BREXIT Happened
a few pros and cons in the brexit aftermath
As British social media descends into post-Brexit misery, and the US presidential campaign spirals off into similar depths of racially-charged rhetoric and idiotic populism, the appeal of western democracy has taken a serious hit in the eyes of the Chinese. And the Communist Party did not even lift a finger. As the Great Chinese Firewall temporarily relaxed its grip over the online population, the country has been treated to a full panorama of British discontent, with several favourite British articles and tweets making the rounds of group chatrooms of WeChat. But what are the Chinese really thinking about the impending Brexit, and how will this affect Sino-UK relations? Here, Bey Critical has just about scratched the surface of what will undoubtably prove to be a long, complicated process of recovery and reorganisation.
On Brexit in the Chinese Context
June 29, 2016
The UK's value just dropped, dramatically. In its relationship with China, the UK positioned itself as a stepping stone into the European single market, spinning a narrative based almost exclusively on geopolitical market advantages. Without the EU, the UK has gone from offering lucrative market access to 500 million wealthy western consumers, to having just 65 million. Furthermore, many of those 65 million have arguably been whipped into a nationalist, anti-foreign frenzy not particularly appealing to foreign investors. Negotiations between the two may now become heavily one-sided, with British tech companies desperate for exclusive access to vast swathes of the Chinese market, without the diplomatic leverage to place their claim above that of other European tech producing nations such as Germany, France and Sweden.
Europe still has the US, the UK does not. In a speech which had disastrous consequences for the Remain camp, President Obama declared that a Brexit would place the UK firmly at the bottom of the US list of priorities as far as trade was concerned. Citing the sheer effort of negotiating multiple treaties, when it would be possible to negotiate with the entire European bloc, the President came across as unduly threatening to the majority of the British populace — of both the Leave and Remain variety. But, the man had a point.
In its quest for a more balanced global power structure, Chinese foreign policymakers pushed for strengthening Europe from the outside in. The aim of this policy was to both cultivate a strong economic and political support network, and to build up separate spheres of regional influence in order to rebalance global power structures. Many in Beijing would like to see the influence of the RMB grow worldwide, allowing Chinese traders to side-step the dollar in conversion. The emergence of RMB trading centres in London and Frankfurt were part of this overall scheme.
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Other than clear economic reasons, China has traditionally looked at the U.K., especially increasingly so at having the U.K. as a counterbalance to relationships with other countries, such as the United States. Without the U.K. being a buffer in US–UK–China relations and also within the EU, I suspect that China has temporarily lost an influential friend on the international stage.
Jackson Ng, Lawyer and Political Advisor in the U.K. Parliament
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Despite growing relations with China, Europe still sees the United States as a closer natural ally. The EU may have been China’s largest trading partner in 2015, but it still is not the EU's most valuable customer: EU exports to China amount to just half of those to the United States. Trade with the US accounted for around 18% of the EU’s total trade in 2015, China accounted for 15% — with the EU-China trade relationship far more heavily weighted towards imports from rather than exports to China.
The UK may loose out on its Special Relationship, at the same time as losing access to the single most valuable free trade zone in the world, in which case it will likely grasp any opportunity to ingratiate itself with another world power. In doing so, the UK will have to concede its lower negotiating position following a drop in its economic and political value. This leaves the now-6th largest global economy in a beautifully vulnerable position, ready for a post-divorce rebound in which its temporary sense of low self-esteem leads it to settle for a particularly unattractive deal, where once it would have maintained a certain standard.
The UK has effectively removed itself from the New Silk Road and all its advantages. The UK will see both benefits and challenges taking shape in its future relations with China. Having chosen independence over integration, however, the UK may find that the advantages of the New Silk Road, which would both travel through and incorporate the European single market, are somewhat less enticing now that having removed itself from said single market. Xi Jinping’s One Belt One Road policy is redefining interconnectivity and interdependence, with both the Asian and European sides of the policy aiming to eventually create a comprehensive Free Trade Zone stretching from Shanghai into the heart of Europe.
The construction of a huge physical and digital infrastructure spanning three continents offers access to some of the world’s most rapidly developing markets: those of Eastern, Central and South East Asia. The project brings with it an influx of much-needed Chinese investment, not only in infrastructure, but in capital-intensive industries such as new energy research and development. According to the European Union Chamber of Commerce in China, Chinese investors view Europe as a safe, stable destination.
