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Why is China concerned about Brexit?

(People's Daily Online)    15:26, June 23, 2016
Why is China concerned about Brexit?
(File photo)

As Britain takes to polls for Brexit, China is also closely watching and weighing the impact of the possible United Kingdom leaving the European Union.

The future of the relationship between the U.K. and the E.U. depends on the vote on Thursday. Recent opinion polls put the “Leave” and “Remain” campaigns neck-to-neck, but the betting markets suggest there is a 75 percent chance that “Remain” will win, the media reported.

The U.K. is only second to Germany when it comes to trade with China in the E.U. According to an analysis report from the Bank of China, China will lose an important power to push forward free trade between China and Europe and it will also add to more difficulties for future negotiations on free trade pacts, the Beijing Morning Post reported.

As one of the most important offshore market and trading hubs for the RMB, London is a key mainstay for RMB internationalization efforts. Since the Brexit may threaten London’s position as a leading world financial hub, it may also affect China’s plans to go global, according to the Economic Daily.

The newspaper added that the world’s capital markets, including China’s, will receive a negative impact from the Brexit.

On the other hand, exports to the U.K. account for some 3 percent of China’s total exports, a figure not too big to indicate a huge blow, Beijing Morning Post noted, adding that the U.K. may also turn to seek more cooperation with countries like China, after Brexit impairs the country’s free trade with the E.U.

The Xinhua News Agency pointed out that the Brexit will also be followed by devaluation in the pound.

Several Chinese experts said the chance of the U.K. leaving the E.U. is relatively small. Professor Wang Yiwei with Renmin University of China said it is not very likely for the referendum to pass and for them to leave the E.U. and even if so, the E.U. may still hold emergency meetings in order to keep the U.K.

A“Remain” camp may attract the majority as keeping the E.U. membership is beneficial for the U.K. in the long run, according to Feng Zhongping, vice president of the China Institute of Contemporary International Relations.

“In all, we will be still delighted to see a ‘united E.U.’ for a Brexit will only jeopardize both the E.U. and the U.K. and weaken future global economic growth, which, obviously, will be bad for China,” People’s Daily commented.

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Editor:Jiang Jie,Bianji)

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