(Agencies)
Updated: 2008-01-18 14:59

LONDON -- British Prime Minister Gordon Brown told China on Friday he was taking their relationship to a new level and that he wanted Britain to be the number one choice for Chinese trade and investment. 

British Prime Minister Gordon Brown (L) together with Chinese Premier Wen Jiabao stand to attention during a welcoming ceremony at the Great Hall of the People in Beijing, January 18 2008. [Agencies]

The global credit crunch has opened up great opportunities for cash-rich sovereign wealth funds in oil-producing and Asian nations, as Western banks seek billions of dollars of capital to shore up their balance sheets.

Britain has a bank in dire need of a rescuer, stricken mortgage lender Northern Rock, but a British official said Brown would not discuss the bank with the Chinese.

Brown arrived in Beijing early Friday and was scheduled to be greeted officially by Chinese Premier Wen Jiabao at the Great Hall of the People.

The two men are scheduled to meet British and Chinese business executives and give a joint news conference. Brown is also to have talks with China's President Hu Jintao.

British officials said that billions of dollars of business deals would also be signed during Brown's visit to India, where he travels after China, but gave no details.

They also see scope to expand trade with China and expect both countries to set a new target for two-way trade of US$60 billion by 2010 compared with about US$40 billion in 2007.

Sovereign wealth funds are state-run investment agencies generally used either to invest current surpluses for future generations, or to create larger returns than cash reserves.

"We have no difficulty with sovereign wealth funds investing in the UK," a British official said, "as long as these sovereign wealth funds operate on a commercial basis and are committed to the general principles of transparency and corporate governance that operate in the UK."

"We will welcome sovereign wealth funds to London."

A British official said there was no ban on sovereign wealth funds previously, but Brown would make it more explicit.

China's sovereign wealth fund, China Investment Corp., was set up last September. A third of the $200 billion initially entrusted to CIC is earmarked for overseas investments.

Britain and China will discuss how to develop their economic relationship, including through a "global prosperity pact" centered on commitment to open markets, a British official said.

Another official said: "What we are saying to the Chinese is we are in favor of an open world economy. It's important that the Chinese work with us on that."

He said Britain would press China to open its market in areas such as financial services where Britain is strong.

He declined comment on whether Brown would push China to revalue the yuan but noted "successive (British) governments haven't talked about currencies".

About 25 business leaders joined Brown on his trip to Asia, including the heads of private equity firm 3i Group, Vodafone, AstraZeneca, Barclays, Royal Dutch Shell, Virgin Group, Ernst & Young and Standard Life.