China’s Ambitions Could Make London Top Financial Centre Post-Brexit
As one of the world’s biggest renminbi hubs outside of China, the UK stands to play a pivotal role in the ‘One Belt, One Road’ (OBOR) initiative.
Chinese investors, according to our conversations with clients, are not that concerned about Brexit and are eager to reinforce trade ties with the UK.
Since its launch in 2013, OBOR – also known as ‘belt and road’ – has achieved steady progress and global influence, amassing project contracts worth USD926 billion in over 60 countries, with the UK serving as a key financial hub. Most banks in the West, including Standard Chartered, now use London as their renminbi centre.
A Golden Opportunity
OBOR, which spans 65 countries across Asia, Africa and Europe, will boost the renminbi’s
internationalization by encouraging its use in both trade and financial transactions.
The UK has already significantly contributed to China’s grand infrastructure project by becoming the first major European country to join the Asian Infrastructure Investment Bank, which focuses on projects across the Asia-Pacific region, including OBOR countries, unlocking opportunities for British companies.
In global money centre terms, London’s expertise and financial infrastructure is rivalled only by New York, and the UK’s share of the offshore renminbi market already outpaces the US’ by some margin – 14.6 per cent versus 4.6 per cent respectively, according to our index.
“Finance is the lifeblood to sustain OBOR”
The UK government described OBOR as ‘an opportunity to strengthen ties’ with China during a recent trip to the country. The appetite to trade more with the world’s second largest economy could help cement London’s position as the world’s top financial centre after Brexit, bringing a boost to the UK.
Finance is the lifeblood to sustain OBOR and effective risk management is vital to encourage investment. With its expertise and financial infrastructure, the UK is in a strong position to benefit hugely from OBOR, especially as it seeks to increase trade ties with China post-Brexit.
About Sam Xu
Based in Shanghai, Sam Xu is responsible for providing integrated working capital solutions across the entire suite of transactional banking products and services with Standard Chartered in China. This includes cash and liquidity management, trade finance, custody, corporate actions, fund accounting and other securities services. Prior to joining Standard Chartered, Xu worked for JP Morgan for nine years in Shanghai and New York. For more than two decades he has worked in a wide variety of senior financial roles, including for HSBC, Deutsche Bank and the Royal Bank of Canada. He holds an MBA from the University of Toronto, Canada.