Beijing — China and Britain look forward to a "new period of historic opportunity" to deepen co-operation post-Brexit, officials said on Saturday, as they accelerated plans to connect the London and Shanghai stock markets.
Visiting British Chancellor of the Exchequer Philip Hammond has been cozying up to Beijing, with the relationship between the two countries growing in importance as the UK contemplates its economic future once it leaves the European Union in 2019.
"Britain’s post-Brexit plans ... have ushered in a new period of historic opportunity for China-UK pragmatic co-operation on economic development and trade," Chinese Vice-Premier Ma Kai told a press briefing, following discussions with Hammond and his accompanying trade delegation.
The UK has said it will leave the EU’s single market and customs union so that it can strike its own trade deals with countries outside the bloc, making China — and its deep pockets — an attractive ally. Hammond announced that the two sides had sped up final preparations for a "stock connect" linking the London and Shanghai exchanges, and had agreed to examine the possibility of connecting their bond markets as well.
Hammond added that the two countries planned to set up a new billion-dollar bilateral UK-China investment fund led in some capacity by former British prime minister David Cameron. They also agreed that the UK Export Finance agency would provide support of up to £25bn ($33.3bn) for new projects along China’s Belt and Road infrastructure corridor in Asia, he said.
The agreements come as Frankfurt and Paris are jockeying with London to attract Chinese investments and supersede the British capital as a global financial centre. Chinese vice-finance minister Shi Yaobin told journalists that "the UK welcomes Chinese investment and China also welcomes investment from UK. Both sides are willing to open up to each other’s market."
He said he hoped Brexit negotiations between Britain and the EU could proceed in a manner "mutually beneficial for both sides" and without "negative impact on the world economy".
But the talks are proving thorny, with a lack of clarity on what form post-Brexit trade ties might take. Options for a future relationship include following the model of a recent EU-Canada trade deal, or Norway’s membership in the European Economic Area.
In Beijing, Hammond said Britain would probably seek "bespoke arrangements" on trade instead of following existing models.
"We have a level of trade and commercial integration with the EU-27 which is unlike the situation with any trade partner that the EU has done a trade deal with before," he said.
China and the UK proclaimed a "golden era" of Sino-British relations when Chinese President Xi Jinping paid his first state visit to the UK in 2015. But ties were strained in 2016 when British Prime Minister Theresa May ordered a review of a $22bn deal to build a Chinese-backed nuclear power point in England.
She subsequently approved the project, but not before Chinese state media accused the country of suffering from "China-phobia".