The United Kingdom is giving China a window to the western world, by allowing them to operate Chinese state-owned banks in their country. CNBC reports these banks will be under 'new rules', that allow them to work independently. United Kingdom’s finance minister, George Osborne announced, this special treatment is
part of a personal mission to make London a significant Chinese offshore banking center.
Chinese banks have found it hard to deal with present UK regulations, and Chinese bankers began to turn their heads toward more cooperative nations, like Luxemburg. This prompted UK financial leaders to push legislation that would create a more “open door” financial policy towards Chinese-owned banks. This can really tie America to the financial stability of Europe. China holds the bulk of U.S. national debt.
The new UK rules:
loosen standards on “transparency, capital cushions and liquidity buffers.
Translation: seeing your operations, having cash in hand, and holding assets.
The cash in hand may be an issue, if China decides it wants to "cash in" on American U.S. Treasury securities. As of July 2013, the U.S. owes China over 1.27 trillion dollars.
There is no immediate threat this may happen, but the possibility of a U.S. default, is something both China, and 'now' the United Kingdom, would not like to see.
The UK would like to attract Chinese banks, in order to promote foreign investment and business. Pinsent Masons Out-Law reports the new rules will allow China to make direct investment using Chinese currency: in Renminbi (RMB) denominated shares and bonds.The Chinese banks will also be able to establish wholesale branches under the United Kingdom financial services regulator: the Prudential Regulation Authority (PRA).
Chinese banks already have a presence in London, but most of these have had to establish UK subsidiaries in order to do so.
The United Kingdom would like to advance its nuclear program and many of its domestic infrastructure with the anticipated investments.