China Netcom, the state-controlled phone giant, is poised to launch in the UK, continuing the country’s “go global” push to create champions to rival US and European multinationals.

China’s second-largest fixed-line group will announce on Thursday plans to open a European headquarters in London. The group's president, Mr Yu Yongping and senior vice-president, Mr Jidong Zhao, are to travel to London for the launch.

The opening is thought to mark part of efforts to go head-to-head with players such as Cable & Wireless, offering voice-over-internet phone services and high-speed voice and data links for business.

The move by China Netcom, which has 114.48 million fixed-line subscribers and 18.4 million broadband customers, comes a year after China Telecom, the world’s biggest fixed-line telecoms group, launched into Europe.

UK and European companies are also vying for a foothold in the Eastern economic powerhouse.

Today Telefonica, the Spanish telecoms giant, said it is to exercise an option to raise its stake in China Netcom to 10 per cent, from 5 per cent, before the end of this year.

Telefonica, which owns O2, the UK's biggest mobile operator, brought a 2.99 per cent stake in the Chinese company in 2005 for €240 million, later raising it to 5 per cent for around €178 million.

BT also has a partnership with the Chinese group.

Last year a planned $5.3 billion acquisition by China Mobile of Millicom, the emerging markets mobile player, collapsed at the eleventh hour. China Mobile is thought to have got cold feet, worried not only over price but over its ability to control the sprawling Millicom.

However Chinese officials insisted at that time that the country’s “go global” expansion policy would not be hampered.

China Telecom’s service is focused on Chinese business customers looking to move into Europe and on European businesses expanding into Asia.

It has billed itself as the provider of an “information Silk Road” offering a phone route for traffic between Europe, China, Asia and the United States.

The ambitions of Asian telecoms players have already been felt in the mobile market, in which the established players, such as Nokia and Motorola, are feeling the heat from rivals such as HTC.

In 2005 Marconi, the remains of the former industrial conglomerate GEC, was forced to put itself up for sale when it lost out on a major BT contract to players including Huawei, which is based in China's southern region of Shenzhen.

Recently China Netcom unveiled results for the January-September period showing revenue of 61.03 billion yuan (£4 billion).