By Xie Fang
David De Cremer, a professor from the University of Cambridge said in his recent speech that Brexit may bring about negative effect on the UK economy and on UK-China economic relations in the short term.
However，he believed that UK-China economic relations would continue to improve despite the negative impact brought about by the Brexit.
David De Cremer is a KPMG-chaired professor in management studies at the University of Cambridge and a fellow at St. Edmunds College, also at the University of Cambridge.
As a prominent economist in the field of behavioural economics, Prof. De Cremer was elected as Member of the Young Academy of the Royal Netherlands Academy of Arts and Sciences in 2005.
Prof. De Cremer delivered a speech at the Fortune Seminar held by the China Fortune Media Group recently. (Photo/China Fortune Media Group)
He pointed out that Brexit, a result that seems desirable to many British voters, had yielded a series of undesirable consequences, including the spike in the food prices between 2015 and 2018, a dramatic decline in corporate investments, as well as the relocation of large companies from the UK. For example, Unilever, the country’s third largest company, has decided to set up its new headquarter in Rotterdam, Netherlands.
What’s more, Brexit will also deal a severe blow to the UK’s car industry which is heavily dependent on the EU market for its car exports.
Not only will Brexit have a negative impact on the UK economy, it may also bring uncertainties to the China-UK economic relationship, according to Prof. De Cremer.
He recalled the golden era in the China-U.K. relations when David Cameron still held office but cautioned that the situation would be more complicated in the short term.
Prof. De Cremer noted that although a post-Brexit China-U.K. trade deal could accelerate trade growth and benefit both economies, it is unlikely to be struck before 2025 because of the two-year transition period during which the U.K. has to negotiate with the EU over Brexit.
Besides, the uncertainty around Brexit has already dampened the Chinese investments in the U.K. as data provided by Prof. De Cremer showed that the U.K. has slumped from the 12th largest recipient of Chinese investments in 2016 to the 40th recipient in 2017.
On the other hand, Brexit has also unexpectedly strengthened the economic ties between China and the EU with the EU becoming China’s largest trading partner and Germany replacing the U.K. as China’s primary trading partner in Europe.
Despite all these negative impacts, Prof. De Cremer remained confident that there were still opportunities for the two countries to improve their economic relationship.
“The U.K. was always the voice for China within the EU,” he said, adding that “it held a more positive attitude towards China than most other European countries.”
Furthermore, the U.K. has also lowered the threshold for Chinese companies to make investments and to conduct merger and acquisition (M&A) activities in it.
When it comes down to the financial cooperation with the two countries, the U.K. can also play a crucial role in promoting the internationalization of the RMB as it became one of the key hubs for offshore RMB transactions in 2016.
“So, what we see is something of a mixed bag,” said Prof. De Cremer. “Because of those historical ties, the U.K. still has many benefits.”
He believed that more and more cooperation between China and the U.K would be made in the fields of education and high technology over the next few years.
