Truss vows to strengthen economic ties with Commonwealth to counter China's influence

British Conservative leadership hopeful Liz Truss has promised to build stronger economic and trade ties with Commonwealth nations to counter China's growing influence.

And the UK's National Security Adviser, Sir Stephen Lovegrove, warned of the "pace and scale with which China is expanding its nuclear and conventional arsenals", as he said the world was entering a "dangerous new age of proliferation".

"During the Cold War, we benefited from a series of negotiations and dialogues that improved our understanding of Soviet doctrine and capabilities, and vice versa," Sir Stephen said in a speech in Washington.

"This gave us both a higher level of confidence that we would not miscalculate our way into nuclear war.

"Today, we do not have the same foundations with others who may threaten us in the future — particularly with China."

Ms Truss would launch a “New Commonwealth Deal” aimed at strengthening economic relations with member countries.

Tony Blair urges western unity in face of China threat

Ms Truss's plan would hasten bilateral trade deals with Commonwealth partners.

Her campaign team claims it would greatly strengthen the Commonwealth trade cost advantage, which is already 21 per cent lower on average for trade with those countries compared with non-members.

“I will ensure the Commonwealth sits at the heart of my plans for Global Britain," Ms Truss said.

“As one of the largest groups of freedom-loving democracies, we must ensure there are clear benefits to remaining a member of the Commonwealth and offer nations a clear alternative to growing malign influence from Beijing.

“Prioritising trade with countries across the Commonwealth will strengthen economic and security ties whilst also turbocharging opportunities for British businesses to access one of the world’s largest economic blocs.”

A campaign representative said: “Liz believes the Commonwealth is vital to countering the influence of China and other authoritarian regimes seeking to undermine democratic values and freedom.

“She believes trade and investment has a key role to play in stopping the growing Chinese influence, where Beijing has used investment as a part of its ‘Belt and Road Initiative’.

“As prime minister, she will maximise all opportunities to strengthen economic and security ties across the Commonwealth.”

But Liberal Democrat foreign affairs spokeswoman Layla Moran said Ms Truss was merely “reheating old promises while ignoring the huge damage her government has done to Britain’s reputation abroad".

“As Foreign Secretary, Truss has helped to oversee savage aid cuts to our Commonwealth allies, pushing desperate people into poverty," Ms Moran said.

“It shows all the rhetoric about Global Britain is just empty words.”

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Key facilities

Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
Premier League-standard football pitch
400m Olympic running track
NBA-spec basketball court with auditorium
600-seat auditorium
Spaces for historical and cultural exploration
An elevated football field that doubles as a helipad
Specialist robotics and science laboratories
AR and VR-enabled learning centres
Disruption Lab and Research Centre for developing entrepreneurial skills

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”