Would UK exit from the EU affect China?

The Chinese Ministry of Foreign Affairs previously said, "China hopes to see a prosperous Europe and a united EU, and hopes Britain, as an important member of the EU, can play an even more positive and constructive role in promoting the deepening development of China-EU ties." President Xi also made that clear during his state visit to the UK that he backs a strong and united European Union with Britain in a key balancing role.

The Foreign Ministry also stressed China's desire for a strong unified EU for trade purposes. This was significant as over ?40 billion (US$61.4 billion) worth of trade deals were announced between Britain and China as part of a growing economic relationship.

Then, there's the argument that, with or without Britain being part of the EU, it won't affect Chinese trade. Wang Hongzhang, chairman of China Construction Bank, was quoted in a BBC interview as saying London's position as the leading center for financial services in Europe would not be affected.

"Whether the UK will stay in the EU or not will not do any harm to trade and economic ties or financial relations between the UK and China," China Daily quoted him as saying.

The real answer is more complicated. Chinese trade with Britain is more than Germany, France and Italy combined, and that is not going to change. Britain is now the highest ranking and the most popular investment destination for Chinese among the 28 EU member states.

However, China sees Britain as more than just a member of the EU. It was clear from the visit of President Xi, that China increasingly views it as a gateway to broader Europe, a thought shared by his British counterpart. This was reflected in Chancellor George Osborne's determined efforts to have London as the first offshore RMB trading point in Europe.

If Britain leaves EU, it would be prudent for the Chinese to seek for other centers in mainland Europe, thereby incurring significant losses to Britain, and a destruction of the growing special relationship. And it is not just financial. The UK and China are among the five permanent members of the UN Security Council, and plan to work closely together. This constant doubt and uncertainty over EU membership casts a doubt on policy planning in China, which is detrimental to Britain as well.

President Xi is right in clearly stating China's position that it wants Britain to stay in the EU, given that so much is at stake.

Sumantra Maitra is a columnist with China.org.cn. For more information please visit:

http://www.china.org.cn/opinion/SumantraMaitra.htm

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