Brexit a possible boon for China, point out analysts
Beijing, June 24
Britain’s decision to quit the world’s largest single market presents China with a golden opportunity to seek better business terms with a more isolated UK, analysts said today, pointing out that London has not had its own trade negotiators for 40 years.
“Now that the referendum has happened, I would imagine that China will be quick to seize the opportunities,” Guy de Jonquieres, senior fellow at the European Centre for International Political Economy, told AFP.
If a departing Britain fails to secure good trade terms with the European Union or other potential partners, he said, it would be ‘very vulnerable’ negotiating with China.
London and Beijing have both proclaimed a new ‘golden era’ of relations between the former imperial power — whose forces repeatedly invaded China in the 19th century — and the rising Asian giant, now the world’s second-largest economy.
Last year two-way trade between them reached $78.54 billion according to Chinese Customs — almost 14 per cent of China’s total business with the EU — with the Asian country enjoying a surplus of more than $40 billion.
A falling pound will of itself make Chinese exports more expensive in Britain.
But since entering the European Union in the 1970s Britain has had no trade negotiators, said de Jonquieres, noting that London’s eagerness to court China would give it ‘no leverage’ with Beijing.
“The British government has acted in a way that suggests it is prepared to a large extent to woo China hard if not indeed to dance to China’s tune,” he added.
“The idea that Britain on its own could negotiate a deal that gives it better access to China’s market is implausible.”
Geo-strategically, he said, it was ‘an extraordinary opportunity to peel off a very close US ally, in fact the closest US ally in Europe’.
Many foreign firms setting up in Britain in recent decades have done so partly to gain access to European markets, a benefit which could come under threat following Brexit, with clouds of uncertainty hanging over their future relationship.
“It will be hard for (China), as an investor, to consider and make strategies for the EU and Britain as a whole in future like how it did before,” Cui Hongjian, director of department for European Studies at China Institute of International Studies, told AFP.
But Chinese investors are very ‘acquisition oriented’ and will be looking out for bargains, said Christopher Balding, professor of political economics at Peking University HSBC Business School.
British Finance Minister George Osborne — a prominent Remain campaigner whose political future is now in doubt — has long sought to promote London as a hub for international trading of China’s yuan currency.
Britain was the first western country to issue yuan-denominated sovereign debt and China’s central bank issued its first offshore yuan denominated note in London in 2015.
But ahead of the vote John Goodrich, an editor for Chinese state broadcaster CCTV, wrote on its website: “An exit from the EU would likely jeopardise that status.”
London had the largest pool of yuan deposits in Europe, he said, ‘but the strength of the city as a financial hub outside the European Union is uncertain’.
Beijing respects the referendum result and was looking to the ‘strategic long-term perspective’ in its relationship with Britain and the EU, Foreign Ministry Spokeswoman Hua Chunying said today, adding: “A prosperous and stable Europe serves the interests of all.”
But hours after the vote a commentary on the website of the state-run China Daily newspaper estimated it would take 500 British officials 10 years to negotiate a new trade deal with China.