(Xi's UK Visit) Spotlight: China-Britain joint efforts on economic resurgence benefit Europe, world

Chinese President Xi Jinping's just-concluded visit to Britain has opened a "golden era" for the two countries' global comprehensive strategic partnership, pushing forward closer economic cooperation in finance, investment, trade and beyond between the two countries.

This will not only benefit the two countries, but also facilitate the economic recovery and development of Europe and the world at large.

While a huge number of commercial deals totally worth 40 billion pounds (some 62 billion U.S. dollars) and signed during the visit are expected to help secure the upgraded relationship, this landmark visit has also opened a new chapter of China-West exchanges, injected fresh impetus into cooperation between the Asian giant and Europe, and once again demonstrated the bright prospects of Xi's idea of building a new model of international relations with win-win cooperation at its core.

As the global economic development faces uncertainties, Xi's visit indicates that the collaboration between China and Britain in economy, culture and other fields has been getting closer than ever, which is good for the two countries, Europe and the globe, and will bring strong vigour into global economic recovery, analysts said.

China's reform and opening-up and its potential of economic growth have drawn keen interest from and prompted cooperation willingness of Britain, whose foreign policies are known to be pragmatic. And Britain has also thrilled the world with its moves to conjoin China's reform process and Belt and Road Initiative with its own development strategy.

BENEFITS OF RMB INTERNATIONALIZATION

London's Renminbi (RMB) overall trading volume more than doubled in 2014, up 143 percent from 2013, with average daily volume reaching 61.5 billion dollars, nearly six times as large as that reported in the first survey in 2011, according to a British official report published in June.

The rapid development of London's RMB businesses is certainly exciting news for Chinese and British companies, as well as for companies in other European countries and beyond, considering London's status as a financial center in the region and the whole world.

In September 2014, British Chancellor of Exchequer George Osborne announced a British government plan to issue the RMB denominated bond and use the proceeds as its foreign currency reserves.

In March this year, Britain announced its intention to become a prospective founding member of the Asian Infrastructure Investment Bank (AIIB), leading the way for other European states to join.

During his China visit last month, Osborne promised that Britain will work with China to make the AIIB a professional, responsible, transparent and effective financing platform.

In the coming November, the International Monetary Fund (IMF) executive board plans to discuss and decide whether to include the RMB into its special drawing right (SDR) currency basket, which could be a defining event for the internationalization of the RMB.

Jan Dehn, director of Research of Ashmore Group, a Britain-based asset management company, saw the potential benefit of the RMB's involvement of the IMF's SDR currency basket.

It means the Chinese currency is able to step in the field of international reserve currencies, thus the country does not need to bear the heavy burden of foreign currency reserves, with part of the assets released as an outward investment vehicle.

Meanwhile, with the openness of China's capital accounts, the liberalization of interest rates and the cultivation of its bond markets, foreign investors can actively tap Chinese market in the context of the RMB's new status, Dehn said.

OPPORTUNITIES FOR INFRASTRUCTURE UPGRADE

As China's top investment destination within Europe, Britain has opened its gate wide for Chinese investment, which has witnessed an annual growth rate of 85 percent in the previous five years.

China made 112 foreign direct investment (FDI) projects in Britain and became the fourth biggest FDI country for Britain in the fiscal year 2014/15, which ended in March 2015, according to a report released by UK Trade & Investment in June.

"I think the most visible thing (in the near future) is Chinese investment in British infrastructure, such as nuclear power station, high speed rail system, and property markets," said Gerry Grimstone, chairman of insurance group Standard Life plc.

Shada Islam, director of policy at the Brussels-based think-tank Friends of Europe, said the British government is very interested in getting Chinese investment in railway links, for example, a high-speed railway link in northern England.

"Britain definitely needs to modernize its infrastructure, this is a win-win situation there," Islam said, noting that room for cooperation also lies in the fields of telecommunication and energy, where China has the money and Britain is interested.

The British government has worked out the "Northern Powerhouse," a proposal to boost economic growth in the North of England, which involves improvement to transport links and investment in science and innovation, providing opportunities for Chinese investment in Britain.

The island country is also committed to working with China on the Belt and Road Initiative and plans to attract Chinese capital to help with the revitalization program, setting an example for other European countries to cooperate with China within the initiative.

Islam pointed out that both Britain and the European Union (EU) are perceived to need more trade and investment synergy with China, considering its status as a very important global economic player.

The cooperation is going to have a big impact on the growth of jobs in Europe, which is in big demand for the moment, she said, noting that it will also benefit China, which needs boost as well.

STIMULUS TO CHINA-EU AND GLOBAL TRADE

China's official data also showed that in 2014, the Sino-British trade volume hit a record high of over 90 billion dollars, with an annual increase of 19.6 percent.

As the second largest trading partner of China in the EU, Britain could become a regional leader in facilitating trade "synergy" with China.

Progress made with the Trans-Pacific Partnership and difficulties in moving forward the Transatlantic Trade & Investment Partnership could lead the British and other European economies to look to the East even more, said Ramon Racheco Pardo, senior lecturer at King's College London and co-director of the London Asia Pacific Center for Social Science.

The British government is very likely to strongly advocate the EU to make progress with the bilateral EU-China investment treaty, and London has also suggested that it would support a bilateral free trade agreement, Pardo said.

It is fair to say that the British government is an important driving force behind stronger economic links between the EU and China, Pardo said.

The fact that Britain, France and Germany have good relations with China means that the EU policies towards the Asian country are improving, Pardo added, noting that the Big Three remains central to the EU policies and major decisions generally need their support.

Daniel Gros, director of the Center for European Policy Studies in Brussels, pointed out that a successful transformation of the Chinese economy from investment towards consumption, and from manufacturing towards services, would greatly benefit the world economy.

Guy Dru Drury, China Chief Representative of the Confederation of British Industry, said in a recent interview that British companies are looking positively on China's market prospects and its long-term return potential, as the country is undergoing the re-balancing of economy, yielding a huge amount of opportunities in sectors like health care, finance, creative industries and retails.

Britain is a gateway to the whole European markets, and the strong ties between Britain and China are also good for the well beings of other European countries, he said.

As an important player in the EU, Britain will continue to serve as a model for other European countries in enhancing economic cooperation with China, and bring real benefits to the whole Europe and the world at large through its closer ties with China. Enditem

Editor's note:

Chinese President Xi Jinping has just concluded a state visit to Britain this week, the first by a Chinese head of state in a decade. Xinhua is wiring a series of in-depth stories on Chinese-British relations and the visit.

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