How China can help Britain reinvent itself

Tomas Casas says as it prepares to leave the EU, the UK will be hard-pressed to find a more strategic partner in trade and investment than China

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Published: 5:03pm, 4 Aug 2016Updated: 2:00pm, 1 May 2017

Compared to the referendum and the Brexit negotiations with the European Union, Britain’s pivot will be a painstaking process – and China’s role could be critical. Illustration: Craig Stephens

Brexit is forcing Britain towards an offensive to reposition itself, one that will only succeed with the help of new strategic foreign partners. The national business model underwritten by EU institutions is gone. Britons might have to save more, consume less and export more. Will creditors now be willing to finance Britain’s huge current account deficits at 5 per cent of gross domestic product?

Recent indicators show just how fast Britain must reinvent itself. Barely a month after the vote, the IHS Markit report points to an economy deteriorating, with both manufacturing and services contracting fast. The one bright spot is new export business. A pound down by 10 per cent hints at Britain’s new position. Compared to the referendum and the Brexit negotiations with the European Union, the pivot will be a painstaking process – and China’s role could be critical.

No margin for error as UK sets about sealing new trade agreements

The slowdown in global trade is most worrisome; the World Trade Organisation forecasts a sluggish 2.8 per cent growth for this year, the same as in 2015. Existing multilateral arrangements have run their course and ambitious new initiatives are all but dead. Jean-Pierre Lehmann’s post mortem examination of the Tran-Pacific Partnership and the Transatlantic Trade and Investment Partnership, recently in the Post, pointed to their original flaw: leaving out the world’s second-largest economy as the US did not want China to join the rule-making.

Fishing boats at berth in the bay of Gwadar Port in southwest Pakistan. China and Pakistan are set to build an economic corridor that is a major project under the Belt and Road initiative, to connect the port with Kashgar city in China's Xinjiang region. Photo: Xinhua

China’s one belt, one road initiative set to transform economy by connecting with trading partners along ancient Silk Road

China’s response to America’s initiatives is “One Belt, One Road”, an incipient development strategy and vision to integrate Eurasia. Today it is an assorted collection of arrangements between China and dozens of countries. Pakistan is being engaged in infrastructure and energy projects to the tune of US$50 billion; a new “World Bank” for Asia, truly multilateral, has been set up as the Asian Infrastructure Investment Bank; there is also the Bangladesh-China-India-Myanmar economic corridor.