The whole world has felt the shock of the UK’s cataclysmic decision to leave the European Union. In China, people are concerned most about how much the vote will affect the bilateral Sino-British relationship, which was declared as entering a golden era by leaders of the two countries only last year.

I don’t give much credence to the term “golden era”. Long before its announcement, China and Britain had built up cooperation in many areas. The two countries have been important trade and investment partners. Bilateral trade reached $80.9bn by the end of 2014; the UK’s direct investment in China amounted to $18.5bn by the end of 2013; since 2000, China has poured more direct investment into Britain than any other EU country. Former prime minister David Cameron began his second term last year with an expressed desire for a stronger partnership with China. Britain, at present, urgently needs to invigorate its economy after the grave international financial crisis. For one thing, the UK must attract more outside investment if it’s to improve and update its infrastructure. The City of London serves as one of the most important services centres in the world, contributing around 20% of Britain’s overall GDP and creating huge numbers of jobs. In the age of increasing global competition, Britain naturally wishes to play a leading role in financial and services cooperation with China, the second largest economy in the world.

After more than 30 years of rapid development, China faces vitally important reforms to create new patterns of growth by innovation. The country has had to transform its cooperation strategy from “inviting in” to “reaching out”. While China possesses the largest foreign reserves in the world, and Chinese enterprises are generally strong in production capacity and equipment manufacturing, the Chinese need more experience of international operating and have to explore wider business. As one of today’s great economic powers, China also feels it necessary to push for the internationalisation of its currency, the renminbi. All things considered, China finds that Britain, an old and experienced developed country, could be the right partner for this cooperation. Both powers, therefore, have come to recognise that strengthening their cooperation is in full accordance with their interests.

It’s no real surprise, then, that the leaders of the two countries reached agreement last October that China and the UK would build a global comprehensive strategic partnership for the 21st century and declared the opening of a golden era in the Sino-British relationship. We can clearly see the decision wasn’t taken on impulse, but out of a strong common desire and with common interests. Irrespective of Brexit, the fundamental elements and necessities for Britain to strengthen cooperation with China remain, with enduring and solid foundations.

“Irrespective of Brexit, the fundamental elements and necessities for Britain to strengthen cooperation with China remain”

But beyond any doubt, Brexit has caused uncertainties. First, we can’t be sure whether Britain can quickly resolve its internal divisions – mentally, socially and geographically – and realise some kind of basic national unity. The root cause of Brexit was a growing anti-globalisation populism in society, and if the British remain confused and divided on this issue for a long time, the negative influences of Brexit will be extended, affecting Britain’s ability to handle foreign relations coherently. Second, it’s also not certain the British economy can escape the dilemma into which it was thrown by Brexit and get back to a comparatively fair shape. If these difficulties endure or worsen, Britain will gradually lose its attractiveness to foreign business. But Britain is a mature country,
and quite experienced in dealing with a challenge.

People are generally still waiting to see what kind of result Britain’s exit negotiations with the EU will yield. A poor deal for the UK would mean yet more trouble, further weakening Britain’s position internationally. The negotiation will, of course, not be easy. Nevertheless, there is a mutual need for cooperation between Britain and the EU. There is reason for us to be hopeful of them reaching some kind of beneficial agreement in the end.

Some suggest that since Britain has placed itself in difficulty with the EU, the country will lean towards even closer cooperation with China out of economic necessity. But the new Prime Minister, Theresa May, has never been directly involved in Britain’s relationship with China. Her attitude to China is almost totally unknown. Nobody can say whether she shares the view of her predecessor and his closest ally, the former chancellor George Osborne. And May’s cabinet has few members with direct experience of working with China. Her early decision to postpone and review Cameron’s project for the Hinkley Point nuclear plant project, to which China agreed to commit huge funds, offers some indication of her hesitant stance.

It’s understandable that the most urgent and pressing task for May is managing domestic issues and relations with the EU. She cannot give too much attention at this time to Britain’s relations with
China. But I believe it necessary for her to nuture the relationship – given its importance to both countries – and the sooner, the better.

IMAGE CREDIT: CC / FLICKR – Number 10

Commentary

The golden era may have only just begun

Ma Zhengang is right to highlight concerns surrounding the future of UK-China relations in light of the Brexit vote, and the new global business relationships the country will be entering. Like Ambassador Ma, I believe wholeheartedly that irrespective of Brexit, the “fundamentals” for strong British cooperation with China remain. I equally share the view that long before the announcement of the Sino-British “golden era” the two countries had fostered and developed significant cooperation across many sectors.

The China-Britain Business Council (CBBC) remains confident about the prospects for the UK-China trade and investment relationship. Tremendous opportunities exist for British companies across China in a wide range of sectors and the UK remains a welcoming destination for Chinese investment. There are increasing opportunities for partnerships between British and Chinese companies around the world, not least those arising from the “One Belt, One Road” initiative.

The success of British companies in China is built on deep foundations of innovation and technological capacity, creative and trusted brands, and partnerships that have endured and flourished over many years. These are qualities that are respected and embraced in China and will continue to drive business relationships long into the future. The UK is also a long-established destination for globally-minded Chinese scholars, travellers and investors. The factors that drive this attraction – outstanding schools and universities, cultural heritage, history, corporate transparency and the rule of law – remain unchanged.

In this context, the UK very much welcomes Chinese investors and offers an open, transparent and stable investment environment. As Ambassador Ma rightly acknowledges, the City of London
remains the world’s most important financial centre and is now the largest renminbi settlement centre outside Asia. Around $61.5bn of renminbi is cleared on an average day on the London markets – a 143% rise since 2013. Britain’s legal system and world-class professional services offer stability and give confidence.

The principal industries and areas for cooperation include advanced engineering, advanced manufacturing, energy, innovation and technology, creative industries, retail, life sciences and healthcare. But investment is a major element too – even in English football teams, with Birmingham City, Aston Villa and Wolverhampton Wanderers all winning Chinese investment in recent months.

With this in mind, I would echo President Xi’s remarks at the G20, stating that China now stands at a new juncture. The international expansion of its enterprises, supported by the internationalisation of the renminbi, is a crucial part of its next stage of growth. Britain too stands at a new crossroads, looking to strengthen trade and investment partnerships with partners such as China following the decision to leave the EU. Both countries are presented with an opportune moment in time to work and advance together. The golden era certainly isn’t over already. Indeed, it may have only just begun.