Wooing the Chinese is the easy bit. The challenge is to get the British to invest

On this occasion, there was a certain irony in Boris and George’s appeals for the Chinese to spend their money in Britain

Share

An all-too familiar ritual has played out this week. We’ve been treated to the sight of senior politicians heading to a faraway land, hand-picked captains of industry in tow.

Once there – this time it was China, before that India – a well-rehearsed choreography kicks in. There are clunky jokes about local customs and the language, and photo opportunities galore, as the politicians lark about for the travelling and local media.

There’s a press conference or two, some speeches, banquets, and plenty of handshakes and smiles. Deals are unveiled, despite the fact that, as they like to say on Blue Peter, they were clearly prepared earlier. Oh, and we and the Chinese must be told, repeatedly, that Britain is “open for business”.

The Chinese don’t need Boris Johnson to tell them that London is a world centre for banking or George Osborne to explain we’re handily located between Asia and North America. It’s a fair bet that all the accompanying business big-wigs had extensive dealings with China and maintained offices or representatives there. Likewise, the large Chinese firms they met almost certainly had a presence here.

And to put the whole thing in perspective: no sooner does our lot pack up and jet home than a delegation from another country arrives to go through a similar sales pitch. Next week, on Monday, a party arrives in China from Australia on what’s being billed as a “Super Trade Mission”.

It’s possible to argue that if we didn’t show our faces at all we would suffer, but is that  really true?

On this occasion, there was a certain irony in Boris and George’s appeals for the Chinese to spend their money in Britain. Currently, our largest companies are sitting on more cash in their bank accounts than at any time in our history. According to a recent study from Capita Asset Services, the total gross cash balances of the FTSE 100 amounts to a whopping £166bn – up from £123.8bn in  pre-crash 2008.

While Osborne yesterday heaped praise on the Chinese for agreeing to invest in new UK nuclear power plants, he cannot get his  own people to do the same. The first major commitment is likely to be a new £14bn plant at the Hinkley C site. Leading the project will be EDF, the French energy firm, with the Chinese set to be co-investors.

As well as France and China, the government is looking to South Korea and Japan  to back a new generation of UK nuclear  power stations.

The Brits, meanwhile, prefer to keep their money in the bank. It’s not just nuclear energy: our biggest firms have stopped investing in Britain. When did you last turn on the radio and hear that a British company was spending heavily on a new project in this country, providing lots of new jobs? Such announcements used to be frequent and across all sectors. Now, they are rare and tend to concern a development of a shopping mall (which does not create employment but takes it away from existing stores) or a giant call centre.

They’re not dipping into their pockets,  neither are they leveraging – using the funds they already possess to borrow in order to  invest. They’re worried about the fragility of the economy, that the Eurozone crisis has not been resolved and the Middle East remains a powder keg. Fortunately, fears of a US default have receded.

They’re also afraid of taking a short-term risk. It’s much safer to stash the cash in  the bank or even return it to grateful  shareholders if you’re a chief executive than plunge down some expansionary route,  placing orders for plant and equipment, and hurt the annual bonus.

This is a serious concern for the government, one laid bare in a new book by Andrew Smithers, The Road to Recovery: How and Why Economic Policy Must Change. The  City listens to Smithers, one of its foremost analysts, even though it does not always  like what he says. He blames the way  management remuneration packages are tied to share-price performance as one of the main reasons behind the financial crash and now, one of the key factors in our slow return to economic health.

Put simply, there is nothing in it for UK corporate executives to gamble. If they  announce a major acquisition or investment programme, their share price will fall – and hurt the yearly hand-outs. By not adding  and developing, they might be fuelling  problems in the long-term but they would rather take that chance than jeopardise their short-term bonuses.

Instead of hurtling off across the globe, Osborne and co might be better advised to stay at home and attempt to sort out executive pay structures, and persuade companies to part with their money. That, though, could take forever and may prove impossible.

It makes more sense to turn to those with money to burn, who are not restricted by short-termism, who play a determinedly long game and don’t have share prices or bonus payments to fret about. The Chinese fit that bill perfectly.

The fact is, as the Government knows, given the caution of our companies, we would be lost without them – and the wealthy Gulf Arabs, rich Indian entrepreneurs and all the other targets of our foreign junkets, sorry  essential begging missions.

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: Massage Therapist / Sports Therapist / Physio / Osteopath

£12000 - £24000 per annum: Recruitment Genius: An opportunity has arisen for o...

Recruitment Genius: Account Manager / Sales Executive - Contract Hire

£35000 - £60000 per annum: Recruitment Genius: This industry leader provides c...

Recruitment Genius: Project Coordinator

£28000 - £30000 per annum: Recruitment Genius: A Project Coordinator is requir...

Recruitment Genius: Area Sales Manager - Midlands

£20000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...

Day In a Page

Read Next
 

Don’t pity me for eating alone, just give me a better table

Rosie Millard
Aerial view of planned third runway at Heathrow  

Heathrow expansion: This final 'conclusion' has simply fanned the airport flames

Chris Blackhurst
John Palmer: 'Goldfinger' of British crime was murdered, say police

Murder of the Brink’s-MAT mastermind

'Goldfinger' of British crime's life ended in a blaze of bullets, say police
Forget little green men - aliens will look like humans, says Cambridge University evolution expert

Forget little green men

Leading evolutionary biologist says aliens will look like humans
The Real Stories of Migrant Britain: An Algerian scientist adjusts to life working in a kebab shop

The Real Stories of Migrant Britain

An Algerian scientist struggles to adjust to her new life working in a Scottish kebab shop
Bodyworlds museum: Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy

Dying dream of Doctor Death

Dr Gunther von Hagens has battled legal threats, Parkinson's disease, and the threat of bankruptcy
UK heatwave: Temperature reaches 39.8 degrees on Central Line - the sweatiest place in London

39.8 degrees recorded on Tube

There's hot (London) and too damn hot (the Underground). Simon Usborne braved the Central line to discover what its passengers suffer
Kitchens go hi-tech: From robot chefs to recipe-shopping apps, computerised cooking is coming

Computerised cooking is coming

From apps that automatically make shopping lists from your recipe books to smart ovens and robot chefs, Kevin Maney rounds up innovations to make your mouth water
Jessie Cave interview: The Harry Potter star has published a feminist collection of cartoons

Jessie Cave's feminist cartoons

The Harry Potter star tells Alice Jones how a one-night stand changed her life
Football Beyond Borders: Even the most distruptive pupils score at homework club

Education: Football Beyond Borders

Add football to an after-school homework club, and even the naughtiest boys can score
10 best barbecue books

Fire up the barbie: 10 best barbecue books

We've got Bibles to get you grilling and smoking like a true south American pro
Wimbledon 2015: Nick Bollettieri - Junk balls and chop and slice are only way 5ft 1in Kurumi Nara can live with Petra Kvitova’s power

Nick Bollettieri's Wimbledon Files

Junk balls and chop and slice are only way 5ft 1in Kurumi Nara can live with Petra Kvitova’s power
Ron Dennis exclusive: ‘This is one of the best McLaren teams ever – we are going to do it’

‘This is one of the best McLaren teams ever – we are going to do it’

Ron Dennis shrugs off a poor start to the season in an exclusive interview, and says the glory days will come back
Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most