Little progress due to 'lower efficiency, lack of experience in big deals'
A Chinese company denied its multibillion-pound investment deal in Scotland had unraveled, saying it is still waiting for the Scottish government to advance the project, despite a "climate of hostility" in local politics.
"I don't think the deal is off … We are awaiting the Scottish side to build a work team for it," Peter Zhang, managing director of SinoFortone Group, told the Global Times on Tuesday.
Zhang, together with representatives of China Railway No. 3 Engineering Group (CR3), signed a memorandum of understanding (MOU) worth up to 10 billion pounds ($124 billion) on March 21 with Scotland's first minister Nicola Sturgeon, to invest in areas such as affordable housing, clean energy, high-speed railway and transport, the Xinhua News Agency reported. However, the UK-based Sunday Times reported Sunday that the deal had "collapsed" in August.
Although little headway has been made in the past months, the Scottish government resumed frequent exchanges with SinoFortone Group this month, Zhang said, adding that no official notice about the cancellation has been issued.
He ascribed the scant progress to the Scottish Parliament elections and Brexit referendum, as well as a lack of experience in operating such a large project. Since the elections, there have been many questions about the project from new Scottish members of parliament.
Opposition parties have voiced fears about the deal since March, amid concerns that CR3's parent company, China Railway Group, had been named in an Amnesty International report on human rights abuses and been blacklisted by Norway's oil fund, the BBC reported Monday.
Zhang said that concerns raised by the opponents of the deal were insignificant.
"The opposition parties may simply aim to frustrate the deal which would allow the Scottish National Party-led government to seek less economic support from the UK government," Tian Dewen, a research fellow at the Institute of European Studies of the Chinese Academy of Social Sciences, told the Global Times.
"We did not consider that the MOU had been canceled, but were aware that SinoFortone felt they could not move ahead at that time in the climate of hostility they faced from other parties," Keith Brown, a spokesperson for Scotland's Economy Secretary, was quoted by the BBC as saying.
"However, they continued to believe in the benefits for Scotland of an infrastructure partnership with China and we remained committed to pursuing these opportunities," Brown said.
Zhang said that the investment environment in Scotland has yet to fully reflect a possible independence referendum, but is still healthy.
"There are plenty of business opportunities in Scotland and in the UK in general," Zhang said. Because of the Brexit referendum, the UK will become more dependent on international investment, he said.
Since Scottish infrastructure needs investment and Chinese companies always follow construction standards set by the EU, firms still have a chance to invest in Scotland, in spite of Brexit and because of Scotland's possible inclusion in the EU, Li Guanjie, an assistant research fellow on British Studies at Shanghai International Studies University, told the Global Times.
Besides, for deals signed by China and the devolved regional UK governments, Chinese firms can resort to the British government via diplomatic channels if Scottish opposition parties continue to obstruct commercial deals, Li said. "After all, Scotland is still part of the UK."
He cited the Hinkley Point nuclear project as an example. Prime Minister Theresa May's administration finally gave the go-ahead to Hinkley Point C, which will be jointly developed by China General Nuclear Power Corp, which has a one-third stake, and French state-owned company EDF, two months after the new government called for a review of the nuclear program.
The Brexit process will take years to complete, including talks between the UK and EU that may start in early 2017 and the transition afterward. The environment for international investment in the UK is relatively volatile, though it is always open to economic cooperation, Tian said.
