The Chinese government owns a vast network of UK real estate via offshore secrecy jurisdictions such as Luxembourg and the Isle of Man, the Guardian can reveal, raising questions about Beijing’s grip on links in the UK supply chain.
Disclosures made as part of a new government register of property owned via offshore entities show that China’s investment division owns more than 250 properties across Britain via dozens of companies. They include distribution centres that are key to the flow of food and goods in multiple regions of the UK including the south-west and south-east of England and the Midlands.
The properties are all ultimately owned via the China Investment Corporation (CIC), which manages the foreign exchange reserves of the People’s Republic of China and is estimated to have more than £970bn of assets.
Land Registry records suggest that CIC has spent at least £580m on UK properties, although the true figure is likely to be significantly higher because some records are incomplete. While CIC was known to be an investor in UK property, the scale and detail of its purchases has remained hidden until now due to the use of a vast array of offshore companies.
The register, which brought the details to light, indicates that CIC has focused on distribution depots, retail parks and trading estates, including some that are critical to regional infrastructure.
The UK government’s new register of overseas entities was created to improve transparency around British property ownership and help the authorities ensure the right amount of tax is paid. Holding property through offshore companies is legal. Owners of property through offshore companies may do so for many reasons, from tax benefits to privacy or liking the stability or simplicity of a certain offshore tax regime. In the words of the government, offshore taxation is “complex”.
But ministers have concluded transparency around foreign ownership of UK property is an important step in improving the operation of the tax system. “Whilst the vast majority of people and businesses pay the right amount of tax, mistakes are made,” the government said in its explanation of why the register was being introduced. The register of overseas entities appears to be a big step forward in transparency, with thousands of owners, including the ones reported on by the Guardian, coming forward to declare their properties. All those named as beneficial owners on the register have complied with their legal obligations to declare their holdings. About a quarter of the companies making declarations so far still do not reveal their ownership publicly, because trusts are only required to give information on their beneficiaries to the tax authorities.
The Guardian has previously reported on offshore ownership of companies via leaks such as the Paradise papers and the Pandora papers, leading to governments including the UK government applying greater scrutiny to international tax affairs and offshore secrecy. The Guardian believes shining a light on the property in the UK held through foreign and offshore firms by rich, politically connected and influential people enhances that process of transparency and allows readers to better understand the power structures that affect their daily lives.
Chinese investment in the UK has been a source of concern and division within the government. Some MPs welcome the flow of cash into Britain, while others have raised security concerns about the role played by China and Chinese companies in strategic assets.
In 2020, the government ordered that the telecoms company Huawei be removed from Britain’s 5G mobile phone infrastructure before 2027, a decision that Beijing described as “groundless”. The government also went cold on plans for China General Nuclear to be involved in the building of a new nuclear power plant, buying CGN out of its stake in the planned Sizewell C project.
The former Conservative leader Iain Duncan Smith said it was concerning that so much of the investment was “disguised” via offshore companies. He drew comparisons with the attempted takeover of the UK tech company Newport Wafer Fab, which initially appeared to be the target of a Dutch company before its ultimate Chinese ownership was revealed. The government eventually blocked the deal on security grounds.
“You sometimes have to go back several links to discover who actually owns the company,” said Duncan Smith, who chairs the international Inter-Parliamentary Alliance on China.
“If they can buy that much, all sounding like important parts of the supply chain, it begs the question of why they’re doing this. This makes the case that we now need to have a strategic audit of the total amount of Chinese finance inside UK key areas, including universities, technology and supply chains. We’re way too open to the interests of Chinese companies.”
CIC and the Chinese embassy did not return requests for comment.
