When the culture secretary Oliver Dowden MP announced the Government’s decision to strip the Chinese firm Huawei this week of its role in 5G he may unwittingly have begun an economic revolution.
“Any firms in hock to Huawei may find suppliers reluctant to grant more credit as the value of that UK business collapses following the Government’s U-turn on allowing them access,” said Ian Carrotte of ICSM Credit. “Furthermore I can detect an appetite amongst those in Government to now look at other Chinese mega investments such as Hinkley Point C power station in Somerset, Sizewell B power station, South West Trains and even the North Sea Oil industry. All have massive percentages of Chinese money in them and many MPs are concerned we’ve allowed a totalitarian Communist state to have a big stake in our infrastructure.”
He said he would not enter into the rights and wrongs of allowing the investment triggered by more than a decade of Sino-Anglo trade but if there is now a pull out of cash it would be SMEs and small businesses that would suffer. Although the slack would be picked up by non-Chinese firms in the long run he said.
Jobs and £7bn hit
Apart from around 1,500 jobs in the UK directly affected by a Huawei pull out the hit to the economy could be just under £7bn according to joint research within the industry while Dowden said the mobile phone industry itself would take a £2bn hit. ICSM Credit understands BT and Vodaphone who have been working with Huawei to install 5G will not be paid compensation.
Glee and Tik Tok
The potential for a further roll back of Chinese investments are clear with a 33.4% stake in Hinkley Point, a 20% share in Sizewell B, 30% share in SW Trains and Crossrail, 10% in Heathrow Airport, 9% in Thames Water, 25% in North Sea Oil production and major investments in Geely and Lotus – as well as the purchase of British Steel for £50m by the Chinese firm Jingye last year. And finally, there is Tik Tok – linked to the TV show Glee by Kesha’s popular song – the social media app beloved by millions and already banned in India.
The decision to drop Huawei by the Government is due to a variety of reasons reversing their earlier policy of allowing some infrastructure to take place in partnership with the likes of BT. America is strongly opposed to Huawei believing it is wrong to allow a Communist state to have a big stake in infrastructure in a democracy, then there is the USA’s trade war, anger over how China failed to alert the world quickly enough over the spread of Covis-19 and finally the way their Government has erased freedom of speech and protest in Hong Kong betraying the agreement with the UK Government.
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For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk