The Chinese have bought up huge swathes of British assets, including real estate, mining and steel, and the Bank of England is now warning of a bubble in global finance, according to the Financial Times.
China’s financial institutions are now in the process of buying up huge swaths of UK assets, according the FT, with a Chinese takeover of Britain’s biggest property firm at the centre of a growing crisis in the City of London.
The Chinese have been building up their business base in Britain, particularly the UK’s financial sector, by buying up properties such as London property firm Canary Wharf and London-listed company Lloyds Banking Group, according a new report by the Financial Services Authority (FSA).
China is now “buying up lots of British property”, the FT says, and is “taking advantage of the low rate of interest” to get a better return on their investment.
It is unclear how much the Chinese have already bought in Britain but the FT reports that China’s real estate market is “at a record high”, and is the biggest in the world.
As a result of the government’s move to tackle the issue, Londoners are being told to be prepared for a “bubble” in their local property market, with many locals reporting the feeling that they are being “borrowed”.
Chinese companies have also been buying up property in London and the north of England, including the property market in the city’s Kensington and Chelsea.
At the moment, there is little evidence of a “London property bubble”, but the Financial Conduct Authority is warning of risks to the City’s financial system from Chinese investors.
A spokesman for the FSA said: “The government has already made clear that a slowdown in property development in London would be a significant and serious concern to investors.”
We are now working with the government to establish how and when this could occur.
“The government will also be examining the possibility of “substantial capital gains tax” to help protect property investors from a “risky” market.
However, the FT’s report comes as a number of major global investors are warning that a property bubble is likely, particularly in China.
Investors in Hong Kong and Singapore have said they are worried about the possibility that a Chinese “bail-in” could happen, while US investors are also concerned about Chinese activity in the financial sector.
In January, the European Central Bank said that a potential Chinese “buyback” of UK real estate could cause a global financial crisis.
Earlier this month, China’s central bank warned that it may need to intervene if it is unable to “restructure” the economy in order to prevent a “surge” in debt.
Last month, Chinese President Xi Jinping visited a luxury resort in Hong