Why is China concerned about Brexit?

As Britain takes to polls for Brexit, China is also closely watching and weighing the impactof 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 onThursday. 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, themedia 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 importantpower to push forward free trade between China and Europe and it will also add to moredifficulties 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 akey mainstay for RMB internationalization efforts. Since the Brexit may threaten London’sposition 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 anegative 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 theU.K. may also turn to seek more cooperation with countries like China, after Brexitimpairs the country’s free trade with the E.U.

The Xinhua News Agency pointed out that the Brexit will also be followed by devaluationin 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 thereferendum to pass and for them to leave the E.U. and even if so, the E.U. may still holdemergency meetings in order to keep the U.K.

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

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

(PEOPLE'S DAILY ONLINE)