"The United Kingdom's exit may reduce the effectiveness of using the yuan in the European region. China is worried about the potential impact on economic and financial areas of cooperation in the long term. The United Kingdom is a European offshore center for the internationalization of the yuan," Xiao Lisheng, a senior research fellow at the Chinese Academy of Social Science Institute of World Economics and Politics, said.
China has been striving to make the renminbi an international reserve currency since the late 2000s. In late 2015, International Monetary Fund (IMF) Managing Director Christine Lagarde announced that the yuan had received a status of reserve currency. The Chinese currency is set to officially become a reserve currency in September and is expected to contribute to the value of the special drawing right (SDR), which the IMF uses to price its emergency loans.
London remains a key hub for renminbi-denominated trade activity, accounting for over half of all transactions outside of China, according to the UK government.
London is also an important link in China's One Belt, One Road initiative focusing on boosting trade cooperation between China and the rest of the Eurasian continent, the expert said, noting that the United Kingdom's exit from the European bloc will have an impact on economic relations between Europe and Asia, as well as bilateral UK-Chinese relations.
China has already expressed its concern with Thursday's vote. Earlier on Friday, Bank of China Governor Zhou Xiaochuan said that the bank had been closely monitoring events in the United Kingdom, stressing that the IMF and central banks of countries impacted by Brexit needed to enhance coordination to protect financial markets.
"The United Kingdom's exit from the integration bloc is a blow to the European Union. Now, China will require more time to improve relations with the eurozone and the United Kingdom, which will have a negative impact on the Silk Road [Economic Belt]. Despite Europe being a global financial center, London is the foothold for the yuan's internationalization," Xiao added.
The United Kingdom also serves as a gateway for Chinese companies seeking to do business in Europe, Vanessa Rossi, an adviser on Global Economics and Finance at the Oxford Analytica consulting firm, told Sputnik.
"China finds it harder — as the United States often does — to make agreements and deals in continental Europe compared with the ease of doing business in the United Kingdom… So China might try to improve its relations in Europe outside of the United Kingdom but probably does not expect much from this beyond its existing market access. There is a good chance that the United Kingdom will remain a key conduit to the European Union even under Brexit," Rossi said.
London will, however, remain a global financial center despite Brexit and its consequences, according to the expert.
"London will remain a key global financial center even if its power reduces a little over time. It is difficult to rapidly reduce its leadership also because this rests on a very wide spread of professional services, as well as finance/banking, which all draw on a substantial pool of qualified labor," Rossi said.
So far, however, markets have been hit hard by news of the referendum outcome. The UK pound collapsed to its lowest value against the dollar since 1985 after plunging over 8 percent. The London Stock Exchange was down over 5 percent, while the Brent crude benchmark fell over 5 percent. The Bank of England tried to calm markets by pledging to ensure monetary and financial stability.
The views and opinions expressed in the article do not necessarily reflect those of Sputnik.