Skip to content

20 Jun, 2018

Chinese Investment in UK to Increase After Regulations Relax

We have some exciting new buy to let deals available right now. Don't miss out and secure the best Liverpool and Manchester investment opportunities, with projected rental yields of 10-15%!

    Chinese Investment in the UK: The Past, Present, and Future

    China has long depended on foreign investment to develop essential sectors within its economy. The highly sustained economic growth rate, thriving middle class, and the expansion of diverse product demand underpins its appeal as a foreign direct investment destination.

    Foreign investors, however, often temper their optimism regarding potential investment returns with uncertainty about China’s willingness to offer a level playing field towards Chinese competitors.

    Earlier on in 2018, the Chinese government restricted outwards investments from the country, hindering Chinese investment in the UK. Fortunately, Chinese investment in the UK is now more accessible for Chinese investors after a new alteration was made to existing restrictions on outward investments from the country, providing a loophole to take advantage of. In this guide we’re going to explore this issue in more detail, offering statistics on Chinese investment in UK cities. 

    How to Build a Property Portfolio, Get Started Now!

    Tips on how to start building your property portfolio with tools for success.

    How Common is Chinese Investment in the UK?

    In 2013, it was reported that the UK was the most popular destination in Europe for Chinese investment. In 2017, however, there had been a significant drop in Chinese investment in UK cities. In 2018, levels of Chinese investment in UK property had risen again, causing the UK to become the most common country for Chinese investment in both Europe and North America. 

    How Much Does China Invest in the UK?

    Chinese outbound foreign direct investment in the UK reportedly stood at around $4.94 billion in 2018. This shows that during this time, China investment in the UK exceeded the levels of Chinese investment seen in the US which generated $4.8 billion. 

    This level of investment is unsurprising, as many foreign investors consider the UK as the best property investment location in the world, thanks to high rental returns and strong affordability compared to other markets.

    Chinese & UK flag merges into each other

    Huge £25,000 Savings

    Discount is now available on completed Greater Manchester apartments.

    More Chinese Investment in the UK

    China Cracks Down on Outbound Investment

    After years of rapid growth, in 2017 China’s outbound investment plummeted as authorities established new rules on overseas investments. Characterising deals as ‘irrational’ and ‘non-genuine’, the Chinese government campaigned to regulate investments and stabilise the devaluation of the Renminbi (Chinese currency).

    Overseas deals were suspected of being used to bypass capital controls and move money offshore, ultimately placing pressure on the yuan currency. The Chinese government released a crack-down on overseas mergers and acquisitions and taken diversified measures to increase scrutiny on outbound transactions and capital outflow.

    A crackdown on capital outflow has made it tighter for Chinese investors to deploy fresh capital abroad, causing uncertainty about their ability to do more overseas investment.

    The National Development and Reform Commission (NDRC) listed three categories of overseas investment: those that are banned (sex and gambling industries, and core military technology); those that are restricted; and those that are to be encouraged. Placed in the ‘restricted’ category were film, entertainment, hotels, sports and property, implying any proposed deal will have to encounter new levels of investigation. Chinese companies are prohibited in making overseas investments that are not associated with China’s national development, macroeconomic, international cooperation and foreign policies. Property investment forms the large base of these restricted assets.

    Background collage of Chinese Rmb bank notes

    Request Virtual Tour

    Receive the virtual tour for this 2-bedroom apartment today.

      New Rules of Overseas Investment

      In a newly released directive, the NDRC said that all foreign investment deals by Chinese firms, including those conducted by their overseas affiliates, must be reported through a new online, government-run information system.

      The new ruling closes the door on the defunct ‘irrational’ capital outflows, and now creates a route for Chinese investors to essentially reinvest cash in the UK as long as it is recycled from an existing property venture, or raised by non-Chinese banks.

      Beijing is seeking to negotiate a balance between encouraging outbound investment to support its ‘Belt and Road Initiative’, an immensely ambitious infrastructure development plan designed to boost trade and stimulate economic growth across Asia and beyond.

      One of China’s main intentions is to build a monumental amount of infrastructure keeping countries connecting around the globe. Proposed developments in the pipeline vary from a port in Pakistan, bridges in Bangladesh and railways to Russia. The ultimate goal is devising a vastly connected trading route that may ignite the start of a new era of globalisation – coining what China calls a ‘modern Silk Road’.

