September 23, 2015 / 11:07 PM / 4 years ago

Osborne courts Chinese investment in high-speed rail

LONDON (Reuters) - Chancellor of the Exchequer George Osborne will open bidding during a visit to China on Thursday on 12 billion pounds of contracts to build a high-speed rail line, the latest effort to bring Chinese cash to Britain.

Chancellor of the Exchequer George Osborne delivers a speech at the Shanghai Stock Exchange in Shanghai, China, September 22, 2015. REUTERS/Aly Song

Osborne will also seek Chinese backing for 24 billion pounds of investment projects in northern England.

Inviting bids on seven contracts to build the first phase of the high-speed rail link between northern England, the central Midlands and London, the British government said it would encourage Chinese firms to link up with domestic companies.

In remarks released by his office, Osborne said Britain and China were entering a “golden era of cooperation”.

The push for investment from the world’s second-largest economy has been criticised by some who say it exposes Britain to risks in the Chinese financial system and ignores concerns about human rights.

Osborne, who wants to make China Britain’s second-largest trading partner after the United States, has responded by saying he disagrees with Beijing on rights issues but wants to engage.

He has led a delegation of senior ministers and business representatives on a week-long trip to China to strengthen economic and financial ties.

Osborne has already promised 2 billion pounds of support for a Chinese-backed nuclear power plant in Britain and agreed steps to link up China’s equity markets with the City of London.

The 43 billion-pound rail project, called High Speed 2, has divided opinion in Britain because of its rising costs and the potential impact on the countryside and local communities.

The proposed route would link London to Birmingham, and the northern cities of Manchester and Leeds. The first phase is due to be completed in 2026 and the second phase in 2033.

The project has attracted a growing number of joint-venture partners such as Carillion , Kier and Eiffage  and possible collaborations between firms like Ferrovial, BAM Nuttall and Morgan Sindall and Costain and Skanska.

Osborne will also invite Chinese investment in a series of projects dubbed the ‘Northern Powerhouse’, designed to spur development in northern England, where growth has lagged London and the southeast.

Among the key investment opportunities being touted are building 10,000 homes in Manchester and regenerating a 130 hectare site in Leeds.

“As we continue to work more closely with China, we have an unprecedented opportunity to secure significant investment into some of our most ambitious projects across our Northern Powerhouse,” Osborne said in a statement.

Reporting by William James; Editing by Ruth Pitchford

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