China Looks to Expand Its Access to London Infrastructure

A company with close ties to the Chinese Communist Party (CCP) wants to control what comes out of the faucets of millions of Londoners. CK Infrastructure Holdings (CKI), a subsidiary of firm CK Hutchison, both based in Hong Kong, is trying to buy London’s Thames Water, which serves 16 million customers and is the United Kingdom’s largest water supplier.  

CKI’s demand to be included in the bidding process for the utility signals Beijing’s continued efforts to access Western critical infrastructure via state-connected firms.

What’s Behind the Bid

Thames Water has sought to find a buyer due to its struggles to manage its 20-billion-pound debt, cover large environmental fees, and persuade regulators to raise consumer rates. Though CKI had been excluded from bidding on Thames Water during a previous round of negotiations, on June 10, the firm reportedly requested to rejoin the process in a letter to Thames’ chairman.

While CKI maintains extensive holdings throughout the United Kingdom, including Northumbrian Water, Southern Water, and power generation stations, the firm has long maintained ties to the CCP. The previous leader of CK Hutchison, Li Ka-shing, was instrumental in the privatization of Chinese public assets during the 1990s, having supported the listing of major telecommunications firms and other businesses before falling out of favor with the party. The current chairman, Victor Li Tzar-kuoi, previously served as a member of the 14th National Committee of the Chinese People’s Political Consultative Conference — an advisory body to the CCP.

China Continues to Pursue Capacity to Exploit Western Critical Infrastructure

Beijing has sought control over critical infrastructure by relying on its stringent national security laws to compel state-linked companies to serve the CCP’s interests. In March, CK Hutchison agreed to sell an 80 percent stake in its Panama Canal port holdings to a consortium led by U.S.-based private equity firm BlackRock. The transaction came on the heels of significant political pressure from Washington due to concerns over CK’s ties to the CCP and its obligations to support Beijing’s geopolitical ambitions under China’s national security laws. Though CK denied any ties to the CCP, the firm was threatened with an antitrust review by Chinese authorities following the sale, which drew severe criticism from Beijing.

China’s behavior has also raised concerns over possible disruptions to — or intrusions on — critical infrastructure elsewhere in London — particularly using its proposed embassy to access underground fiber optic cables carrying financial information from the City of London to Canary Wharf. The two locations constitute the second-largest financial services center in the world. While a local borough council had initially denied Beijing’s bid to construct a new diplomatic compound, China has resubmitted its proposal, which is now expected to pass.

London Should Prevent China From Gaining Access to Public Utilities

The firm and government regulators should prevent CKI from participating in the bidding process. The sale would present a significant threat to the United Kingdom given China’s practice of pre-positioning vulnerabilities within critical infrastructure that may be activated during a crisis.

London should also consider blocking the construction of the new Chinese embassy at its currently proposed size and location and ban CCP-connected firms from purchasing other critical infrastructure projects.

Jack Burnham is a research analyst in the China Program at the Foundation for Defense of Democracies (FDD). For more analysis from Jack and FDD, please subscribe HERE. Follow Jack on X @JackBurnham802. Follow FDD on X @FDD. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.