      A person standing on a globe

      Get Your FREE Liverpool Investment Guide

      Everything you need to know about investing in Liverpool, one of the UK’s hottest investment cities.

        The Future of Chinese Investment in the UK

        Chief Economist at Hong Kong-listed Zhongyuan Bank, specifies the new rules are about creating a clear operating framework for businesses seeking overseas expansion, rather than ‘simply blocking some deals’. A fundamental part of the new rules structure was retargeting deals that were once deemed ‘irrational’, after outbound investment in 2016 reached its pinnacle at US$170 billion, causing a depreciation in the value of currency (the lowest levels since 2008) and huge capital outflows, hinting at instability.

        Uncontrollable outbound investments were considered a ‘national security matter’ by President Xi Jinping, and close examination of the country’s top private sectors occurred. Wanda Group, China’s largest commercial property company, sought a buyer for its flagship property assets in London, valued at US$5 billion.

        Statistics from the commerce ministry specify China’s outbound investment in the first 10 months of 2017 fell 40.9% from the same period of 2016. In November alone, the total rose 34.9%, presenting a year-on-year increase of 2017. This was due to the recommencement of ‘normal’ deals after a blanket suspension.

        State approval from China will no longer be a necessity for any overseas Chinese investment in UK, relating to infrastructure or development, even if the funds are currently in China and not yet distributed overseas – reinstating access for Chinese investors to enter the UK property market.

        HONG KONG - JUN 19: Neon lights on Tsim Sha Tsui street on June, 19, 2015. Tsim Sha Tsui street is a very popular shopping place in Hong Kong.

        Secure 15% Deposit

        Only 15% deposit needed now, with nothing else to pay until February 2025 on luxury 2-bed apartments.

          Lifting the Floodgates for Investors

          If investors have already entrusted their money in UK real estate, they will now have an additional choice of trading and refinancing their current stock while reinvesting somewhere else without receiving consent from the Chinese authorities. This stimulates greater diversification into the asset class covered by the new exemption, including logistics, infrastructure and business parks.

          Research collated from Cushman and Wakefield highlights that Chinese investment into London has decreased exponentially with only £482m worth of commercial property transactions completed in the first quarter of 2018, compared to £7bn in 2017 ploughed into the capital from China and Hong Kong. The latest restrictions prohibiting outbound investment have had a detrimental effect and played a role in decelerating Chinese investment into London property.

          For the latest on the UK property market in 2024, take a look at our updated guide to Foreign Investment in the UK.

          RWinvest Liverpool Office
          Avatar photo

          Dale Barham

          Dale is a property content writer at RWinvest. Keeping a close eye on the UK property market, Dale helps our readers stay informed and up to date on the latest market news and statistics.

          Why Choose RWinvest?

          Here are three reasons to choose RWinvest for your next UK property investment.

          We have over 2,000 five-star Trustpilot reviews

          Multiple Award Icon

          We're a multi-award winning investment company

          We offer investments in the best buy to let areas

          Contact Us

          Contact Us

          Want to Get in Touch?

          Fill in the form to contact us today and a member of our award-winning property team will be in touch to help.

            I can honestly say they have put my mind at rest from day one answering all my questions I had , true professionals, I am not experienced in buying off plan or for a rental income but I have to say the process has been smooth from sales to Chloe in client care and now I’m handed over to the final stage for the site visits
            I feel very relaxed and happy with how amazing the team have been. I I can’t wait now to see the end built ! Thanks 🙏

            Kelly Webber

            Google Reviews Logo

            I have had the pleasure of experiencing exceptional customer service from RWinvest. Adam and Michelle were remarkable and were exceedingly supportive in facilitating the acquisition of two properties in Liverpool, at "The Gateway." Their guidance was instrumental in the purchase of the properties and I express my utmost satisfaction with their assistance, and I am inclined to not only endorse but also consider any property advertised by RWinvest.

            Narendra Rai

            Google Reviews Logo

            I am very happy and satisfied with RWinvest. Their team was always responsive, supportive and friendly throughout my investment process. Thomas from RWinvest team was especially very supportive and he made sure that I have all the necessary information at the right time. He helped me with all my queries, and helped me to complete my investment process smoothly and with peace of mind.


            Arrow left
            Arrow right