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China and the Chancellor

• Robert Peston
• 25 Jul 07, 01:00 PM

The press release put out by when announcing that the would be taking a stake in it was filled with statements about how much the leading British bank would be assisting this arm of the Chinese government to commercialise.

Barclays said it would help CDB to learn best practice in customer service and product development. CDB staff would be trained by the blue-eagle bank, which would also help CDB recruit top class people from around the world.

Further, Barclays’ managers would be seconded to CDB. And the Chinese would have access to Barclays’ sophisticated financial products.

Now in return for all that, Barclays gets a huge dollop of cash to pursue its ambition to buy and the tantalising prospect of incremental revenues from the enormous Asian market.

For Barclays’ shareholders all that may be a very good thing.

But is it good for Britain that one of our leading banks is transferring vast amounts of commercial know-how to the world’s fastest-growing and most fearsome economy?

Does it make sense for Barclays to help CDB transform itself from a non-commercial arm of a ruthless, undemocratic government into a potentially world-leading commercial bank?

And isn’t it a bit odd that there hasn’t been a squeak out of our politicians?

Indeed later today, Alistair Darling will say that this kind of investment is good for Britain – though he’ll add that he wants other countries to be more open to investments from British companies.

However think for a moment about what would have happened in Washington if a part of the Chinese state had made a similar kind of investment in or ?

There would have been uproar in Congress. There would have been all sorts of claims made about China attempting to steal valuable US skills and intellectual property in an attempt to dominate the global economy.

Just extrapolate from the frenzied US congressional reaction in 2005 to an of a middling US oil company, Unocal, by the and then add a bit more shouting and screaming.

Such US hysteria would be over the top. But isn’t it possible that the UK’s sangfroid about this kind of deal is also a little short-sighted?

There’s going to be a vast torrent of money coming from the Chinese state to buy British companies in the coming months, so surely it at least makes sense to take stock and think about the implications.

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