Sheffield has cashed in on the so-called “golden era” of relations between Britain and China, with a 60-year, billion-pound construction deal that is set to change the face of the steel city.
In the biggest Chinese investment outside London, Sheffield city council announced that an initial £220m would pay for four or five city centre projects over the next three years and create “hundreds if not thousands” of jobs in south Yorkshire.
The partnership is between Sheffield city council and Sichuan Guodong Construction Group, one of the biggest firms in China’s south-western Sichuan province.
The deal is seen as highly significant at a time of political uncertainty around Britain’s trading relationship with China following the vote to leave the European Union.
Julie Dore, leader of Sheffield city council, said: “This is the biggest Chinese investment deal to be made by a UK city outside of London. And perhaps more importantly, it is the first deal of its kind to be made by a UK city. This is a real partnership.
“The projects funded by this investment will be determined by Sheffield city council, and the 60-year commitment secures a stream of investment into our city for the next generation, and means a whole range of projects become viable because of the long-term nature of the relationship.
“At a time of unprecedented uncertainty and turmoil on the national political scene, we have taken the bull by the horns and led by example. We have the skills and the connections to drive economic growth in our city.”
Council bosses did not reveal which projects are to be funded by the first tranche of investment, insisting that “sensitive negotiations” are continuing.
It is thought, however, that the money will be used to fund the city’s first five-star hotel, as well as new office and leisure developments and both high-end and affordable housing in the city centre. The total value of the deal was “potentially billions” over 60 years, a council spokeswoman said.
The deal, which took 18 months to thrash out, is the biggest Chinese cash injection in the north of England to date and follows George Osborne’s oft-repeated desire to get the country’s financial muscle behind his “northern powerhouse” project.
Chinese officials have said they are open to launching trade negotiations with Britain in the aftermath of the Brexit vote, but there remains uncertainty about how Theresa May’s government will seek to do business with Beijing.
Experts have predicted the beginning of the end of the so-called “golden era” fostered by the former chancellor, who last year unveiled plans to make Beijing Britain’s second biggest trade partner by 2025.
Osborne was seen to have wooed China by stressing trade and investment rather than human rights. Experts believe that Theresa May and her chancellor, Philip Hammond, will take a cooler approach, albeit under greater pressure to strike trade deals with non-EU countries.
Next week, a delegation of Manchester’s business and civic leaders, including the council chief executive, Sir Howard Bernstein, and the council leader, Sir Richard Leese, will fly out to Beijing in an attempt to secure further Chinese investment in the city.
On Monday, executives will rub shoulders at Beijing’s Bird’s Nest stadium while watching Manchester United’s pre-season friendly against Manchester City.
The trip follows Chinese president Xi Jinping’s state visit to London and Manchester last October, in which David Cameron announced the launch of direct flights from Manchester – the UK’s second biggest airport – to Beijing.
Chinese investment in the north has followed Osborne’s overtures, though the Sheffield deal is by far the biggest cash pledge to date.
Last September, the Hualing Group agreed to invest a reported £60m in the building of apartment blocks at Middlewood Locks in Salford, the Thorpe Park business zone in Leeds and a digital campus in Sheffield in a deal with the developer Scarborough Group.
The Beijing Construction and Engineering Group (BCEG) has agreed to fund £4m to help kickstart the building at Middlewood Locks. The firm is also understood to have invested around £15m in St Michael’s area of Manchester city centre in a project spearheaded bythe ex-footballers Gary Neville and Ryan Giggs.
BCEG in 2013 spent £12m on a 20% stake in Airport City, a new commercial district close to Manchester airport whose construction would cost £800m to complete.
