The widespread celebrations that will mark Chinese New Year in London this week go some way to highlight the importance of the UK’s relationship with China. Its growth may have slowed in recent months, but China’s economy remains one of the fastest growing in the world – and one to which British companies are increasingly turning to for success in all areas of the economy.
The opportunity to trade more widely with China is an important addition to our longstanding historical trade relationships with closer partners such as Europe, diversifying our trading options to great benefit. A crucial factor in developing this relationship will be the expansion of the internationalisation of the renminbi. Facilitating this brings great benefit to the capital, and the City of London has been championing a renminbi initiative since 2012, ensuring that London remains the Western hub for offshore trading of the currency.
The renminbi is now the world’s fifth most widely used payments currency, with the value of cross-border deals settled in it more than doubling in 2014. The UK is also the fastest growing market in Europe for renminbi payments – more than doubling volumes from July 2013 to July 2014.
There is no doubt that these are exciting times. Various policy announcements last year, such as the creation of the first UK-based clearing bank and the first UK government sovereign renminbi bond issue, have more recently been built on by practical, market-led steps that are helping to create a long-standing and sustainable environment for renminbi business. However, its success in London is just one aspect of the UK-China relationship. If both countries are to be free to meet their economic potential, it must be possible for more Chinese business leaders to visit Britain and develop the relationships and market understanding that are crucial for success. This is why I was encouraged last week by the government’s decision to streamline the visa process to make it easier for foreign nationals to do business in Britain. A successful international financial centre like London cannot afford to be bogged down in the bureaucracy of an overly complex visa system.
If we are to maintain London’s role as the Western hub for renminbi trading, and as an indispensable business destination for leading Chinese firms, steps such as these will be crucial. However, we must also maintain our ties with other key European financial centres, incorporating each city’s specialist capabilities in order to capitalise on the opportunities which can benefit us all. Growing interconnectedness has a multiplier effect on economic potential. That’s why we work so closely with our European partners on this issue – and why the development of renminbi trading facilities and banks in Europe must be encouraged.
This year has seen a bright start to the UK-Chinese business relationship. My hope is that through the work that we do here in London in facilitating meaningful engagement between the UK and Chinese financial sectors, we can see it grow into a fruitful year for both partners.