City of London seeks cooperation with China on fintech

By Sun Wei in London Source:Global Times Published: 2019/7/10 20:23:41

The Lord Mayor of the City of London Peter Estlin Photo: Sun Wei/GT

Editor's Note:

The Lord Mayor of the City of London Peter Estlin is traveling to China on July 12 and 13, seeking to explore greater collaboration after the 10th China-UK Economic and Financial Dialogue held in London in June. Estlin will join discussions on fintech and future of the Shanghai-London Stock Connect in Shanghai, Hangzhou and Suzhou. Ahead of the visit, Global Times London correspondent Sun Wei (GT) interviewed Estlin (Estlin) at the Mansion House to seek his opinion on China's further opening-up of its financial market.

GT: What's on the agenda of your trip to China?

Estlin: It's very much to build on my last visit to China and also in fact the talks that we just completed in the Economic and Financial Dialogue between the UK and China. 

The focus is largely on capital markets. I'm going to look to continue the conversation around the Shanghai-London stock connect, and also the broader aspects of engaging with Chinese companies around issuance, IPOs, bonds, but also looking to continue to encourage UK businesses to go into China. I'll be meeting with a number of British businesses who are in China and encouraging them to be looking at these sorts of facilities. No specific contracts are lined up, but I never say never.

GT: You are going to attend Fintech summits in China. What kind of cooperation can China and the UK have in Fintech? 

Estlin: In terms of the agenda, I've got two big round tables on capital markets. On Fintech, we really get to continue the dialogue that we've already had on continuing to encourage British Fintech businesses to look to China for their expansion. 

But I'm also in dialogue with a number of Chinese businesses looking to them to leverage the UK ecosystem. One of the things that I think certainly in the conversations I've had so far, where a lot of Chinese businesses we got here in London, is encouraging them to tag onto the UK fintech ecosystem. It's very much an opportunity to build on those conversations and take them to the next level. 

GT: Chinese Premier Li Keqiang recently said at the Summer Davos Forum that China will bring forward plans to remove foreign ownership limits on financial companies, which means foreign ownership of securities firms, futures businesses, and life insurance companies will be allowed by 2020 instead of the original plan in 2021. What's your take on this? 

Estlin: We very much welcome that. As I said when I was there in March, the statements to be made, and the continued opening-up of China to the international markets is helping China's growth. Certainly when I was in China back in March, I had the good fortune to open the Eastspring Fund, which is part of Prudential, a 100 percent owned fund. And again, it's a further indication of China opening up its market, it is very encouraging and creates lots of opportunities I am very excited about. 

GT: China is committed to further opening up its financial markets. What does it mean to the world? 

Estlin: What it largely means is that China's market continues to expand. As it expands, the opportunities that it creates are for those companies to expand into international markets. It is part of raising capital and awareness by leveraging some of the international markets, particularly London, through an IPO, issuing equity or bonds. 

Let's not forget that London is the largest renminbi market outside of Asia. We host a 120 dim sum bonds here in London. We're very much looking to encourage more Chinese businesses to leverage the international markets and particularly London, but it's also an opportunity for me to promote China to the UK. And by going there I see firsthand opportunities that I can then relay back to the business community here to encourage it to look as they expand into Asia and look at China as their port of call. It's very much a two-way relationship and that's the important thing. 

The UK is an open economy and it's something that we have encouraged in China as President Xi Jinping has done a lot to promote an open economy. It's about capital and accessing the capital markets. It's also for developing trade and open trade as part of that. Eventually you know one sees from that the greater free movement of people. We get people coming into each other's country, that's healthy, and 42 percent of the London fintech market is comprised of international citizens many of whom are Chinese. That's really encouraging. 

GT: The Shanghai-London stock connect was launched during the Tenth Economic and Financial Dialogue and was hailed as a "ground-breaking" event. What's the stock connect's role in financial corporations between the two countries?

Estlin: As international businesses expand, one of the ways they do it is by accessing capital. In order to support that, it's very healthy to see that capital comes from the markets in which you are trading. 

The Shanghai-London stock connect has created that capacity. Following the launch, a huge amount of capital has been raised for that business through the London market. As the stock connect continues to develop and more Chinese companies join in to raise capital internationally, I hope we would get more British companies coming onto the Shanghai end of that spectrum, so they would then raise capital in Shanghai or through Shanghai from Chinese sources. That strengthens the economy and creates trade capacity. It's just another marker of the healthy ties between the UK and China. 

The trade volume in the first few days was 2 or 3 billion pounds ($2.5 or $3.75 billion). It's a huge number for individual businesses. 

GT: China's continuing investment in the UK is a vote of confidence for UK's financial markets. But is the financial market fully prepared for a no-deal Brexit

Estlin: The City of London has been very clear all along about its democratic decision to leave. We have argued for a smooth transition with the deal, and that's still what we argue for. We are business people, once we do not like the uncertainty created by the current situation, we also have to prepare for any outcome.

Therefore, our agenda has had to largely recognize the possibility, although that's not something we support. But at the same time, we're also focusing beyond Brexit, because the scale of innovation that's taking place in the UK in fintech, life sciences, cyberspace, creative and media industries, is creating a large number of jobs and huge investment opportunities. 

While Brexit is a short-term frustration, the long-term opportunities actually are in the areas of innovation and that is where the excitement lies. 

GT: Are you going to assure Chinese investors?

Estlin: I'm just a businessman, and I can't provide assurance. It's a political decision of the government as to how they decide to end up. But what I can assure investors of is the sheer scale of innovation in the UK creating real economic growth. It's creating job opportunities. 

The UK is at record levels of employment. We have seen innovation develop in the City. We're seeing record levels of capital coming into the market to drive that innovation. 

It can't give guarantees but the signs show that innovation is clearly being masked by some frustration around Brexit. We need to see a deal reached on the closure of Brexit, and then continue to move on to the wider agenda.
Newspaper headline: Taking stock


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