Brown wants bigger piece of China action

CHANCELLOR Gordon Brown today shifted the focus of his China visit from the rescue of ailing MG Rover to the other key objective of his trip - winning a bigger slice of the financial services pie in the emerging economic powerhouse.

After hinting yesterday that potential Rover investor Shanghai Automobile Industry Corp could receive tax breaks to encourage its entry into the British car market, Brown today said in Shanghai that Britain would send a task force to China next month to help set up a corporate bond and derivatives market.

The Chancellor hopes that by assisting the fast-growing economy, British firms, including the London Stock Exchange, will snare more financial services work and secondary listings.

Brown said he would also like to see more Chinese companies listing on the LSE and Aim, following the lead of Air China, which raised £600m on the LSE and in Hong Kong in December.

'The UK's China Task Force - chaired by the Deputy Prime Minister John Prescott - is promotinga long-term commercial strategic-relationship with China including on financial services,' Brown said.

'And starting with a visit next month, the Task Force will work with China to establish a corporate bond and associated derivatives market, key elements of a deeper and efficient capital market.'

The LSE has benefited recently from a change of sentiment in China over secondary listings, which have previously gone mainly to New York.

But the LSE is increasingly seen as working under a more accommodating regulatory environment as Chinese companies struggle to understand the complex new provisions of the Sarbanes-Oxley Act in the US, aimed at addressing recent corporate accounting scandals.

Air China backed away from the US markets because of tougher disclosure rules. Bank of China and China Construction Bank are understood to have abandoned plans to seek listings in New York. China Life Insurance and China Mobile, which are listed on the NYSE, are having to contend with a litigious investor base.