While the European economic crisis appears to be gradually resolving, the International Monetary Fund (IMF) is insistent that the improvement being observed is not actual. Although the deficits of struggling economies such as Greece, Portugal, Ireland, and Spain are contracting, this is due to a collapse in imports as a result of the recession, not an increase of trade exports. The IMF has also taken note of lowering labor costs, but attributes the decreases to mass unemployment rather than pay cuts for workers. Consequently, even though economic indicators are showing signs of improvement, these events could be causing an even larger cyclical downtown for Europe. Since European banks have allowed large amounts of loans to be taken out, they too are unable to invest in businesses which might support infrastructural growth. As a result of this, the United Kingdom in particular is seeking help from international business partners to mitigate the issue.
Manchester Airport, the third busiest airport in the United Kingdom, is expected to receive an investment of £800 million from Beijing Construction Engineering Group in order to develop offices, hotels, manufacturing firms, logistics, and warehouses surrounding the airport. The development of the Airport City is projected to create around 16,000 jobs for the encompassing Manchester area and has caused government leaders such as London Mayor Boris Johnson and Chancellor George Osbourne to visit China in order to promote business in the United Kingdom and encourage relations. The managing director of BCEG Mr. Xing Yang even revealed that the company has been “looking to further explore joint infrastructure opportunities for some time”.
The surge of Chinese tourists in recent years could be an indicator of success for the project. In 2012, Boris Johnson stated that London saw about 104,000 Chinese tourists visiting the city, a 28% increase from 2011. As a result, the United Kingdom is seeking to simplify the visa application process for Chinese visitors. Currently, visitors can apply for a certain visa to visit Europe, but also need to apply for a separate visa to travel to the United Kingdom specifically. Fears of the Chinese traveling to other European countries are bringing attention to the need for an altered application process, as the UK is one of the top 10 nations that attract investment from China and these visitors could bring a multitude of business opportunities to the country.
Since most European countries are unable to develop and invest in new businesses of their own, the trend of international borrowing may begin to grow in the next few years. And while the economic growth of developing industries may prove to alleviate strain, will it be able to eliminate the mounting deficit? The United Kingdom will have to work diligently to create new jobs in order to decrease the over £900 billion debt they currently possess. In that respect, the money borrowed from China will additionally only add to this amount. This international deal has the potential to either salvage the United Kingdom from its less than desirable economic state, or further exacerbate the borrowing tendency that continually adds to its debt. Is receiving investments from China the proper way to deal with the deficit, or should the United Kingdom seek other methods?