updated 4/15/2008 8:26:57 AM ET 2008-04-15T12:26:57

A Chinese investment fund has accumulated a stake of just under 1 percent in British oil company BP PLC, the company confirmed on Tuesday.

BP spokesman David Nicholas said that BP was aware of the stake, which had been built up over a few months.

“We are a publicly traded company and we welcome all shareholders,” Nicholas said.

British Treasury chief Alistair Darling, who is attending the inaugural China-UK Economic and Financial Dialogue in Beijing, said the government welcomed foreign investment and that it does not interfere in commercial decisions.

BP declined to name the investor, but The Daily Telegraph reported that it was the State Administration of Foreign Exchange, the same Chinese state fund that recently reportedly built up a similar size stake in French oil giant Total SA.

SAFE is an arm of the central bank that manages China’s $1.68 trillion in currency reserves.

“Our view is that investment from abroad, whether it’s private sector or a sovereign wealth fund, is welcome, provided it is done on a commercial basis,” Darling told reporters when asked about the BP stake after meeting with Chinese government officials. “We do not set any arbitrary limits.”

Asked whether the British government was worried that there was no transparency about the deal, given the identity of the Chinese entity has not been officially named, Darling said that disclosure was up to BP.

China has amassed its currency reserves, by far the world’s largest, as the central bank drains money from the economy to reduce pressure for prices to rise as money pours in from booming exports.

Beijing keeps most of its reserves in U.S. Treasury securities and other safe but low-yielding assets. But it launched a $200 billion sovereign wealth fund last year using money from the reserves in hopes of earning a higher return.

Darling said that Britain welcomed the creation of that fund last September and its potential for investing in Britain.

“London attracts more Chinese inward investment than any other location in Europe,” he said. “And there are now over 350 Chinese companies in the U.K.”

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