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    Election shock could have a silver lining

    By Mike Bastin | China Daily Europe | Updated: 2017-06-16 08:41
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    Far from harming the UK's relationship with China, the recent poll turmoil might have some highly beneficial effects

    The recent UK election has not just resulted in a hung Parliament, in which none of the major political parties has an overall majority. It has left the country's business community in a dreadfully uncertain and unstable state.

    The election outcome has also thrown the imminent start of Brexit talks into absolute turmoil. Never has a country been more in need of stable and strong leadership.

    UK and European business leaders have further clouded the situation with very public pleas for clarity and direction.

    Out of this murky morass, can we see even the slightest ray of light? Unequivocally, yes.

    At the governmental level, the UK now, more than ever, needs to look far beyond the shores of mainland Europe to build effective bilateral ties. Nothing will pacify the UK-and even the European business community-more than very public announcements, very soon, detailing trade deals with the governments of emerging and fast-rising countries.

    Sino-UK trade deals and overall government relations should now take center stage in any Downing Street foreign policy discussions. By so doing, the UK government will also bolster its position with the EU in any Brexit negotiations.

    Minority governments and any consequential cross-party coalitions, regardless of the mix of political persuasions, need not necessarily project a negative, indecisive and weak image to the markets and the international business and investor industry.

    But they do leave themselves easy prey to such media coverage unless they counter quickly and repeatedly with tangible, concrete international trade and investment deals.

    Right now, the UK government, despite its beleaguered position, should be preparing to publicize policies aimed at attracting further non-EU investment. The less-than positive business and economic effects of any negatively perceived Brexit negotiation outcomes could then be countered with very public announcements of major inward UK investment.

    And there is no better place to start than Asia - and China in particular. Since Brexit, it has become clear that the UK is now China's favored trading partner in Europe. Property and infrastructure investment continues to flow into Britain's cities from China.

    China remains comfortably the UK's largest trading partner, in terms of both imports and exports, outside Europe and the United States. From January to November 2016, the value of UK imports from China reached a whopping ??35.65 billion ($45.38 billion; 40.45 billion euros), just pipping the US. UK exports to China for the same time period also rose to a more-than-respectable 12.18 billion, a figure significantly higher than those of major European economies such as Italy and Spain.

    One of the few "freedoms" that Brexit will bequeath to Britain is the opportunity to grant Most Favored Nation status to its most attractive trading partners.

    Since the outcome of the Brexit referendum was announced last year, investment from China has not only continued to roll in but has done so at an ever-increasing rate. So one immediate initiative the current UK government could consider is granting MFN status to China.

    Such a gesture would foster an increasingly symbiotic trading relationship between the two countries.

    Furthermore, the UK government could also consider establishing an emerging market ministry, with a brand new department being set up in order to focus exclusively on non-EU trading relationships and deals. Of course, China would receive high priority here, and the new department would create a clear point of contact for the management of Sino-UK government ties.

    All things considered, there is no reason why Brexit should lead to anything other than an even stronger relationship between the UK and China, at both government and business levels.

    Because of this, it is in the EU's interests to work closely with the UK in forthcoming negotiations and never lose sight of ever-closer Sino-UK business and government ties and the consequential benefits these bring to the entire continent of Europe.

    It is clear that Chinese business appears more and more comfortable with investment opportunities in the UK, and the UK business community is also warming to doing more business in China.

    Infrastructure and property account for most of the recent Chinese investment in the UK. Chinese business leaders across a wider range of industries are publicly voicing plans to penetrate European markets, with the UK often cited as the natural starting point and initial steppingstone.

    Brexit, even if it leads to the UK exiting the Single European Market, does not necessarily diminish the appeal of the UK to Chinese investors, who may still see the UK as the best stepping stone.

    Brexit negotiations, therefore, are not just about the future trading relationship between the UK and the EU. The EU needs to understand and accept the UK's role as a beacon for Chinese investment that could very soon spread - but that could also dry up if negotiations lead to a casting aside of the UK economy, making it little more than a vassal state.

    The EU would be adopting an extremely risky position if it assumed that Chinese investment In the UK economy could switch seamlessly to major European economies, should Brexit negotiations result in any kind of impasse.

    It may well be the case that a divided House of Commons, as a result of the recent election, could lead to closer relations between China and Britain. Sino-UK relations should now include representation from a number of political parties, not just the largest one.

    Generally, more collective decision making will now take place inside UK government circles, which should allow for more open debate and discussion generally, which can only have a beneficial effect on inter-government relations

    But more specifically, such cross-party involvement should serve to symbolize even greater commitment to Sino-UK ties from the British side and should also accelerate Chinese understanding of the British political system.

    At the business level, despite the uncertainty surrounding the current UK government, there remains a strong bond between China and Britain. Chinese business leaders, in the main, continue to regard London as not only the financial heart of Europe (if not the world) but also see the UK's first city as the overall business capital of the entire European continent. London is also the favorite European destination for Chinese tourists.

    Of course, nothing provides a more credible example of the continued strengthening of Sino-UK government relations than specific industry agreements. The UK government could take a very close look at its country's world-famous university sector, in which interest from China remains extremely strong, and start discussions on more strategic alliances between UK and Chinese universities.

    One of China's most prestigious seats of learning, Peking University, is set to open a campus in Oxford later this year. This initiative could be seized on by the current UK government, and further similar direct investment by leading Chinese universities could be fast-tracked.

    All in all, far from putting a brake on both Chinese investment in the UK and inter-government relationship building, the very recent election will make stronger ties with China an even higher priority.

    The author is a visiting professor at the University of International Business and Economics in Beijing and a senior lecturer at Southampton University. The views do not necessarily reflect those of China Daily.

    (China Daily European Weekly 06/16/2017 page10)

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