Watchdog closes office in China over red tape

A FINANCIAL watchdog has shut down its Chinese office with a broadside against bureaucrats who blocked attempts to export "gold standard" British financial examinations into the booming economy.

The departure from Shanghai by the Chartered Institute for Securities & Investment (CISI) will embarrass Whitehall after the recent high-profile British delegation to China led by Prime Minister David Cameron.

The visit, which included 40 British business leaders, followed efforts on the ground by Business Secretary Vince Cable and Chancellor George Osborne to expand trade ties with the world's second largest economy.

But CISI chief executive Simon Culhane said: "We've closed our China operation as, regretfully, after four years and considerable help from the British government and successive lord mayors of London, we have been defeated by the Chinese bureaucracy.

"Although the Chinese securities regulator has been welcoming, it has been impossible to obtain the necessary permissions from his officials, and as a body with high ethical standards we will not operate in a country without complying with their regulations."

Culhane said CISI's decision to quit the potentially massive Chinese financial market was particularly disappointing as almost 9,000 of its financial qualifications were taken outside the UK and "commonly regarded as the international standard for the securities and investment industry".

He added: "The key problem is that whilst at the highest level it may appear to be all agreeable, the Chinese are inherently protectionist and when the spotlight falls away, the bureaucrats take back control and gum up the works."

CISI cited "a very public trade meeting" in China, led by the then lord mayor of London, Sir David Brewer, when the British body, also the leading authority on ethics in the Square Mile, was given permission to offer its financial qualifications in the country.

"However, despite interventions by British ministers and the embassy, we could not convert the oral permission into written documentation, and so after three years of trying we reluctantly mothballed our operation in Shanghai," Culhane said.

Despite the setback, he said the ministerial visit to the country would provide "a genuine boost" to UK businesses' chances of winning Chinese contracts because China held government in high regard.

CISI, as well as offices in the City of London and Edinburgh, has overseas offices in Dubai, Dublin, Mumbai and Singapore, and is shortly to establish a presence in Sri Lanka.

Among the heavyweight business leaders who accompanied Cameron on the visit were David Nish, chief executive of Standard Life.

Standard announced more than a year ago that Chinese regulators were in "the final stages" of approving a partnership with Bank of China. The deal has still not gone through.