A plus for the Great British tourism industry. For the sake of ending on a high, at least the great British tourism industry will get a little kick of encouragement. Overnight, the UK has become a much more attractive holiday destination. Even before the referendum, the UK’s visa policy for traveling Chinese differed from that of other EU countries. While a Chinese traveller with a visa for Germany can travel anywhere from Portugal to Latvia, a traveller planning to visit the UK must apply for a UK-specific visa which can only be used in the UK. Many Chinese business travellers and tourists would consider skipping the UK on their tour through Europe, citing visa difficulties and the cost of living.
With the British pound falling steadily against the Chinese yuan, many are considering a last-minute shopping trip. In the space of a few hours, the Chinese watched as 10,000 RMB went from being worth around 1,020 GBP to being worth nearly 1,130 GBP. The key point here is that they were watching. The Brexit is, of course, not the only cause for British currency fluctuation. At certain points over the last year, 10,000 RMB has bought as much as 1,100 GBP (February 2016), but the general public were unaware of this. With coverage of the Brexit — in all its glorious melodrama — reaching the eyes and ears of the Chinese, general amusement has evolved into opportunism, with China Daily leading one of its first Brexit articles with a section about how studying in the UK just got affordable.
Note: The content of this article does not reflect the official opinion of any unit of the Chinese government. Responsibility for the views expressed in the article lies entirely with the author.
Image credit: tumblr
Written by Abbey Heffer
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Using barbarians to fight barbarians has never been easier. Historically, Chinese foreign policy was premised on the superior intellect of Chinese diplomats over their are barbarian neighbours. In a thousand years, so much has happened, but little has changed. The Chinese have been trying to play European countries against each other for years, angering the EU by favouring cooperation with certain countries over others; while the British Prime Minister prostrated himself before Xi Jinping in October, the German Chancellor was in Beijing negotiating her own series of trade deals. European disunity in the face of Chinese market opportunities has weakened the region’s negotiation strength for some time.
Unlike the United States, China has always preferred a bilateral approach to international relations; country-to-country negotiations leave the People’s Republic far stronger than most other nation states. Man-power and market access are on China’s side in negotiating trade deals in such a manner. With the UK desperate to reassert itself as a global power outside of the EU, China can expect far greater concessions from the former superpower as it tries to re-secure trading partnerships worldwide. Similarly, other EU countries will be looking to strengthen their national economies in the face of a falling pound and euro. China, ever the opportunist, will be ready and waiting to benefit from this.
With the region divided and weakened, the Chinese can expect greater leniency when faced with opposition from the European camp. For example, a united European Union represented a powerful voice against China’s being given market economy status — a move which would have negated European claims against Chinese “dumping”, forcing the region to accept Chinese imports at the cost of production in China rather than Europe. If the EU now stumbles, and falls into the trap of fear-driven division, further weakening the institution as a regional power, China can expect far less opposition to its international trading aims. At the expense of European businesses.
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I have emphasised more than once that China wants to see a flourishing Europe, a united European Union with a strong euro because that’s in the interest of China. This cooperation has achieved considerable results over the past four decades. Mutual political trust has been strengthened. The EU is now China’s largest trading partner [and] China and the EU are in close contact about international and regional issues.
Li Keqiang, Prime Minister of the People's Republic of China
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Moreover, the political value of the UK has dropped in the Chinese perspective. Aside from the obvious economic benefits of the Sino-UK relationship, which may yet survive the Brexit, China had also relied on the UK for support internationally. The UK was one of the first western nations to sign up for China’s Asian Infrastructure Investment Bank (AIIB), an alternative to American-led financial institutions such as the IMF and the World Bank. Support from the UK arguably convinced other nations, such as France and Germany, to also get behind the AIIB — despite risking Washington’s displeasure.
The UK also offered support for China as an ally within the EU, as one of the Big Three founding nations. British support for China against European anti-dumping allegations would have continued to prove useful as the asian giant’s oversupply issues continue to build. It should also be noted that Westminster offered support for China in issues such as this, despite ongoing problems in its own steel industry.
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Opportunities include concluding an ambitious and comprehensive agreement on investment, a Chinese contribution to the Investment Plan for Europe, joint research and innovation activities, as well as connecting the Eurasian continent via a physical and digital network through which trade, investment and people-to-people contact can flow.
Press Release, the European Commission
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To conclude, no one bloody knows. At this point, the best that the world — and the post-Brexit UK — can offer is conjecture with a healthy dose of speculation. Educated guesses are the best we can offer after such a huge, regional, world-changing decision was inelegantly placed in the hands of the disenfranchised population of a single, confused nation. As I’m sure Mr. Xi is thinking, while he congratulates his Party members on their infinitely more stable system: how on earth did that happen?