"China Investment Corporation, the second largest of the SWFs, has taken 2 to 3 per cent in a wide range of UK companies including 2 per cent in Barclays Bank so I see this activity building up and I think it’s to be encouraged."
Brewer, a former Lord Mayor of London, believes the reasons why the Chinese have chosen to invest in the UK are similar to the Japanese and the Americans, namely to gain an entry into Europe.
He said: "Not only did we give them attractive deals and stick to what we offered but also more particularly we then fought battles in Brussels when a Japanese company might have problems with quotas on motorcycles or television sets in the rest of Europe. I think the Chinese know that if they do come here they will benefit from that."
"They do realise that this is the place to have a window into Europe – to come to the City of London," Brewer added.
Describing the position of China in the world economic crisis at the Securities and Investment Institute's annual conference, Brewer presented a picture of Chinese government policy as essentially benign with positive implications for the UK and the international community.
However, he also hinted at the possible "worrying consequences" of high unemployment in China. When asked what the key risks to this apparently benign strategy, Brewer said: "Social unrest will be the real problem if it is organised and co-ordinated across the country. If that built up nationally then that would be a very worrying thing for the Chinese leadership."
He continued: "So far there have been some demonstrations in certain towns. They have either been to do with employment or more frequently when land that has belonged to peasant farmers has been expropriated by local officials not totally fairly and there have been some protests against that. That activity has been closely monitored by central government."
Brewer compared the political situation in China with Russia: "Over the years I have found Chinese businessmen and politicians have often ended a conversation by saying ‘we don’t want to be like Russia do we?’
"I think they saw what happened in Russia with glasnost and perestroika where the leadership let go of both the economic and the political reins with initially great enthusiasm from the population in anticipation of things getting better – more choices in the shops etc - then disillusionment set in when things hadn’t been moved further forward leading to demonstrations asking to bring back the good old days.”
He concluded: "I think that is why the Chinese do keep the political side very close to them. They can control that whilst letting the economic side loosen where people can make lots more money and start their own factories, for example."
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Sovereign wealth funds assets climb
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Peasant revolt in China - update
Data available on Trustnet Offshore indicates that a number of offshore funds that invest in UK equities have managed to deliver positive returns over the last 12 months.
Top five offshore mutual funds investing in UK equities over past year
| Fund | 1yr % in the fund's relevant currency |
| UBS (L) Institutional Key Select UK Equity AA | 23.7 |
| Quantum UK Absolute Income A | 13.6 |
| Insight Absolute UK Equity Market Neutral S GBP | 8.5 |
| HSBC Intl CSGF UK Growth II | 6.1 |
| Sanlam PSigma Inflation Plus A | 3.8 |
Source: Trustnet Offshore
By contrast, data available on Trustnet Hong Kong indicates that mutual funds available in the region which invest in UK equities have struggled to deliver over the last 12 months.
Top five Hong Kong authorised mutual funds investing in UK equities over past year
| Fund | 1yr % in the fund's relevant currency |
| Threadneedle UK Equity Income 1 GBP | -19.0 |
| BNY Mellon UK Equity A GBP | -19.0 |
| Fidelity United Kingdom | -19.6 |
| MFS Meridian UK Equity A2 GBP | -20.3 |
| Threadneedle UK Growth & Income 1 | -22.4 |
Source: Trustnet Hong Kong
Data available on Trustnet indicates that equity income funds available in the UK that invest in UK equities have also struggled to deliver over the last twelve months.
Top five UK funds investing in UK equities over past year
| Fund | 1yr % in the fund's relevant currency |
| Schroder Income Acc | -8.1 |
| Schroder Income Maximiser Acc | -9.7 |
| JOHCM UK Equity Income Ret Acc | -10.6 |
| SJP Equity Income Acc | -10.9 |
| BlackRock UK Income Acc | -12.9 |
Source: Trustnet
Meanwhile China's Vice Premier Wang Qishan said today that the global financial crisis is still spreading and the world economy is going to get worse before getting better. Wang said China and Britain should take stronger measures to stimulate an early recovery of the global economy.
"To overcome the current difficulties, it is essential to convert confidence into credit in the market and quickly recover functions of the financial markets," he said.
China's 4 trn yuan ($586bn) government stimulus package has produced initial results, Wang said, and there has been a "positive change" in the economy. "Things are better than previously expected," he said.
Wang is in Brussels for annual trade talks between China and the European Union. He told EU officials the Chinese government will send several business delegations to Europe to repeat a February shopping trip where they spent $13.6bn on contracts in Germany, Britain, Spain and Switzerland.