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Still Golden
British PM's China tour enhances Sino-British ties in the new era
By Yu Lintao | NO. 6 FEBRUARY 8, 2018
Chinese President Xi Jinping (right) meets with British Prime Minister Theresa May in Beijing on February 1 (XINHUA)

British Prime Minister Theresa May arrived on her maiden trip to China as the head of the British Government on January 31. Owing to numerous uncertainties at home including ongoing Brexit negotiations, terrorist attacks, a general election and a cabinet reshuffle, the highly anticipated visit had been postponed for almost a year.

Nevertheless, the visit has been successful, evidenced by plentiful consensus and cooperation deals, and is believed to add impetus to the upward momentum of China-UK relations, guaranteeing the continuation of the golden era that started during David Cameron's tenure as prime minister.

Maintaining momentum

Chinese President Xi Jinping's state visit to the UK in 2015 was believed to have ushered in a golden era for bilateral ties, with the Cameron administration viewing China as a great opportunity for the UK's development, committing to developing a global comprehensive strategic partnership for the 21st century with the world's second largest economy. Cameron was also successful in attracting Chinese business. Based on the UK's advantages in financial services, more than two thirds of the Chinese capital invested in Europe flowed through London at that time. Cameron also expressed great enthusiasm toward cooperation with China under the framework of the China-proposed Belt and Road Initiative, with the UK becoming the first European country to apply for membership of the China-initiated Asian Infrastructure Investment Bank launched in January 2016.

Despite Sino-British ties cooling down when May, shortly after becoming prime minister in 2016, delayed approving the Hinkley Point C nuclear power project on England's southern coast citing "security concerns" about China's investment, bilateral relations soon got back on track once she had stopped obsessing over domestic problems.

Although May didn't fulfill her planned trip to China in 2017, high-level bilateral interaction between the two was frequent. In February 2017, the second China-UK High Level Security Dialogue was held in London. Chinese Premier Li Keqiang and May exchanged congratulatory messages on the 45th anniversary of bilateral diplomatic ties in March of the year. During the G20 Hamburg Summit last July, Xi met with May, and the two leaders reaffirmed plans to maintain the golden era of bilateral relations. After the 19th National Congress of the Communist Party of China (CPC) last October, May sent a letter to Xi congratulating him on his reelection as general secretary of the CPC Central Committee.

Construction on the Hinkley Point C nuclear power project started in March 2017. The landmark project, with one third of the total investment from a Chinese company, is expected to power 6 million homes by 2025, creating 25,000 jobs during construction and 900 permanent positions throughout the station's 60-year lifespan.

Last year the volume of trade between the two nations hit $79 billion, up nearly 6.2 percent on the previous year, with Britain's exports to China increasing 19.4 percent. Currently Britain is China's second largest trading partner within the EU and China is Britain's second largest non-EU trading partner. British exports to China have increased 60 percent since 2010, and China is expected to be one of the UK's largest foreign investors by 2020.

In recent years more than 500 Chinese enterprises have set up their offices in the UK, with a total of $21.8 billion invested in projects ranging from traditional sectors such as trade, finance and telecommunications to the emerging industries of new energy and high-end manufacturing. In addition, at the China-UK Economic and Financial Dialogue held last December, the two sides proposed a bilateral investment fund with an initial round of $1 billion to create jobs, promote trade and support the Belt and Road Initiative.

During May's visit, the two governments agreed to take the golden era of the Sino-British partnership to a new level.

China agreed to accelerate the final preparations for the Shanghai-London Stock Connect scheme and to review the timeline for its launch when conditions permit. China also announced that it has allowed a British bank to offer lead underwriting services for certain types of Panda bond issuances as part of its efforts to open up the financial market, a major move conducive to bilateral financial cooperation. A panda bond is a yuan-denominated debt sold by a foreign issuer in China.

China and Britain also agreed to jointly build a finance and technology park in north China's Xiongan New Area, an area near Beijing slated for major development as an alternate location for companies and other offices.

The visit also witnessed the signing of $12.8 billion worth of business deals between the two countries covering construction, finance, agriculture and technology.

Cui Hongjian, Director of the Department for European Studies with China Institute of International Studies, said the stable momentum of relations between China and the UK will continue against the backdrop of the ongoing Brexit process.

According to Cui, May and her cabinet ministers hope to minimize the uncertainty from Brexit and are trying to boost confidence in the UK around the world. They believe that maintaining a good economic relationship with China can help to offset the negative effect of leaving the EU.

Belt and Road potential

The UK has been at the forefront of support for the Belt and Road Initiative, which aims to connect Asia with Europe, Africa and the world at large through infrastructure and trade in order to build a shared and prosperous future. Last May, British Chancellor of the Exchequer Philip Hammond attended the Belt and Road Forum for International Cooperation in Beijing and announced that Britain was a willing partner in this historic project.

The May administration has also pledged up to 25 billion British pounds ($33.3 billion) worth of financial support for British companies participating in Belt and Road projects in Asia.

At a media briefing at her residence in Beijing ahead of May's visit, British Ambassador to China Barbara Woodward said, "Britain is eyeing closer cooperation with China on the Belt and Road Initiative."

According to Woodward, Britain is especially keen to work on the initiative in three ways: fostering partnerships with Chinese companies in third party countries along the Belt and Road, harnessing London's financial expertise to create a solid financial and legal footing for the major projects of the initiative, and sharing its experience of international engagement and multilateral organizations so as to maintain high operational standards.

During May's stay in Beijing, China Development Bank (CDB) and Standard Chartered Bank signed a deal worth 10 billion yuan ($1.6 billion) on Belt and Road cooperation. CDB will make available up to 10 billion yuan in the next five years to Standard Chartered to facilitate Belt and Road projects. Standard Chartered will use this to support loans to fund corporate finance projects and trade finance transactions along the Belt and Road routes.

When meeting Xi in Beijing, May hailed that the Belt and Road Initiative has far-reaching global influence, and her country will enhance cooperation with China in this regard to boost global and regional economic growth.

May also said as a defender of free trade, Britain is willing to cooperate with China in areas of trade, investment, science and technology, environment, culture, and the Internet, as well as intensify coordination on major global and regional issues and jointly promote the Britain-China global comprehensive strategic partnership for the 21st century.

In the view of Wang Yiwei, Vice Dean of the Institute of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era at Renmin University of China, Britain has many advantages and great potential for conducting cooperation with China under the framework of the Belt and Road Initiative, particularly in the markets of third-party countries.

According to Wang, many of the legal systems in these countries are modeled on that of the UK, and British enterprises often have a better understanding of the markets in these places. Sino-British cooperation on Belt and Road projects in these countries is thus conducive to policy coordination and strengthening intercultural bonds.

British enterprises have long shown interest in participating in the construction of the China-Pakistan Economic Corridor. If the involved parties can devise a proper framework for cooperation and reap the rewards, it will produce a good example for others to follow, Wang said.

Copyedited by Laurence Coulton

Comments to yulintao@bjreview.com

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