Tension looms large over Chinese enterprises about Brexit outcome

By Sun Wei in London Source:Global Times Published: 2019/9/17 17:13:40

A view of the first phase of ABP development, opposite City Airport on the northern edge of Royal Albert Dock in London on September 12 Photo: Sun Wei/GT

The much anticipated ABP Royal Albert Dock in London is shadowed by the uncertainties of Brexit.

The project is being hit by a dampened sales and lettings activities, although its £1.7 billion ($2.1 billion) development's first phase, which was completed earlier this year, has been placed in the top 10 percent of sustainable commercial building design after it was awarded an "Excellent" rating by sustainability body Building Research Establishment Environmental Assessment Method (BREEAM).

"We have delivered a high quality and highly efficient output, but the government hasn't honored its promise," Xu Weiping, ABP Chairman told the Global Times, adding that the uncertainties brought by the Brexit stalemate have made business partners and clients reluctant to make progress.

The crossrail, which is running two years behind schedule, is another case of the government's undelivered instance. The first phase of ABP was slated to match with the crossrail timetable, with the nearest stop only 3 minutes away; however, it turns out the crossrail project is delayed until 2021.

The Chinese property developer signed the deal in 2013 with then mayor of London Boris Johnson, to turn the historic Royal Albert Docks into an "Asian Business Port." 

The project was believed to regenerate the royal docks in east London, and become a platform for financial, high-tech and knowledge driven industries looking to establish and further business in the UK and European markets.  

Uncertainty kills

Brexit has been delayed twice, from March 29 to April 12, and then to October 31, the Anglo-Saxon festival of witches and pumpkins.

When Brexit was delayed for the second time in April, Catherine McGuinness, policy chief at the City of London Corporation warned, "Sustained uncertainty is leaving business with its hands tied, reluctant to make everyday decisions on recruitment, expansion and investment."

According to statistics from the Department for International Trade which was released in June, investment in the UK by overseas firms has declined sharply in recent years, with the number of new projects in the UK dipping by 14 percent in 2018-19, and the rate of job creation falling by 24 percent.

A Reuters poll in August further pointed out that Britain's deepening political crisis will weigh on London's blue-chip stocks index FTSE into next year, as investors continue to steer clear of the region's assets. The poll highlights the extent to which Brexit worries are gripping all British assets.

Xu Weiping emphasized that Brexit itself is not frightening, but uncertainty kills. The investors' confidence is being consumed by the uncertainties cast by the Brexit mire. 

Peter Ren, chairman of the British Chinese Entrepreneur Club, told the Global Times that the impact of Brexit on Chinese enterprises in the UK is not particularly huge. "The greater impact comes from the fall in value of the British pound, which is a by-product of Brexit." 

Ren added that Brexit was not a good news, while a no-deal Brexit would be the worst of the lot especially in the short term. A hard Brexit will impact everybody's daily life in the UK with the disruption of food and medicine supplies. 

No-deal Brexit would trigger a year-long UK recession in just a few months' time, the Office for Budget Responsibility predicted in July 2019.

In terms of impact on small and medium-sized enterprises, the shortage of workforce might be a problem, but the British Prime Minister Boris Johnson recently announced a new policy that will grant a post-study work visa to the international students, thus allowing them to stay in the UK for two years to find work after graduation. The new visa policy will come into effect from next year. "That might mitigate the impact," Ren added.  

Halloween Brexit

Johnson met on Monday with European Commission President Jean-Claude Junker in Luxembourg. Johnson insisted the UK would exit the EU at the end of October, with or without a negotiated agreement, in line with his first speech of "do or die" at No. 10 Downing Street.

A week back, a new law was passed by the British parliament that compels the prime minister to seek a delay until January 31, 2020, unless a deal or no-deal exit is approved by MPs by October 19.

Johnson emphasized that he would not carry out Parliament's instructions to ask for another extension, saying, "This is something I will never do."

As of now the Parliament remains suspended until October 14, in accordance with a process known as proroguing. 

Stephen Perry, chairman of the 48 Group Club, told the Global Times recently that nobody knows exactly what will happen on Brexit. Perry said there will be ups and downs in the short term, but he is optimistic about the medium term. The UK is going to be close to Europe, close to the US and close to China.

"I think the British must stay determined to stop war in Europe and build a successful European continent. Some people may think that we have a different type of Europe but if we're all committed to a peaceful Europe, then we will have a nice time ahead," he said.

Perry believes it's pertinent for the Chinese investors to invest in London because London is the world's biggest financial center outside the US. And "it's a place where it's easy to invest." There is going to be some tensions of security and other issues, but the UK will continue to be a country that depends upon foreign investment. And the biggest foreign investor in the world is China. 

Xu believed that London was a natural choice for Asian companies to gain access to Europe and the rest of the world, and he still believes so. "Because London is best positioned and experienced in growing a global business," Xu said, adding that London has favorable time zones, access to banks and finance, regulators and government bodies, and world's leading universities and talent.

But the policymakers need to be held accountable to boost investors' confidence, he added.
Newspaper headline: Crisis brewing


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