UK must look beyond EU for Asian trade engagement

With the European Union now opening the long-awaited trade talks with Britain, Prime Minister, Theresa May has promised to drive home a final Brexit deal next year by ushering in a ‘new dynamic’ in negotiations. She said the breakthrough heralded a new ‘spirit of co-operation’ with EU leaders. After months of clashes, the EU rubber-stamped a mandate to start drawing up a ‘wide-ranging’ free trade agreement.
However, as the UK is dominated by domestic politics and Brexit matters, it is easy to lose sight of trading priorities in other global markets. Looking at reports on Asia, it is expected by 2025, the region will contribute to 45 per cent of global growth, and 54 per cent of the world’s urban population.
As the UK projects 1.3 per cent growth by 2020, it is worthwhile keeping in mind the opportunities in Asia and how UK can build relationships and business with the region for prosperity in the next decade.
Most people will assume that Asia’s growth is down to the economic powerhouses China and India, that is partly correct. However, Japan, South Korea, and the Asean (Association of Southeast Asian Nations) nations add to Asia’s diversity. Financial and professional services trade with Asia is on the increase. As Asian markets mature, the demand for two-way financial flows grow.
Opportunities include inward investment to Asean, servicing Chinese demand for insurance alternatives, and collaborating with Indian fintech. Inward investment into the UK from Japan, listings of Indonesian Rupiah bonds on the London Stock Exchange, and Chinese bank growth show that opportunity is not one way.
It is with this opportunity in mind that the City of London Corporation recently launched Asia Next Decade campaign. According to City of London Corporation’s special adviser, Sherry Madera, the campaign for 2018 is consulting industry on top priorities for future-proofing London’s relationship with Asia.
There are questions that have to be addressed. How can London build on its existing relationships? How can both government and industry support new cross-border business with Asia? How can UK’s rank as the top global financial centre support emerging Asia and bring growth to both regions?
London has never been a European financial centre, it has always been a global financial centre. According to Sherry Madera, the UK-Asia relationships play a critical part in London’s global ecosystem.
Over 50 financial institutions from Asia already call London home, and many of the capital’s financial firms — large and small — have operations across Asia. Madera points out that one school of thought is that the UK is correctly focused on its relationship with the EU as it navigates Brexit, but there is another way to think about it.
UK government, industry, regulators and advisers need support in showcasing the UK’s leadership in the global financial arena. London’s foreign exchange market is second to none globally.
The UK is the largest offshore centre for the Chinese currency — the renminbi — outside of China. The London Stock Exchange is the world’s most global attracting a wider variety of Asian issuers than any other market.
The time is exactly right, Madera says, to be planning for the next decade for the relationship between Asia and Britain. Asia thinks in decades, and perhaps it is a good time for the UK to do so as well, apart from its trade deals with the EU. By scoping together a set of priorities and plans that will benefit both Asia and Britain, the latter can think beyond its limited projected GDP growth domestically and through the Euro zone.
Regardless of political issues in the UK, companies as well as ambitious entrepreneurs and adaptive enterprises will be shaping their plans to a new interconnected world of trade opportunity. It is critical to development across the world that trade grows, that developing countries join the party, and that new jobs are created faster.
For the UK it will be a positive move to increase focus on the fastest growing global markets, what they need, and what far-sighted businesses can offer. As the global centre of economic gravity moves progressively towards Asia, the winners in coming years will be businesses that seek out opportunities in new markets.
Whatever political leaders say and do, enterprise will follow the money and look for ventures and partners that help open doors into lucrative markets.
(The author is our foreign correspondent based in the UK. He can be reached at andyjalil@aol.com)