Complacency on China risks bringing London ‘to its knees'

Yahoo

23-04-2025

London risks being 'brought to its knees' by the Government's complacency over Chinese investment in critical infrastructure, MPs have warned.
A cross-party group of politicians is calling for an investigation into CK Infrastructure Holdings (CKI) Ltd after it made a bid for Thames Water, the UK's largest water company.
They claimed the deal would make a company linked to the Chinese Communist Party (CCP) 'responsible for both keeping the lights on and the water running in the capital'.
It comes after the Government passed emergency legislation to keep the blast furnaces running at British Steel in Scunthorpe where Jingye, the Chinese owner, was accused of industrial sabotage in a bid to make the UK reliant on steel made in China.
CKI, which is based in Hong Kong, already owns the electricity distribution network for London, gas networks across England, Wales and Northern Ireland, and another water company, serving 2.7 million people, as well as a power station and multiple wind farms.
It will soon own 49 per cent of Vodafone-Three, the merged telecommunications company, and has recently bid for a major stake in Thames Water, which supplies water to 16 million customers in London and the South.
Despite growing concerns about the business being subject to increasing influence and oversight from Beijing since Hong Kong was handed over in 1997, Ofwat, the water regulator, has said it 'would prefer CKI remained at the table' as Thames Water's future is decided.
The private equity company KKR has been selected as preferred bidder for Thames, meaning CKI will only be given a chance to buy it if that deal falls through.
Victor Li Tzar-kuoi, CKI's chairman, serves as a member of the 14th national committee of the Chinese people's political consultative conference of the People's Republic of China, a political advisory body tasked with promoting unity, democracy and consultation under the leadership of the CCP.
His father, Li Ka-shing, a Hong Kong businessman, owns both CKI and CK Hutchison which owns assets in the Panama Canal. The business was admonished by Beijing over plans to sell this operation to Blackrock, a consortium owned by US investment company, after president Donald Trump criticised China's involvement in the strategic port.
Last week, Jonathan Reynolds, the Business Secretary, said that for 'any major Chinese industrial company, there are always direct links to the Chinese Communist Party'.
MPs have written to Pat McFadden, the Chancellor of the Duchy of Lancaster, to raise their concerns. The letter, seen by The Telegraph, reads: 'The trend is clear and alarming – Beijing is exerting ever greater direct control over CK Hutchison and related companies' activities.
'Any activity not in Beijing's interests is regarded as a hostile act and cause for state intervention. Allowing CKI to expand its UK presence without scrutiny sends a signal that the Government is not concerned by Chinese interference. It also risks putting the UK at odds with the Trump administration.'
Urging Labour to investigate the acquisitions made by CKI using its call-in powers under the National Security and Investment Act, the letter adds: 'A national security assessment is particularly vital in the case of the capital, where the electricity distribution networks owned by CKI, and the water infrastructure CKI aspires to own through Thames Water, are both critical to the functioning of Government, the military and the security services. Without power and safe drinking water, the capital would swiftly be brought to its knees.'
CKI's extensive reach into the UK's critical national infrastructure includes a 40 per cent stake in UK Power Networks, the UK's largest electricity distribution network, serving 8.3 million homes, and businesses in London, the South and East of England.
The rest of the company is owned by Power Assets Holdings Ltd, in which CKI is the largest shareholder and CK Asset Holdings Ltd, one of CKI's sister companies. The CKI-led consortium also owns Northumbrian Water, Northern Gas Networks, Wales and West Gas Networks and Seabank Power. The assets were acquired more than a decade ago, before China was widely regarded as a threat.
Under the National Security and Investment Act, CKI's acquisitions since 2020 could be called in if they are deemed to create the potential for 'disruption, erosion or degradation to critical national infrastructure'.
These include Phoenix Energy, the main gas distribution network in Northern Ireland, UU Solar, which owns 70 renewable generation projects, and 32 wind farms previously owned by Aviva Investors. The Vodafone-Three merger could also be investigated along with CKI's bid for Thames Water.
The letter, signed by Sir Iain Duncan Smith, Labour MP Blair McDougall, SNP MP Chris Law, Liberal Democrat MP Layla Moran and Lord Alton of Liverpool, comes as the Government attempts to pass the Cyber Security and Resilience Bill to improve the defences of critical services including power and water.
The National Cyber Security Centre recently assessed China as a 'highly sophisticated and capable threat actor, targeting a wide range of sectors and institutions across the globe, including in the UK'.
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