UK companies need to take look at the world beyond Europe, senior HSBC economist says
Britain should boost ties with countries linked by China's Belt and Road Initiative amid uncertainty over its post-Brexit future with the European Union, a senior HSBC economist said on Tuesday.
"Although you have uncertainties with regard to Europe, you have certainties with regard to Asia," Stephen King, HSBC's senior economic adviser, said at an HSBC China forum in London.
He said UK companies need to look at the world beyond Europe, adding, "One of the reasons we put a lot of emphasis on the Belt and Road is that the perception and understanding of the Belt and Road is pretty thin." At the same forum, Chinese ambassador to the UK, Liu Xiaoming, emphasized the importance of UK-China financial collaboration and stressed Brexit uncertainties have not dampened Chinese firms' eagerness to invest in the UK.
The Belt and Road Initiative, proposed by Chinese President Xi Jinping in 2013, is aimed at growing infrastructure to strengthen trade and investment between Europe and Asia.
Liu said Britain could support the initiative with finance, expertise and experience.
So far this year, Chinese firms have signed nearly 4,000 engineering contracts in the Belt and Road area, worth almost $70 billion.
HSBC Group CEO Stuart Gulliver said British professional services companies can help investors to identify projects that are legal, feasible and sustainable.
Britain's growing interest in Belt and Road opportunities coincides with the internationalization of the renminbi, signaled by the International Monetary Fund's inclusion of it in its basket of special drawing rights currencies on Oct 1, a big boost toward its reserve currency status.
Using renminbi to finance trade and investment flows in Belt and Road countries is a core strategy of the initiative and London has used its position as a leading European renminbi offshore center to secure deals.
The latest figures from the People's Bank of China show London's renminbi-denominated business transactions in August were 60 percent higher than in July.
China Construction Bank cleared 10 trillion yuan ($1.5 trillion) of transactions between June 2014, when it was appointed as London's official renminbi clearing bank, and August 2016.
The chief European representative of People's Bank of China, Jin Mei, said the currency's inclusion in the SDR will have a major impact on its use internationally. Central banks and institutional investors globally will increase renminbi asset holdings, Jin said, adding that China will continue to make its domestic market more accessible to foreign investors.
This year, China liberalized foreign access to its domestic stock and bond market and foreign ownership of onshore government bonds has increased by more than$15 billion since March.
