China gets a link to our stock exchange

CHINESE investors are to be given a direct link to Britain’s stock exchange despite warnings the move could inject ‘volatility’ into our economy.

George Osborne, on a five-day tour of China, said he wanted to create a unique link between the London and Shanghai stock exchanges, to allow funds to flow both ways more easily.

The move, which would enable Chinese and British shares to be traded in both countries, comes despite fears about the fragile state of the Shanghai index, which prompted a global shock last month dubbed the ‘great fall of China’.

The Chancellor is pushing to make Britain one of China’s major trading partners – on the expectation the communist country’s growth is likely to stay well ahead of the EU’s.

This week he unveiled ‘subsidies’ worth £2billion to encourage Chinese investment in Britain’s nuclear power industry, and today he will announce £10million to fund the teaching of Mandarin in UK schools.

Mr Osborne said Britain and China should ‘stick together’ as ‘partners in growth’, regardless of concerns about the country’s economy.

But economist Linda Yueh said: ‘Chinese stock markets are down by 40 per cent this year … If you link up in this way you are directly transmitting the volatility of a country that is undergoing this dramatic transition.’

Former Lib Dem business secretary Sir Vince Cable said the Chancellor was ‘making a big gamble’, but Mr Osborne said linking the stock markets would mean ‘more jobs, more investment, higher living standards’.

Alex Brummer – Page 16