Xin Tang Ren News reported that a little-known Chinese company named ABP has overcome several bidders and won a special London government-approved project. 

The largest greenfield project named “ABP Asia Business Port” was signed by ABP with then London Mayor Boris Johnson in 2013. It is also considered an important project of China-UK cooperation.

ABP planned to spend 1.7 billion pounds (around 2 billion dollars) on building a third financial city in London at the Royal Albert Dock in East London in six phases with CITIC Construction, a holding subsidiary of CITIC Group as the general contractor.

However, there has been no significant progress in the three years since the project’s first phase was completed in April 2019.

ABP has failed to complete the development plan according to the contract since the city of London issued a final notice in August last year, requesting the company to confirm the date of completion.

London authorities finally terminated the development agreement and took back the land development rights.

According to Li Hengqing, an economist from the U.S., such a project is a ‘snowball’ development model of Chinese real estate. It has been extended to the West.

Li explained that in China, developers made a so-called blueprint first right after they got the land. 

Then, the developer did not start building immediately but used the land as a mortgage. This means he has pledged his project to the bank.

According to Li’s analysis, both clients and banks fully believe in the developer. At that time, the developer and the government were colluded to make real estate prices rise. As a result, the developer and banks made a lot of money. Then, whenever the developer invests in any project in the future, others will follow him. 

However, according to Li, Western countries’ situation is not similar to that of China. The strict regulations and supervision have increased the developers’ costs. 

Li supposed that the ABP project operates the same as in China by constantly borrowing from the capital market, growing with many projects, drawing a lot of money in. If the projects are successful, the developer makes a lot of money and investors also make money too. If he loses, investors will suffer the loss accordingly.  

Why the little-known ABP could win China’s largest overseas investment project in the U.K. remains unknown. Some British Parliament members also questioned the bidding process.

According to Xia Tian, a professor at the Aiken School of Business at the University of South Carolina, the success of a little-known developer in a famous international bid could involve such an official Chinese Communist Party agency. In addition, it could be attributed to the help of pro-communist Chinese in the U.K. He said that both cases are all worth considering. 

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