As part of the Greater Birmingham Chambers of Commerce’s EU referendum activity we’ve challenged a selection of business, academic and political leaders to share their views on Brexit or remain and key aspects of the debate so far. All views expresses are those of the authors, not the GBCC:
Greater Birmingham Chambers of Commerce
Business Leader Blog Posts, EU Referendum Series – Andy Clayton, CEO, LNP China
The below is a transcript of an interview undertaken by Angus Neice, China Daily, in partnership with the Greater Birmingham Chambers of Commerce:
Angus: What is the current trading relationship between the UK and China like?
Andy: Trade between the UK and China has grown significantly over the past 10 years . It’s predominantly based on goods, about 80% of trade between the UK and China is in goods rather than services. The UK runs a significant trade deficit with China . We buy roughly twice as much from China as we sell, importing roughly £40bn worth of goods an services and exporting only approximately £20bn each year. The exception is in our services sector – we export approximately £3bn a year more in services than we import from China.
What’s interesting is how fast this market has grown. Over 10 years the total value of UK trade with China has tripled and exports to China have quadrupled. This compares very favourable to growth in UK trade with other major regions such as the USA, and certainly to trade with Europe. However, as a proportion of the UK’s overall trade it is still relatively small. For instance, our trading relationship with China is only worth about a quarter to a third of the UK’s trade with Ireland.
Angus: With that context in mind, what are your contacts in China telling you about their views on the EU referendum so far?
Andy: From my experience, the Chinese have mixed views towards Brexit (not so different to the UK!). On the whole, China as a country supports the UK remaining in the EU. There are several reasons for this – mainly, it values the EU as a trading partner and wants it to grow in prosperity. It does see the UK as a very valuable part of that but I think there would be negative consequences for the EU as a whole is there is a Brexit. Hurting economies in Europe would hurt the Chinese trading relationship there.
On the other hand, they have been stymied in their negotiations of more favourable trade arrangements with the UK because the EU is responsible for negotiations in this space. China is very keen to sign a free trade agreement with the countries of Europe but this has proven very difficult to negotiate through the European Commission. It would perhaps be something that would be more realistic or feasible if the UK were able to negotiate a trade deal bilaterally. China does already have free trade agreements in place with lots of other countries, namely South Korea, New Zealand, Iceland and they would view the UK as being a country that could potentially pull that off. In general, China does not state this publically, partly because they would be concerned about hurting their relationship with Brussels.
As a whole, China’s position is not entirely different to that of America, anti-Brexit for wider geopolitical reasons such as valuing a strong Europe and European Union and questions over Russia.
Angus: What impact do you think a vote to leave the EU would have on UK trade with China?
Andy: Potentially it would open the door to increasing our trade with China, if we are able to implement a favourable trade deal. Obviously Brexit would lead to uncertainty in Europe and I think the country would have to do something different towards other trading partners, like China. UK trade with China is fast growing so there are some opportunities in Brexit.
Personally, in terms of the importance of UK-China trade versus the value o f UK trade with the European Union, I still don’t believe that the economics quite stack up on the case for Brexit for the economy as a whole. Even with potential improved trade with China.
Andy Clayton is CEO and Founder of LNP China. Founded in 2007, LNP China provide back office operations for companies in China, including financial operations, HR, and goods import / export. LNP have operated over US$30m of operations for their clients in China, and have offices in Beijing, Shanghai, and Oxford.
Oxford educated, Andy has lived and worked in China for over 15 years, and speaks fluent Mandarin. He was previously Vice-President of NASDAQ-listed Elong.com, running their USD100m/year air ticket business unit, and was previously Operations Director for B&Q China.
About China Daily:
Since opening in 1981, China Daily has grown to become the nation’s leading English-language newspaper. With 36 million users and readers, and a global print circulation of 900,000, it serves a vital role in telling the world about China, providing valuable insight into the world’s second-largest economy.
About the GBCC EU Referendum Series:
GBCC have not been campaigning for or a remain or leave vote in the EU referendum. Instead, we have been actively surveying business opinion, offering events with independent experts, providing neutral briefing documents and informing the debate without fear or favour. Read more about our EU Referendum activity here.