´óÏó´«Ã½

Panda diplomacy is worth more than just the cuddly toy sales at Edinburgh Zoo's gift shop.

When Adelaide Zoo gained a panda, visitor numbers went up 70%. The business model on the capital's Corstorphine Hill is conservatively estimating a 40% leap in revenue at the turnstiles.

Even when you've paid for the import of a lot of bamboo shoots to give Tian Tian and Yanguang something to chew on, that's quite a money-spinner. So when the ten-year loan of two pandas was today described as a gift, it's the kind of gift that carries the condition of a sizeable, but so far unspecified, donation to conservation projects on the pandas' home turf.

Panda diplomacy is also a sign that Scotland's and Britain's relationships with China are going pretty well, as vice-premier Li Keqiang brings 100 business leaders from Madrid, to reassure with Chinese support for Europe's economic recovery plans, and Berlin, where he sought common ground with a fellow exporting powerhouse.

Whisky imitators

Coming to Scotland, this was to build on cultural exchanges - setting up a Confucius Institute at Edinburgh University, and licensing Scotland for outbound tour operators, as the newly-rich business class take enthusiastically to golf.

That's been followed more recently by an agreement to protect Scotch whisky against imitators, signed off in November.

On Sunday, the vice-premier was checking out Pelamis's wave power technology with a keen eye. His visit was accompanied by a modest £6m deal for the W2E plant in Annan, Dumfriesshire, for work with a Chinese partner on sourcing energy from household waste.

But today, at the same time as the Chinese delegation signed off on the panda deal in London, the agreement with Ineos took the Scottish-Chinese relationship onto a wholly different level.

Until that, the most significant inward investment from China was to take over Todd and Duncan, a failing cashmere yarn company in Kinross.

There's no figure yet attached to the Ineos deal, but if it follows through by the target date in June, it will involve very significant numbers.

Debt challenge

Ineos is a private company created by entrepreneur Jim Ratcliffe in 1998, buying undervalued assets with leveraged debt, and lots of it. Taking on Grangemouth and Lavera, its sibling plant in France, was part of a $9bn purchase from BP in 2005.

Hitting the credit crunch, that debt financing became a lot trickier. With 7bn euros of debt, it's been under pressure to reduce it, particularly when the declining petro-chemicals market took it to seven times earnings. With refining and petrochemicals' recovery, it's since moved out the danger zone by reducing that to a four-fold gearing.

But finding the funding to keep investing in Grangemouth has remained a challenge, and that's where PetroChina has stepped in with a lot of money, and with ambitions to grow into one of the world's oil majors. Buying Grangemouth and Lavera refineries (not including Ineos' petrochemicals plant in the Forth Valley complex, or 40 others around the world) gives it a big footprint in Europe, processing 210,000 barrels a day in each.

A parallel strategic agreement between Ineos and PetroChina's parent company, to collaborate on petrochemicals technology, opens up other possibilities for Ineos to play a bigger role in China. In exchange, the English-based (soon to be Swiss?) firm has know-how in making acryolonitrile, used in carbon fibre production, at which China has been lagging its rivals.

Powerful symbol

And what's in it for Grangemouth? You can overplay the rhetoric about thousands of jobs being saved. The plant is a strong going concern, whether or not its owners are financial trouble.

But now it gets access to a significant source of investment, which Ineos hopes will extend its advantage over other refineries in cracking crude oil more efficiently, and with more output of valuable diesel.

As Scotland's biggest and most conspicuous industrial plant, its half-Chinese ownership will also be a powerful symbol of the new world economic order - its gas flares just about visible from the panda enclosure at Edinburgh Zoo.