China’s Silk Road should consider Britain as its ultimate destination
The early signs are that Britain will remain open-for-business with China while the EU may – without British input – become less outward-looking
Britain has every opportunity to be at the European end of China’s new Silk Road even though the United Kingdom has elected to leave the European Union, the so-called Brexit.
The bottom line is that Britain will remain open-for-business with China while the EU may, without British input, become less outward-looking.
In the first instance, and although it will not be straightforward, Britain and the EU will ultimately agree the terms of a post-Brexit trade deal. It is in the interests of both sides to reach a deal for economic, geopolitical and even military reasons.
At the moment, while Britain remains a full and participating member of the European Union, its influence is still felt around the negotiating table.
For example, EU leaders agreed on 21 October to look again at how the European Union can defend itself against what it sees as unfair trade practises, the alleged dumping of Chinese steel on EU markets being a case in point.
But sharp disagreements among EU member countries will likely make major change difficult to formulate, at least while Britain still has a say in matters.
British Prime Minister Theresa May was in the vanguard of those leaning against the imposition of yet higher tariffs on steel imports from China, arguing instead that EU leaders should not just consider their own steel smelters but also the interests of EU companies which use the metal and benefit from competitively-priced Chinese imports.
European Commission President Jean-Claude Juncker seemed unimpressed with the stance of those, led by Britain, who opposed higher tariffs, saying it might look as if “we are naive guys wanting to charm others.”
In a similar vein, while Britain continues to back China’s right to be allotted “market economy” status by the European Union, Juncker takes the view that such a designation needs to be preceded by the adoption of new trade defence measures by the EU, lest unimpeded Chinese access to EU markets excites anti-EU populism inside the bloc.
One thing seems certain. Once Brexit has occurred and Britain’s voice is no longer heard at the EU policy table, those who favour a more protectionist approach by the EU towards trade with China may meet with greater policy success.
Already, and this might seem odd given the success Germany’s exporters have had in China, Berlin seems to be increasingly cynical about Chinese companies making foreign direct investments in German firms.
Germany’s economy ministry recently withdrew approval for the proposed €670 million purchase of German chip equipment maker Aixtron by China’s Grand Chip Investment. The mooted sale of German firm Osram’s general lighting unit to Chinese buyer Sanan Optoelectronics is also said to be coming under renewed scrutiny.
That should make for an interesting agenda during this week’s visit by Germany’s Vice-Chancellor and Economy Minister Sigmar Gabriel to Hong Kong and China, and especially after Gabriel said at the weekend that “if China wants to get the market economy status, then it also has to act accordingly.”
In stark contrast, Britain is open for business and as the Asian Development Bank said on 19 October “Brexit offers the UK an opportunity to develop a more independent trade policy towards Asia that can play to its inherent and historic economic strengths and bring benefit to both parties.”
That’s particularly the case with China.
Britain’s new Prime Minister Theresa May did chose to take a second look at the deal for France’s EDF and China General Nuclear Power to build the new Hinkley Point C nuclear power station but then gave it her blessing.
Telecommunications and computer network group Huawei, whose overseas expansion plans have met suspicion in places like Australia and the United States, has found a welcome in Britain and significantly announced £1.3 billion of new investments in late June after the Brexit referendum result was known.
British and Chinese officials will meet in London in November at an event titled, “The next economic and financial dialogue.” Liu Xiaoming, China’s Ambassador to the UK, regards Brexit positively arguing, “We should seize the opportunities when they come along.”
In one area, opportunities have certainly come along. Investors from China and Hong Kong now dominate the football scene in the Midlands, Britain’s industrial heartland, owning four main clubs Aston Villa, Birmingham City, West Bromwich Albion and Wolverhampton Wanderers.
The signature tune of Birmingham City fans is “Keep Right on to the End of the Road.”
Keeping right on to the end of the new Silk Road should still lead China to choose Britain as its preferred investment and trade destination in Europe.