London's Heathrow airport is one of the busiest in the world
China Investment Corporation (CIC), the country's sovereign wealth fund, has bought a 10% stake in the firm that owns London's Heathrow airport.
Heathrow Airport Holdings' other UK airports include Stansted, Southampton, Glasgow and Aberdeen.
CIC was set up in 2007 to invest some of China's foreign exchange reserves.
Despite concerns in other countries about Chinese access to key assets, the UK has been developing closer business ties with China.
"It is fair to say that the UK has a more open relationship with China than many other major economies," said Stephen Joske, senior manager at AustralianSuper, a pension fund based in Beijing.
"There is certainly push all around the world for scrutiny of Chinese investment - it has been ringing alarm bells.
"It is unfair to an extent, as these deals are a win-win transaction. Politics has been overshadowing economics."
British opportunities
This is CIC's second major investment in UK infrastructure. In January, it bought 8.68% of the firm behind UK utility group Thames Water.
The latest airports deal will see the fund pay £450m ($726m) for a 10% stake in Heathrow Airport Holdings Ltd, which was previously known as BAA Ltd.
Under the terms of the agreement it will buy a 5.7% stake in FGP Topco Ltd from Spanish firm Ferrovial for £257.4m. FGP Topco is the holding company which owns Heathrow Airport Holdings Ltd.
CIC will get the remaining 4.3% stake from other shareholders of FGP Topco Ltd at a cost of £192.6m.
The Chinese investment company is not the first foreign firm to buy a stake in the Heathrow holding firm.
In August, Qatar Holdings bought a 20% stake, and this deal is currently awaiting approval from European competition regulators.
China expansion
Foreign firms are increasingly looking at the UK for investment opportunities as the economic slowdown has pushed down the price of assets.
At the same time, problems in the eurozone have made the UK, which is not part of the European single currency, a more attractive and stable destination.
Earlier this year, Chinese telecoms and computer network firm Huawei Technologies said it was going to invest £1.3bn expanding its UK operations.
And while UK Prime Minister David Cameron said the investment showed that the UK was "open for business", similar moves in other countries have raised concerns.
Last month, the US claimed that Huawei and another Chinese firm posed a security risk and warned against doing business with them.
In a separate move, US President Barack Obama blocked a wind farm deal involving Chinese firm Ralls Corp, citing national security issues.
Australia, meanwhile, has previously blocked Huawei's plans to bid for work on its national broadband network.
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