Liu Xiaoming, China's ambassador to the UK. [Photo by Kevin Wang/chinadaily.com.cn]

Increasing investment from China represents a vote of confidence in Britain's future despite the "challenges" that Brexit might bring, said Liu Xiaoming, China's ambassador to the UK.

Speaking in an exclusive interview with China Daily, Liu also dismissed as "groundless and harmful" claims that Chinese investment poses a threat to the UK.

"Chinese investment in the UK is open and transparent," he said on Thursday. "Britain needs to be open-minded, inclusive and confident when it comes to foreign investment."

As the UK's Brexit Secretary David Davis continued hard talks with the European Union, Europe's chief negotiator?Michel Barnier has said there has been "no decisive progress" on key issues in talks.

"Brexit brings both challenges and opportunities, but there are far more opportunities than challenges," said Liu.

He said that for China and the UK's other trading and investment partners, the time after Brexit will be a period of "greatest uncertainty".

"As an optimist, I believe that after Brexit the UK will choose to be more open to the world, rather than lowering the portcullis and pulling up the drawbridge," Liu said. "I have great confidence in the prospects of China's investment in the UK."

Non-financial direct investment from China has now reached $18 billion in the UK, expanding from trade, telecommunication to new energy, high-end manufacturing and infrastructure. More than 500 Chinese companies have settled in Britain, more than any other European country.

Liu said Chinese investors help create local jobs and tax revenue and boost the UK's green and low-carbon development.

It is estimated the Hinkley Point C nuclear plant, in which China General Nuclear Power Corp holds a one-third stake, will lead to the creation of 26,000 jobs. Once complete, it is forecast to cut the UK's carbon dioxide output by nine million tons annually.

Liu said the rapid growth of Chinese investment in the UK is not led by the visible hand of the government, but by the invisible hand of the market.

"Chinese companies not only look for profits for themselves. They also look for win-win results so that business could last," he said.

Reports in some British media claim the UK government intends to strengthen its oversight on foreign investment, although no official announcement has been made.

President of the European Commission Jean-Claude has also been reported to be considering moves to manage foreign investments. An announcement could come in a major speech he is due to give on Sept 13.

Liu said he hoped the UK will have enough confidence to steer clear of protectionist measures and not regard China's investment through "cold war tainted spectacles".

He noted a key to Britain's continued success is its open and inclusive business attitude.

Liu said London's City financial district is renowned not only as the heart of the UK capital and the British economy, but also as a financial center of the world.

This status could not have been possible without the City's open, liberal and inclusive policies and environment.

The UK — "one of the most attractive investment destinations in the world" - should have the confidence to work with fast growing investment from China, he stressed.

He said he believes the UK's sound inspection and monitoring system for foreign acquisitions, underpinned by the UK Company Law, the Financial Services and Markets Act 2000 and other laws, should be a source of confidence.

"Both China and Britain need to take it rationally, avoid panicking and stay confident," Liu said.

China is now the UK's second-largest trading partner outside Europe, while Britain is the biggest destination for Chinese investment in Europe.

According to the Department for International Trade, China invested in 160 projects in Britain in 2016-2017, which was less than one-third of those invested by the US.

Liu said there remains great untapped potential for Chinese investment in Britain to continue to grow.