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Wang Huiyao: A golden future for China-UK relations

Monday,Jan 29, 2018


Britain’s departure from the European Union leaves room for nations to enhance their ties and champion globalization

Beijing and London are passionate and eager partners in their mission to promote global trade and opening-up, especially during a period when strong headwinds face globalization across the world.

According to British media, the United Kingdom’s Prime Minister Theresa May will visit China in the near future. The visit will shore up bilateral ties. May’s government needs to secure a stronger Sino-UK relationship for its "global Britain" strategy after sufficient progress has been made in talks about Brexit, the country’s exit from the European Union.

Obviously, China, the world’s second-largest economy and one of the fastest-growing, is important for the UK’s interests. London now has more space and willingness to woo investment from China to balance the consequences of its departure from the EU.

As a financial hub on a par with New York, London eyes more capital from China, the second-largest outbound investor, to update Britain’s outdated infrastructure and motivate global business, while China will also utilize London as an overseas currency exchange platform during its RMB’s internationalization.

Business leaders from China seem confident in the UK as a safe and lucrative destination, a springboard for their global vision.

Despite domestic worries about the influx of Chinese money, the UK’s is still one of the most investment-friendly and dynamic economies.

According to a China Daily report, foreign direct investment into the UK from China more than doubled from $9.2 billion (7.5 billion euros; £6.5 billion) in 2016 to $20.8 billion in 2017. The figure is eyecatching and astonishing, considering the year-on-year one-third slump in China’s overall outbound investment due to tightened capital limits from both the Chinese government and foreign scrutiny agencies.

Instead of worrying about its role as a gateway into the EU after Brexit, the UK could play a bigger role in linking China and the EU if London can deal promptly with bilateral relations with the EU.

Exit from the EU will probably leave the UK more dependent on bilateral trade relationships, and thus a Sino-UK free trade agreement is more likely at this time, given the UK’s growing independence in decision-making. China also sees the UK as a breakthrough point for its FTA negotiations with developed countries and regions like the United States and the EU.

Moreover, the UK is now also a unique ally among the Western developed bloc for China in the process of taking on a major role in the world and advancing globalization, from which Beijing has benefited during its 40-year opening-up and since its entry into the World Trade Organization in 2001.

Thus China will hope for more support from the UK over its Belt and Road Initiative, like what it received during the foundation of the Asian Infrastructure Investment Bank, a China-led multilateral financial organization serving infrastructure construction in Asia.

Since President Xi Jinping’s visit to the UK in 2015, the Sino-UK golden era has escalated to a new stage, with more comprehensive political and economic pillars likely to be fortified during May’s forthcoming China tour.

It could benefit both governments and their peoples if the two countries accomplish more record-breaking strategic cooperation, business and investment projects and even a free trade agreement.

There are obstacles. May’s Cabinet still faces domestic pressure, as it has found in the case of the Hinkley Point power station and in China’s risk control and policy adjustment over outbound investment.

Notwithstanding, support for globalization has laid the groundwork for the two UN Security Council members to tackle the global issues of the 21st century.

 

About Author 
Dr. Wang Huiyao is founder and president of the Center for China and Globalization(CCG), the largest social independent think tank in China, and also a counselor to the State Council, China’s Cabinet.

 

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