Financial reform a boon for China-UK cooperation

Source:Global Times Published: 2018/7/30 22:53:39

Sherry Madera Photo: Sun Wei/GT

Editor's Note:

The UK's new foreign secretary is making his first overseas visit to China on Monday to seek discussions on post-Brexit trade relations with Beijing. This year also marks a decade of the City of London Corporation's direct presence in Beijing and Shanghai. Sherry Madera (Madera), the City of London Corporation's special adviser for Asia, talked with Global Times London Correspondent Sun Wei (GT) about the half year review of the City of London Asia Next Decade campaign, which launched on Jan 25 this year to create partnership opportunities for Asia and London, with green finance, fintech, and the opening of capital markets as three key trends. The interview may offer insights on the future of China-UK bilateral cooperation.

GT: How do you evaluate China's opening of the financial sector? Where are the opportunities for financial industry cooperation between the two countries?

Madera: For us, the biggest reforms that we're interested in are how is it that caps on foreign ownership are being not only increased, but completely removed in areas like banking, insurance, asset management, and also in some other interesting areas. And it's not only about ownership, but also the flow of capital, flow of money, and the quotas between the Shanghai and Hong Kong stock connect. We are thinking the London and Shanghai stock connect is going to happen this year. So how is it that we can continue with that trend?

GT: Fintech is becoming a key area for cooperation. What kind of support can the City of London offer cooperation between China and the UK?

Madera: I think that the role for the City of London in fintech is to make sure that our key organizations here in the UK are connected to the right organizations in China. We can help them find out what they want to know about international markets, what's happening with regulation, and where the new opportunities are. We're happy to be that middleman to play the role of a matchmaker.

GT: China and the UK will co-build a Fintech City in Xiongan New Area. Can you tell us why the UK decided to join and what kind of lessons or experience you could offer?

Madera: Well, I think it's a really good example of the UK getting it with China. If you just met China this year and someone said, "I'm going to put this much money in investment into a place that doesn't exist," you would say that's crazy. But actually we know China and we understand that there are some really important drivers that are going to ensure a success.

The first is the fact that it's based on really solid reasoning, which is that Beijing itself is just too big to manage. Creating that cluster effect within China of paired cities that have good communication between them, this is a big trend, and China with its population density is going to lead the way. We're very much supportive of the relationship that Canary Wharf Group has with Xiongan. When the Canary Wharf Group announced their relationship, they did it on the basis of understanding, and it's about creating a whole ecosystem of a CBD that you need. I also want to make sure that we don't forget that Xiongan is going to be a very green finance-oriented city as well.

GT: What's your view on the recent escalation of the trade war between China and the US. What do you think the effects are on the global economy and financial markets?

Madera: A year of trade friction between the two countries can only make people think of disorder. However, because those two countries are so large in the grand ecosystem of the global economy, I think it's right for us just to consider and listen to what's happening around the globe. I'm lucky because I spend half my time traveling in Asia and that includes, for example, countries in ASEAN and India, countries that are part of supply chains.

And so if we start thinking about how supply chains function, we've had such a good run until recently with an openness in global connectivity and global supply chains. So trade barriers don't just affect the target countries, they also affect the whole supply chain.

We're in an era of a lot of protectionism and lack of openness in terms of trade. The UK and the City of London are very open to trade. We've got 250 foreign banks in the city - it's perfect evidence of the fact that we have vastly more foreigners that are doing business here than British banks.

GT: What kind of positive and negative effects has Brexit had on the UK economy?

Madera: I am so lucky that I get to deal with Asia because if you think about the growth rates - for example, India at 7 percent, China at 6.8 percent - those countries have incredible growth in terms of GDP.  Being able to look at where the markets of the future are is a really important thing for us to keep in mind.

So if you talk about Brexit, where are the opportunities? Of course our relationship with the EU and our trade relationship is important, and that's why a lot of effort is being put in by our government and by our industry to be able to give guidance on something that's brand new.

And coming out of a trade union like this is unprecedented. So it's right to put some focus on that, but remember that we're not a UK financial center, not a European financial center - we are a global financial center.

GT: What kind of role will the City of London play in the further internationalization of the yuan and what are the current challenges or opportunities?

Madera: The City of London has been really well known at getting in there early and building knowledge about the yuan, and hopefully contributing to the growth of the yuan market here. So now we're the number one in the world for foreign exchange in yuan. So it's still incredibly important to us.

GT: A recent report by Financial Times said that there was some skepticism about the Belt and Road (B&R) initiative. A lot of projects have been obstructed. How do you see this phenomenon?

Madera: This is part of growing protectionism. It's a byproduct of that same sort of "us versus them" mentality, as opposed to just good trade.

There is skepticism about some of the initiative, but actually that's quite healthy in some ways, because what it means is it makes sure that all parties involved in infrastructure projects are really taking it seriously, and making sure that the financing is appropriate.

And I think some of those comments are coming out now that the B&R initiative is just starting to mature. It's been five years. You couldn't do this in 2013 and you wouldn't know what it is you're assessing. So now it shows that there's a maturity in terms of the project, but it's still very much like a startup.

It's going to be decades into the future before we really understand how the B&R initiative is influencing and impacting  transportation, energy and connectivity. So it may be worth doing like the saying: you measure twice and you cut once.


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