwinds given the UK government’s growing hostility towards Beijing in the wake of the Hong Kong clampdown and the coronavirus crisis. Foreign secretary Dominic Raab has announced an end to “business as usual” with Beijing.
Mr Johnson in February backed plans for Chinese telecoms company Huawei to play a central role in Britain’s 5G networks, despite mounting criticism from Tory MPs, with its market share capped at 35 per cent.
But this position has reversed over the past fortnight with Downing Street preparing to cut Huawei’s role to zero within three years. A security review has been initiated — with involvement from security services MI5 and MI6 — to examine the resilience of the telecoms network to Chinese espionage.
Mr Johnson is also accelerating legislation designed to make it harder for foreign state-owned companies to buy struggling UK companies.
A new “national security and investment bill”, scheduled to be published in weeks, will widen the scope of takeover rules, creating a system whereby any deal with national security implications — even if it only involves intellectual property or a shareholding — will be referred to the takeover authorities.
Mr Cameron’s determination to proceed with his China fund against this backdrop has raised eyebrows.
Bob Seely, a Tory MP, said: “I wish him well but I think he should be under no illusions that China is changing and not for the better. We need to continue a two-way dialogue and economic relationship, but you do wonder how the changing outlook is going to affect that.”
Another Conservative MP said he was “not at all surprised” Mr Cameron was pushing ahead with the fund.
“He’s spent a lot of time building it up,” the MP said. “But it’s going to be a very tough gig trying to persuade people to get on board with it now.”
Mr Cameron and other backers had previously hoped to reach the “first closing” — the point when a fund has attained enough capital to begin making investments — in the autumn of 2018.
In April 2019 one leading figure at the fund said positive announcements were imminent. At the time, the former prime minister’s spokesman said substantial funds were already committed.
But since then there has been no public progress in the attempted fundraising. Contacted by the FT, Mr Cameron’s office refused to comment.
Previously, London and Beijing have said the project would “create employment and boost trade links, supporting the Belt and Road Initiative”, China’s flagship infrastructure-building programme.
But there have long been widespread industry doubts about Mr Cameron’s proposed fund because it was in competition with more established operators.
The fund is an initiative of Peter Gummer, Lord Chadlington, a prominent Tory donor and public relations veteran who was president of the Witney Conservative association in Oxfordshire when Mr Cameron successfully sought selection to be the party’s candidate for the constituency in 2000.
Lord Chadlington did not return the FT’s calls last week.