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    A member of staff stands behind flags as officials arrive for the UK-China High Level Financial Services Roundtable at the Bank of China head office building in Beijing on July 22, 2016

    British PM in China – Economic Areas in Which UK-China Relations Could Improve

    © AFP 2019 / DAMIR SAGOLJ
    Asia & Pacific
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    As the political ramifications of Brexit play out in London, what are the likely areas of future cooperation with Beijing once Britain has gone out into the world beyond the European Union?

    British Prime Minister Theresa May continued her state visit to China February 1 meeting with President Xi Jinping in the Chinese capital seeking to affirm the "strategic partnership" between the two nations. The two leaders have agreed to US$12.8 billion (£9 billion) in bilateral business deals and a review of trade relations to prepare for talks on a post-Brexit trading relationship.

    "The UK and China are both global powers with a global outlook. Our relationship is indeed broad and deep and it delivers benefits to both countries. We're working together to tackle global and regional security challenges such as North Korea, threats to aviation security, to build sustainable economies of the future and enhance our bilateral trade and investment relationships and to develop our strong educational and societal links," the Prime Minister said at a press conference shortly after arriving in the Chinese capital.

    ​Britain enjoyed a long period of economic and colonial hegemony over China in the 19th and 20th centuries beginning with the Opium Wars of the 1840s which forced the country to open up to British exports, particularly of the wars' namesake narcotic whose criminalization was used as the pretext for British military action.

    While the island-nation's imperial heyday has long since past, its impending divorce from the European Union has had many considering the possibilities of future cooperation and enhanced ties between the economic and financial powerhouses at opposite ends of the Eurasian landmass.

    Industrial Development R&D

    The relative slowdown in China's economic growth in recent years has particularly caught the attention of the business community in Britain even before the public's decision to exit the EU in 2016. Beijing's increasing desire to focus on internal economic development and investment in high-technology industry rather than on mass-production using cheap labor was noted in a 2015 report by aerospace and defense company ADS.

    In it, the report advocates British industry, particularly the aviation sector, the second largest in the world, seek to exploit Chinese demand for high technology transfer and know-how so as to profit from the development of advanced Chinese industry rather than been outcompeted by it. In 2017 China successfully tested a prototype of its first domestically manufactured large civilian aircraft, the C919.

    Financial Services

    The status of the City of London as a premier global financial hub came under unprecedented uncertainty throughout 2017. Various European centers, Paris in particular, sought to lure financial institutions away from London. In November 2017 the French capital managed to snatch the hosting of the European Banking Authority from London, while President Emmanuel Macron has spent his first year in office cutting corporation taxes among other attempts to entice London-based financial entities to relocate to the continent.

    London however already serves as the major clearing center for the Chinese yuan, having displaced Singapore from that position in March 2016. It is a role that many in the business world hope will dramatically expand once Britain's divorce from the EU is finalized. As of mid-2016 the Chinese currency was the eighth most traded on the London Foreign Exchange markets, but has seen its prominence in international transactions dramatically expand since the inauguration of China's National Development Bank which seeks to play a key role in financing the infrastructure projects along its envisioned Silk Road to Europe.

    Overland Freight

    On January 18 the first freight train carrying cargo from the Chinese city of Yiwu arrived in Barking in the south of England after an 18 day and 5,770 mile overland journey through the heart of Eurasia. En route the line passed through countries ranging from Kazakhstan, Russia and Belarus to Germany, Belgium and France. The revival of overland trade across Eurasia has long been a goal of the Chinese government seeking to circumvent US domination of maritime trade routes. Despite the increased costs of moving cargo by land, it has proven more cost effective than air-freight and faster than travelling the same distance by sea. During her visit however, Mrs. May pointedly did not sign a memorandum of understanding signaling official British interest in joining the "Belt and Road" initiative of Chinese president Xi Jinping, reportedly causing some irritation among her guests. China has eagerly sought Western interest in its bid to link itself overland to Europe with nearly US$1 trillion in transport infrastructure investment.

    READ MORE: 'New Silk Route, New World Order:' First Freight Service To China Leaves UK

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    Tags:
    One Belt One Road, New Silk Road, Silk Road, free trade, Brexit, European Union, Xi Jinping, Theresa May, Eurasia, Germany, China, Europe, Russia, United Kingdom, Belarus, Belgium, France
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