A Sharp Brexit

Britain's imminent departure from the EU has already caused ripples around the globe but could it actually be a turning point for UK-China relations, asks Tom Pattinson

Britain’s shocking referendum result, which saw the UK vote to leave the European Union (EU), will have knock-on effects that might not be clear for years. What is clear, however, is that nearly every country on earth is affected.

Britain's exit would “cast a shadow over the global economy” said Lou Jiwei, China's finance minister. During his state visit in October last year, Chinese President Xi Jinping reportedly said in private that he supported Britain remaining in the union. A weaker European market means bad news for Chinese exporters, and a global market in turmoil has already seen short-term affects on Asian stock markets.

China would rather negotiate on trade – and other issues – with a large, single block of nations, rather than deal with many smaller, individual countries.

Assuming Britain does leave the EU and go it alone, China will certainly have the stronger hand when it comes to trade talks. The point of establishing a common union was to forge one of the largest trading blocks in the world. The greater the seat at the table, the stronger the negotiating position is. The EU is on par with China and the US. Britain alone simply isn’t.

The EU as a block is in a much stronger position to negotiate with China than are individual states, however in China’s case, the EU has failed to wield that collective power as effectively as it could have.

Individual countries have been less than unified as they try to outbid each other for their own benefit – and for Chinese investment. China has used this fragmentation to carve out better deals, and to ensure that the EU has never managed to create a unified China policy.

A EU-wide China trade policy would actually have been beneficial in the longer term; now Britain must to spend a significant amount of time and resources negotiating new deals. This could, however, lead to a positive, new dynamic between the two nations.

Chinese companies in the UK may have been looking for a gateway into the EU, but it could well be that the UK retains its free trade agreement with the EU even following the Brexit. And without the reported slow and bureaucratic EU legislation holding the UK back, Britain has the potential to create better trade deals with China than it could as a member state.

Dealing separately with the UK and the EU also could allow Beijing to reach agreements that might have previously been blocked by the need for Britain and Europe to agree, said Liu Yuanchun, executive dean of the National Academy of Development and Strategy of Renmin University. An EU without the UK is more likely to impose higher tariffs on China.

As former diplomat and China watcher Kerry Brown argues, “With strong, visionary, intelligent leadership, Britain could place itself at the heart of a new set of relationships, working in different ways and without the alleged bureaucratic constraints that Brussels imposed.” The challenge now however, is to find that strong leadership – and find it fast.