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Britain to Advise China on PFI

UK Treasury officials have gone to China to show them effective ways of private sector utilization in public projects such as construction of hospitals and schools as well as the adoption of private finance initiative (PFI).

george-osborneEver since the Treasury found in 2012 that many PFI projects were “tarnished by waste, inflexibility, and lack of transparency,” it had discouraged new ones. However, the Chinese have requested British assistance to overcome its struggles in overhauling its finances. The Treasury therefore is providing assistance on public private partnerships in general although reliable sources say that PFI is just one of several financial tools used to supply funds for infrastructure.

George Osborne considers the latest move as essential to the building of relations between UK and China.

The Treasury stated:

China, in common with numerous other countries, recognizes our commercial expertise in public-private partnerships. We have worked closely with key decision makers there to share our knowledge, further developing economic ties between the two countries and helping to open up new markets for British business.

The government of China has suggested that PPPs should be promoted as a solution to China’s financial problems in the hope that private investors, instead of the state treasury, will bear the burden of rejuvenating the country’s economy, which has recently taken a beating.

However, China’s interest in the financial activities of countries such as the UK does not necessarily mean that companies in those countries will be granted business opportunities in China.

Although Britain continues to hope that China’s interest in NHS function and structure will lead to the signing of deals, only a few agreements have been signed despite Britain’s best efforts to push its health services in China.

In 1992, the John Major government had thought of the PFI, but the Labor with Mr. Gordon Brown in the Treasury used it widely. Post 2010, Osborne created changes in the PFI model.

Osborne has been trying to find opportunities in China of late. In March, he signed up the country to the Asia Infrastructure Investment Bank of China. Although this move angered the US and was severely criticized by the Foreign Office, it received a warm welcome in China.

Beijing had frozen relationships with the UK when David Cameron was the prime minister, shortly after he met the Dalai Lama.

Xi Jinping, the president of China, plans to visit London in October, indicating that relationship between China and Britain is beginning to warm up.