© The Financial Times Ltd 2015 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
February 19, 2012 8:16 pm
Dublin is courting Chinese investment by showcasing its low corporate tax rate and pro-business environment at an investment summit on Monday with Xi Jinping, China’s vice-president.
Mr Xi, who is almost certain to replace Hu Jintao as Chinese president later this year, is on a three-day visit to Ireland focusing on trade and investment.
The trip is a major coup for Dublin, which is recovering from an economic crisis and is seeking closer ties with Beijing to help it attract Chinese companies eager to access the EU marketplace.
“We want China to look at us like a bridge or gateway, where there is potential not just for investment by Chinese companies or investors directly but also at opportunities to build partnerships with investors in the US,” Eamon Gilmore, Ireland’s deputy prime minister, told the Financial Times.
Ireland’s small, open economy attracts one-sixth of all foreign direct investment made by US companies in Europe. These employ more than 100,000 people and are central to Dublin’s export-led recovery, which helped Ireland return to economic growth last year.
But Dublin has so far failed to attract significant inward investment from China, the world’s second-biggest economy. Just 13 Chinese companies have set up in Ireland since Dublin launched an Asian strategy in 1999. Ireland is ranked 18th out of 27 EU states in terms of Chinese investment, according to Rhodium group, a consultancy.
“We have a population smaller than Shanghai, so there isn’t much visibility of Ireland in China,” says Thomas Moriarty, co-founder of Firecomms, an Irish technology firm recently bought by Chinese investors. “Chinese investors also tend to be resource driven, most often in Africa. We don’t feature there.”
Mr Xi’s visit offers a critical opportunity for Ireland to build the type of political relationship that could translate into investment opportunities, Mr Moriarty said.
China holds the world’s largest foreign exchange reserves of around $3.2tn, and there is a debate in Beijing about diversifying some of these into hard assets abroad. The European debt crisis is seen as an opportunity to buy up assets in developed economies at bargain prices. In December, China’s Three Gorges Corporation bought a 21 per cent stake in Portuguese utility EDP.
Dublin is rolling out the red carpet for Mr Xi’s three day visit, which is the only European Union stop on an travel itinerary that includes the US and Turkey, writes Jamie Smyth.
Mr Xi was treated to a medieval banquet at a castle following his arrival on Saturday, and he was due to see the Irish dancing show Riverdance and performances of hurling and Gaelic football, the traditional sports.
On Sunday he visited a dairy farm in Clare where he inspected modern farming techniques and had a newborn calf named after him.
Dublin has pinpointed its fast-growing agriculture sector as a key area where it can boost exports to China, the world’s most populous nation.
Dublin’s announcement last year that it would sell state assets as part of its bail-out by the European Union and the International Monetary Fund may have caught Beijing’s attention. China’s sovereign wealth fund, the China Investment Corporation, visited Dublin late last year to assess opportunities arising out of the country’s deep economic crisis. Last week Irish officials were marketing the country’s government bonds in Asia.
Myles Lee, chief executive of Irish cement maker CRH, says there is more Chinese interest in Ireland than the country’s small size would suggest.
“Ireland offers a way into Europe. We are an open economy and have proved very friendly for inward investment,” he said.
CRH is one of 150 Irish companies to have set up operations in China – investments that help Ireland enjoy a trade surplus with China.
Mr Xi, who last visited Ireland in 2003, said on Saturday he would like to boost Chinese-Irish trade, which is currently worth more than €6bn.
“It is of particular importance for us to fully tap the co-operation potential in biotechnology, communication technology, agriculture and other priority areas,” he told The Irish Times.
Mr Xi will sign a series of bilateral trade agreements at Monday’s summit, at which several new investments by Chinese firms will be announced.
The aircraft-leasing arm of Industrial and Commercial Bank of China, one of the largest banks in the world, will announce an expansion of its Dublin-based subsidiary. The company issued a $750m bond in late 2011 to develop the business in Ireland.
“The competitive tax regime, legal system and skills attracted us to Ireland ... I think Mr Xi’s visit will help Chinese firms know more about Ireland and spur investment,” said Cong Lin, ICBC Financial Leasing’s chief executive.
Please don't cut articles from FT.com and redistribute by email or post to the web.
Sign up for email briefings to stay up to date on topics you are interested in