Brexit strategy

Updated: 2016-06-17 08:29

By Andrew Moody(China Daily Europe)

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"The Chinese are not that familiar with referenda. They feel that when Western countries hold them, they are running away from their responsibilities and giving way to populists."

Brexit strategy

Evans-Pritchard at The Daily Telegraph believes that if the British are to choose to leave, they will have to do so in the knowledge that not only the Chinese but many in Asia and elsewhere will also regard it as an act of "strategic vandalism" on the world order.

Most economic commentators regard it as one of the three main risks to the global economy this year, alongside hikes in US interest rates and a slowing Chinese economy.

"Not one of the Western democracies would be in any way sympathetic because it breaks up the international order. I don't think those advocating Brexit have faced up to all the implications of it. If you leave you have to do it with open eyes and be aware of how the world views it," he says.

Evans-Pritchard, a long time Brussels correspondent, says the only response after a leave vote would be for Britain to commit to being a country with a greater international outlook.

"You have to be more globalist if you take a decision to leave. You have to commit to the European convention on human rights. You have to show that you are not just resiling from the world and are not just some pariah. I am not sure the leave campaign have fully understood this."

Jonathan Fenby, a China commentator and historian and author of Will China Dominate the 21st Century?, believes the Chinese government would prefer the UK to stay in the EU.

"I must say this was the view of the Chinese officials and other people I spoke to on a recent visit to Beijing. If Brexit wins there would be a big push from the UK to establish a bilateral trade agreement with China," he says.

"The question then would be how Beijing would react to one middle-sized economy wanting to negotiate a bilateral trade deal when they are much more used to dealing with bigger entities like the EU."

Rana Mitter, director of the Dickson Poon University of Oxford China Centre, thinks some Chinese investment in the UK could be at risk if Britain does decide to leave.

"It will certainly force China to have a long, hard, serious look, and possibly in a negative way, about investment in Britain and there will be a clear reasons for this," he says.

"The first is that the UK might not be such an attractive place to invest because Brexit is likely to negatively effect the economy, according to the majority of economic analysts. And second, China has valued its relationship with Britain because it is relatively easy to do business with, partly because of it being a gateway to the European Union."

One of the major questions is whether the Chinese will still be keen on establishing London as the biggest RMB offshore center outside of Asia.

George Magnus, senior independent economic adviser to Swiss bank UBS in London,says this would largely depend on whether London was undermined as a financial center by a Brexit decision with a lot of its euro-denominated business moving elsewhere.

"If a certain proportion of London's financial business is shifted to Europe, there might be implications for the RMB business development that is currently envisaged. Beneficiaries might include New York, if not Frankfurt or Paris," he says.

Martin Jacques, the British journalist and author of one of the most influential books about China in recent years, When China Rules the World, says the major worry for China of a Brexit decision is having to deal with an unstable Europe in the aftermath.

"The consequences of the decision for China are simply not bound up with its relationship with the UK but more the wider impact on Europe, with all the various fragmentary, nationalist and nativist forces likely to come to the fore.

"It could make Europe a much more difficult place for a country like China to operate."

Portes at London Business School believes a Brexit vote could even also put in jeopardy the visa status of Chinese students.

Brexit strategy

The number of such students is currently greater than those from all the EU countries combined. One of the main aims of the Brexiters is to curb immigration, although primarily from the rest of the EU, into the UK.

"We don't know what sort of immigration policy the leave faction will want to impose. It is completely up in the air. It is likely to include some reduction in Chinese student entry, perhaps not to the major universities, but they could be tough on those wanting to enter some of the lesser institutions," he says.

For Evans-Pritchard, who has now declared in his column he is supporting Brexit, the importance of the decision goes beyond the UK's relationship with China and even short-term economic issues but addresses more fundamental questions.

"Whether you lose 10 percent of GDP and there is a terrible crisis afterward seems to be neither here nor there. If you are going to do it, you have to accept things are going to get a bit rough. Compared with the Battle of Austerlitz of 1805 (Napoleon's greatest victory in the Napoleonic Wars) and May 1940 when Britain stood entirely alone against an entirely Nazi-occupied Europe, it is small beer."

For British author Jacques, Brexit may not lead to any British rejuvenation but may have a much more fundamental impact on the global order.

By undermining one of the West's pillar institutions, the European Union, it could be an important staging post toward China having a more dominant position in the world.

"The West has never properly recovered from the financial crisis and the decision to leave would be a further splintering of the mainstream Western consensus. All this is taking place in a very new climate, where China is rising."

 Brexit strategy

From left, former mayor of London and Conservative Party politician Boris Johnson, moderator Aasmah Mir, Labour Party Remain campaigner Liz Kendall and Scottish National Party MP Alex Salmond take part in a debate on Brexit in London on June 14. [Photos Provided to China Daily]

 Brexit strategy

UK Independence Party leader Nigel Farage campaigns for Brexit in Sittingbourne on June 13.

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