China is a potential winner if Britain and the European Union rework trade deals and look for investors after a British exit.
Beijing faces a blow from weaker European demand for its exports and pressure to hold its yuan steady in turbulent currency markets. But economists and political analysts say if Britain and the EU split, both sides will look to cash-rich Chinese companies that are expanding abroad — with the possible bonus for Beijing of closer political ties.
“One of the benefits China can gain from ‘Brexit’ is a stronger and closer economic relationship with the U.K. and even with the EU,” said Zhang Lihua, director of the Center for China Europe Relations at Tsinghua University in Beijing. “Both the U.K. and the EU need that kind of co-operation with China under the current circumstances.”
Chinese leaders urged Britain to stay in the 28-nation EU and have avoided mentioning possible benefits of a split.
On Monday, Premier Li Keqiang, the country’s top economic official, said Beijing wants to see a “united and stable” EU and a “stable and prosperous” Britain — a possible reference to concern the vote might inspire separatist sentiment in other EU members or parts of the United Kingdom.
“We are seeing increasing uncertainties in the world economy,” Li said in a speech at the World Economic Forum in the eastern city of Tianjin. “We need to jointly handle challenges, strengthen confidence and create a stable international environment.”
Europe is China’s biggest trading partner, and Chinese investors already see the region as more welcoming than the United States, where some acquisitions have been stymied by security concerns.
Chinese companies own France’s Club Med, the makers of Pirelli tires, Volvo cars and Weetabix cereal and football teams Inter Milan of Italy and Aston Villa of Britain. London is the second-biggest centre outside mainland China for settling transactions valued in Beijing’s yuan.
Britain has technology China needs as the ruling Communist Party tries to evolve beyond low-skilled manufacturing, said Lu Zhengwei, chief economist for Industrial Bank in Shanghai.
“China will benefit from industrial development experience in the U.K.,” said Lu. “I do recommend seizing the opportunity to establish China-U.K. free trade to enhance bilateral co-operation between the two countries.”
Mark Schlarbaum
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