Economists speculate on Brexit impact on China

By Li Xuanmin and Kou Jie Source:Global Times Published: 2016/6/16 0:33:00

UK, China could ink long-delayed FTA

A boat decorated with flags and banners campaigning for a "leave" vote in the EU referendum sails by the British Houses of Parliament as part of a "Brexit flotilla" on the River Thames in London on Wednesday. A rival flotilla (right), led by former pop star Sir Bob Geldof, clashed with the Brexit group, blasting them with music to drown out their rhetoric. Photo: AFP

As the UK's referendum approaches, concerns over the potential economic and diplomatic impact of Brexit on China have been mounting among Chinese scholars, with some suggesting that a British EU exit does not suit China's national interests, while others believe Brexit may offer new opportunities for China.

While overall Sino-EU relations will not be heavily affected by the UK's possible exit, experts noted that it will definitely make a dent in the EU's power position in the international political and economic arenas, as will complicate China's diplomatic relations with other EU countries.

"Brexit doesn't suit China's national interests, as China's diplomatic focus in Europe lies in Sino-EU relations," Wu Yikang, director of the European Studies Center at the Shanghai Academy of Social Sciences, told the Global Times on Wednesday.

"A strong EU can secure regional stability and development, and play a decisive role when it comes to international affairs. Brexit will weaken the EU's influence, leading to more member countries' possible exit from the union," he said.

China's economic relationship with the EU might also suffer a downturn after Brexit, experts noted.

Brexit will probably slow the economic recovery of the eurozone from its debt crisis, and the EU may in turn implement protectionist policies, like imposing higher tariffs on Chinese goods, Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Wednesday.

"Britain staying in the EU will benefit China most," Wu said.

"The UK has adopted isolationism as its diplomatic policy within the EU, so its political influence is relatively weaker than that of Germany and France," Zhao Junjie, a research fellow at the Chinese Academy of Social Sciences European Institute, told the Global Times. "Britain's possible exit from the EU won't affect Sino-EU relations that much, as long as China can keep its good relations with Germany and France."

Economic opportunities

Despite the impact of a potential Brexit on Sino-EU relations, some experts believe that Britain's exit from the EU may lead to booming mutual relations between China and the UK.

"New cooperation opportunities in various sectors, especially military, infrastructure and high-tech, will spring up in the post-Brexit period," Zhao said.

China's trade volume with the UK jumped from $63.1 billion in 2012 to $78.5 billion in 2015, and the UK has become China's second-largest trading partner among EU economies.

Given the increasing bilateral trade volume and closer economic ties, analysts envision positive prospects for China-UK cooperation after a British withdrawal from the EU.

"The UK's decision to initiate the Brexit referendum is partly due to the various EU laws and regulations, which uniformly applies to 28 European countries," Zhao said, noting that sometimes the rules deviated from the British government's economic agenda, and even inhibited the country's economic vitality.

Meanwhile, the UK government has recognized the significance of China to its economic growth and has long served as the engine to push forward Sino-EU economic ties among EU countries, Zhao said.

For example, British Prime Minister David Cameron has said many times the country's commitment to facilitate the signing of a Free Trade Agreement (FTA) between China and the EU bloc. Yet subject to pressures from other EU countries, negotiations have been extremely slow.

"The UK will actively look to sign the long-awaited FTA with China," Bai said.

"China will also reward the country with a stream of investments, both from State-owned and private firms, further reinforcing London's position as the second-largest global offshore yuan center," Zhao said.

Little impact on UK visits

The Chinese public, on the other hand, has shown much less interest on Britain's possible departure from the EU. Compared to the hashtag "The US election" on Sina Weibo which garnered 260 million page views and over 110,000 comments, the hashtag "Brexit" only garnered 2.3 million views and 631 comments as of press time.

Wu believes that Brexit will barely affect Chinese nationals, or hinder their access to studying, working or traveling in Britain. Aside from that, Britain is not a Schengen country, and its visa policies toward Chinese citizens are unlikely to change if it leaves the EU, Wu added.

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