Sheffield Council scraps 60-year Chinese deal after promised £220m investment never arrives

Sheffield Council leader Julie Dore signed a 60-year partnership deal with Wang Chunming, chairman and president of Chinese firm Sichuan Guodong Construction Group, in Sheffield's sister city Chengdu in 2016. Picture: Sheffield Council
Sheffield Council leader Julie Dore signed a 60-year partnership deal with Wang Chunming, chairman and president of Chinese firm Sichuan Guodong Construction Group, in Sheffield's sister city Chengdu in 2016. Picture: Sheffield Council
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Sheffield Council has scrapped a 60-year partnership agreement with a Chinese construction group after plans for £220m of investment in a series of city centre projects failed to materialise.

The authority announced what it described as the “biggest Chinese investment deal outside London” in July 2016 with Sichuan Guodong Construction Group with a pledge that a first tranche of £220m of funding would fund “four or five Sheffield city centre projects over the next three years”.

But with no schemes - including the idea of turning the city's Central Library into a five-star hotel - yet brought to fruition, the council today admitted no current projects will be brought forward and "there are no future plans or projects likely to be considered" with the organisation. It said Sichaun Guodong had carried out feasibility studies on several council-suggested projects but had found none viable for investment.

The council spent £40,000 courting Wang Chunming, the chairman of Sichuan Guodong Construction, but he has not invested any money in the city.

Council spent £30,000 on trips to China

Councillor Mazher Iqbal, Cabinet Member for Business and Investment at Sheffield City Council, was unable to say when the council last had dealings with Mr Wang but the businessman was sent a book outlining investment opportunities last year and did not respond.

Coun Iqbal said: “It looks like he is not interested in Sheffield any more.

“Sheffield provided five private sector investment opportunities for Mr Wang and, for me, it’s like any other negotiations we have. We were very hopeful that this investment would materialise and unfortunately it didn’t but that’s not bad news for Sheffield as he has not invested anywhere else in the UK.”

Coun Iqbal said news of the partnership agreement had "put Sheffield on the map and brought in a number of opportunities".

Golden era for Yorkshire/China trading

The council said today the planned partnership had been complicated by the Chinese Government's introduction of stricter investment criteria for private companies wanting to invest in real estate projects outside the nation. It added that "Guodong remain open to working on future projects in Sheffield if the right investment opportunities can be found".

Council bosses had said in 2016 the agreement would create “hundreds, if not thousands of additional jobs” at a time of “unprecedented uncertainty” for the UK following the Brexit vote which had happened the month before. Council leader Julie Dore hailed the agreement as "the first of its kind to be made by a UK city" and one which would "secure a stream of investment into our city for the next generation".

Days after the deal was announced, the construction group’s chairman and president Wang Chunming told the BBC that the investment capital was to come from unnamed private investors rather than the publicly-listed company.

He said: “Our publicly-listed company is not involved in this investment anymore, this investment is coming from our parent company and those financiers are not public.

“If we had used our publicly-listed company to invest the red tape would have been too complicated and time consuming. Not every shareholder understands every decision we make and the board might not have voted for all of our decisions.”

The first intended project put forward later that year was a plan to turn the city’s central library into a five-star hotel but the scheme never came to fruition after concerns about the financial costs of carrying out the work.

Earlier this year, it was revealed that Sheffield Council had spent more than £150,000 pursuing Chinese investors - including buying bags, rulers and bookmarks as gifts.

Between January 2016 and December 2018, there were 12 trips made by council officials - including leader Julie Dore and chief executive John Mothersole - to China as they pursued the Sichuan deal, along with other investment opportunities.

In March, the council’s former leader, Liberal Democrat peer Lord Scriven claimed the now Labour-run authority had been “plonkers” in chasing after “false promises” of investment with nothing to show for it.

Sheffield Council said at the time their work to cultivate links with China had resulted in a series of substantial benefits for the city, including local companies winning work in China, the city hosting the International Horasis Conference bringing British and Chinese business leaders together and an increase in the number of Chinese students coming to the city.

Penny Baker, leader of the Liberal Democrat group on Sheffield Council, said: “The truth always comes out in the end. Labour announced this deal in 2016 to great fanfare – they claimed it was the biggest deal outside of London. But right from the start, the numbers just didn’t add up.

“We know that the Labour council have been courting this investor for years. Tens of thousands of pounds of taxpayer’s money has been spent on flights to China – including a trip by the council leader Julie Dore. Senior Labour councillors need to take responsibility for misleading the people of Sheffield."

Additional reporting by Lucy Ashton