China-Britain trade, financial cooperation to endure despite Brexit
Britain's decision to leave the European Union (EU) will not be a handicap to collaboration between Britain and China in financial services and trade, according to James Sassoon, chairman of the China-Britain Business Council (CBBC).
"Bilateral trade, (Britain's) exports to China and the Chinese investment in the UK have grown very strongly and I think that is the trend that will continue," Sassoon told Xinhua recently in an exclusive interview.
China-Britain trade in goods stood at $74.34 billion in 2016, according to statistics from the official website of the Economic and Commercial Counsellor's Office of the Chinese Embassy in the United Kingdom.
Britain had a surplus with China on trade in services, outweighed by a deficit on trade in goods. China, the seventh-largest export market for Britain, contributed 3.6 percent of Britain's exports and 7 percent of all of Britain's imports.
"Bilateral trade started from a very low base. It was embarrassing to me when I took over as chairman of CBBC four years ago that our UK exports were lower than Italian exports to China. Those days are well behind us," Sassoon said.
The British capital London is one of the world's most important financial centers and the largest single hub for trading in currencies.
Sassoon said that London's financial services and Britain's financial and capital markets have been crucial drivers for the Britain-China relationship.
The British government from 2010 onwards has played an active role in promoting London's financial capabilities to China, one of which was in propelling the internationalization of the Chinese currency renminbi.
The City of London Corporation (CLC), the municipal body of the financial district, has supported the growth of a long-term sustainable offshore RMB market in Britain.
Britain's central bank, the Bank of England (BOE), and its Chinese counterpart the People's Bank of China set up a sterling/renminbi swap facility in 2013, which is now worth 350 billion yuan (about $51.3 billion). The facility is aimed at supporting domestic financial stability in Britain. If a generalized shortage of offshore renminbi liquidity emerges, the facility will also allow the BOE to facilitate renminbi liquidity for eligible institutions in Britain.
The value of the swap line increased in 2015 from the original figure of 200 billion yuan set in 2013. The increase reflected the continuing growth of renminbi trading in London, according to the BOE.
BOE governor Mark Carney added that it reflected a constructive approach to support the development of an effective and resilient renminbi market in London.
Many major Chinese banks have opened offices in London over the past ten years.
As of January 2016, deposits of 50 billion yuan were held in the London market, making it one of the largest markets outside Asia.
Of all offshore Chinese renminbi foreign exchange transactions outside mainland China, 36.3 percent are carried out in the United Kingdom, according to SWIFT, a global financial transactions firm.
London overtook Singapore to become the largest center for offshore renminbi trades last year, and has retained the premier spot since.
Sassoon added that as commercial secretary to the Treasury between 2010 and 2013, he was involved in discussions with Chinese authorities to identify areas of mutual benefit in financial services.
During the talks in 2011, British financial institutions wanted to "explore what can be done between China and the UK on offshore renminbi," said Sassoon.
London prides itself on being "the most international financial center," a place to allow any Chinese banks, securities houses and commodity traders to conduct business and set up branches.
"And things have developed from there - the Hong Kong exchange's acquisition of the London Metal Exchange, the China Investment Corporation's investment in property, and the big Chinese banks either setting up here or converting to branch status -- there has been great momentum," he said.
"I see that as something that continues and will be a key plank in the (bilateral) relationship," Sassoon said.