UK likely to pursue China FTA
Sooner or later, the United Kingdom, if it wants to remain competitive, will follow in Switzerland and Norway's footsteps to enter into free trade agreement talks with China after withdrawing from the European Union, experts said.
Wealthy non-EU member Switzerland signed a free trade agreement with China in 2014, and Norway is now in talks with China to reach a bilateral free trade deal.
Ma Yu, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation in Beijing, said the UK was Chinese companies' favorite European investment destination and has strong business and diplomatic ties with China.
"Under such circumstances, it shouldn't take long to complete China-UK free trade agreement talks if both sides want it to be done within a short period," said Ma.
"However, because the UK used to have a strong voice in Brussels, its withdrawal from the EU will raise China's time and resource costs in negotiating the China-EU free trade agreement and a comprehensive EU-China investment agreement with the EU without the UK," said He Wenwei, director of the research center for European and American studies at the China Association of International Trade in Beijing.
Trade of goods between China and the European Union amounted to $564.85 billion in 2015, while trade between China and the UK reached $78.54 billion, according to the General Administration of Customs.
Offshore RMB centers boosted
The status of Frankfurt, Luxembourg and Paris as offshore renminbi centers will improve significantly after the United Kingdom voted to leave the European Union, experts said.
Wen Bin, chief researcher at China Minsheng Banking Corp, said the status of London as a global financial center will be weakened after Britain withdraws from the EU.
"It will trigger an increase in the size and volume of cross-border renminbi transactions at the other three offshore renminbi centers in Europe, which will replace London, while China is pushing forward such transactions under the framework of the Belt and Road Initiative," Wen said.
He expects the renminbi to fall slightly against the US dollar but to remain relatively stable against a basket of currencies.
Zong Liang, deputy director of the Institute of International Finance at the Bank of China, said the British exit will also lead to Chinese banks that are expanding their business worldwide to readjust their global strategies by accelerating deployment in countries such as Germany and France.
Wen agreed, saying that huge business opportunities will emerge for Chinese banks in Europe, whereas their business in London may slow.
Sun Yu, president of Bank of China's London branch, said: "The Brexit will bring uncertainties to ... large international banks. Its impact on London as a world financial center will affect the future strategy of banks. Previously, all European banks used London as their business hub."
