Brexit strategy

Updated: 2016-06-17 08:29

By Andrew Moody(China Daily Europe)

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Brexit strategy

How would China react to Britain leaving the European Union?

Britain goes to the polls on June 23 to make one of the most momentous decisions about the future direction of the country.

People will decide whether to remain in the European Union - where the UK, the bloc's largest economy after Germany, has been a member for 43 years - or to leave.


 Brexit strategy

Britain goes to the polls on June 23 to decide whether to remain in the European Union. The outcome could certainly have implications for Sino-British relations.  [Photo provided to China Daily]

Although the Chinese government remains neutral on such issues, the outcome could certainly have implications for Sino-British relations.

Those on the remain side argue ties could put in jeopardy the new "golden era" of relations cemented when Chinese President Xi Jinping visited the UK in October.

They stress that some of the trade and investment deals agreed as well the development of the City of London as the biggest offshore RMB center outside of Asia were partly predicated on the UK staying in the EU.

Those backing Brexit, however, insist that if the UK leaves the EU, it could focus on building a better independent trade and investment relationship with the world's second-largest economy as well as with India and the United States. China, after all, has still to conclude a free trade agreement and investment treaty with the EU after years of talks.

Some have also made the case that China prefers the UK to be in the EU because it has been a sympathetic advocate for the country's commercial interests, particularly recently over accusations of alleged Chinese steel dumping.

There are concerns also that if the UK left the EU, it could have implications for the 50,000 Chinese who currently study at Britain's universities.

Brexit strategy

Richard Portes, a professor of economics at the London Business School and a close observer of the Chinese economy, says a lot of the debate does not take into account the complexity of negotiating new trade agreements.

"It was estimated the other day that the UK would need 450 people to negotiate new trade agreements, and you just don't get these kind of people off the shelf. The reality is it would take a long time to do all this."

Portes, also founder and president of the influential Centre for Economic Policy Research, says leaving the EU would put at risk the progress the UK has made in attempting to build a new a partnership with China.

"A lot of the work that has been done would be severely undermined and it would be a big negative for the UK."

US President Barack Obama brought the complexity of trade negotiations to the fore in the debate when he warned on April 22 that the UK would be at the back of the queue in any trade deal with the US. It also brought into question where the UK would be in China's queue.

This had a short-term impact on the polls, with a sudden surge in support for the remain camp.

The precise trading arrangement a post-Brexit UK would have with China would partly depend on what leaving arrangements it negotiates with the EU.

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