China’s top envoy to the UK said 2017 will be a year for consolidating the China-UK “Golden Era”, in spite of challenges that some Chinese businesses in the UK may face from Brexit, especially those in the financial industry and companies with EU headquarters in the UK.
“The China-UK relationship is now at a historic moment, and it is time to lock in what has been achieved and seek further progress,” said Liu Xiaoming, China’s ambassador to the United Kingdom, in an exclusive interview with China Daily. “There is huge potential to be tapped and bright prospects for cooperation.”
Liu made his remarks in tandem with the publication of a British government policy document on Feb 2 that clearly sets out the way in which the UK will be withdrawn from the 28-member European Union.
The white paper details 12 major principles, including the way the UK will control its immigration and arrangements for trade. The document is seen to be in line with British Prime Minister Theresa May’s vision of building Britain into “an independent, truly global UK”.
Reiterating China’s position on Brexit, the ambassador said: “We respect the choice of the British people. We respect Britain’s independent choice of its own development path. And we hope the UK and the EU will reach an early arrangement that is acceptable to both sides.”
He also said he is optimistic about the Brexit negotiations. “I believe, when there is a problem, there is always a solution.”
Brexit will not affect China’s confidence in its growing ties with the UK and the EU, Liu said.
His attitude is reflected in the increasing enthusiasm of Chinese businesses to invest in Britain and the EU.
China’s investment in Europe as a whole increased by 76 percent last year, and its direct investment in the UK’s nonfinancial sectors in 2016, from January to November, exceeded $1 billion. Additionally, the value of British exports to China has skyrocketed, increasing by 108 percent between 2010 and 2016, according to British government figures.
China is Britain’s second-largest trading partner outside the EU, while the UK is China’s largest investment destination in Europe.
Commenting on the strong momentum of China-UK ties, Liam Fox, the British secretary of state for international trade, said earlier that the UK was happy to see how China had positively greeted its “new place in the world” since the referendum on the EU in June last year. He said the UK had seen record levels of investment from China.
In an article signed by the ambassador that was published on Feb 2 in the Daily Telegraph, Liu said that, instead of a U- or V-shaped rebound of the Chinese economy, which is undergoing structural and supply-side reforms, the recovery will be L-shaped.
“This L-shaped curve means China’s economic growth, though slower than before, will sustain a steady speed,” he wrote in the opinion piece, which ran under the headline “Steady Chinese growth is lifting millions out of poverty”.
“That can be translated into more business opportunities for British companies,” he told China Daily. “The Chinese and British economies are quite complementary.”
Liu noted that the UK enjoys a leading role in high-end manufacturing, the services sector, pharmaceuticals and the biological and high-tech sectors. He said such advantages can help China improve its industrial structure and the quality of its GDP growth.
He also said Chinese business and investment that focuses on the UK domestic market, such as the automobile industry, infrastructure development, the real estate sector and service industry, will not be affected by Brexit.
“The British economy is performing better than expected, and the fundamentals in the UK are stable,” he added.
However, for Chinese doing business in the UK－especially those involved in the financial sector and enterprises whose European headquarters are in the UK－attention should be paid to policy uncertainties hovering around Britain’s relationship with the European single market, the settling of euro business and the perceived undercutting of London’s role as Europe’s financial center.
“Chinese companies in these sectors should take precautions,” said the ambassador.