Chinese and British flags fly in front of Buckingham Palace on the Mall in London on October 19 before President Xi Jinping's state visit to the country in 2015（CFP）

The United Kingdom is experiencing its worst identity crisis since the end of World War II, according to panelists discussing the repercussions of the British vote to leave the EU. What role will China play in the UK's efforts to redefine itself following its historic referendum?

As the 2016 G20 Hangzhou Summit looms on the horizon, experts convened in Beijing on August 11 to discuss the future of the UK, Europe and those regions' relationships with China. At the meeting, which was held by German-Chinese Media network, Jiang Shixue, Deputy Director of the Institute of European Studies at the Chinese Academy of Social Sciences, said that China hopes that the bilateral relationship it has with the UK will continue to move forward despite Brexit.

Jiang was steadfast in his belief that China wants to go global and wants to go anywhere there is money to be made, highlighting the fact that the UK is still a popular destination for Chinese investment. Nonetheless, Brexit has somewhat tarnished the UK's image, since its economic ties to mainland Europe were one of its main drawing points.

"The UK will not be as sexy as before," said Jiang, "But on the whole, the UK still is one of the best places for Chinese investment to go to, since [it has] very nice manufacturing capacity, infrastructure, legal system and one of the best financial systems in the world—China is ready to offer a helping hand if its economy is in trouble."

The economy does face uncertainty as the Bank of England's decision earlier this month to cut interest rates to depreciate the British pound could backfire on the UK, since it requires increased investment from abroad in order to succeed. This is a hard sell since the country is expected to undergo major political and economic changes for the foreseeable future.

Furthermore, the UK's Office for National Statistics said on August 16 that import prices for metals, oil, food and other products grew by 6.5 percent year on year in July, the fastest rate in five years, prompting fears of inflation.

However, Jörg Wuttke, President of the EU Chamber of Commerce in China, was doubtful of claims that China could offer the UK assistance in the short term. "I don't see that actions on China will move fast forward, in particular because [the UK authorities] have to completely change their storyline. Britain has been selling London and the UK as the entry-point into the EU—that's not the case anymore."

Great expectations

Brexit is believed to be a hot topic during the G20 Summit, especially considering the fragile state of the world economy and its tepid recovery prospects. Clare Pearson, Chair of the British Chamber of Commerce in China, was nonetheless optimistic about the G20 meeting, claiming that it would be good for the world economy.

In an exclusive interview with Beijing Review, Pearson declared that the upcoming event would be the right forum, at the right time, in the right place, because it's bringing together countries with some diverse issues and real common problems.

As the world muddles through the doldrums of economic recovery eight years on after the 2008 global financial crisis, nations are faced with obstacles composed of terrorism, climate change and developmental issues in contentious areas such as the Middle East and Africa.

Pearson said that although there are some things that divide those 20 countries, there is more that unites them. "I think the G20 will stimulate the global economy by creating the one-to-one relationships on which economic growth depends. So it's the right forum, the right time—you know, we've just had Brexit in the UK, we have a government that is confident in China, and I just think it is a good time for people to reassess their bilateral relationships with countries around the world," she said.

The G20, which collectively accounts for 85 percent of the world's gross domestic product and 80 percent of global trade, was designed to be a platform to address problems that transcend any one nation's responsibilities. Pearson said that rather than just looking at issues from the selfish point of view of a single country, "What the conference does is that it wakes you up to the bigger picture. This is what I think we need our politicians to do—show less self-interest and more mutual consideration for the spillover effect of their domestic policy on the global stage."

Free trade agreement?

Following the Brexit vote, Chancellor of the Exchequer Phillip Hammond has begun discussions for a free trade agreement (FTA) with China. The chancellor told the BBC on July 24 that it was the right time to explore "new opportunities" with China and the rest of the world. China is one of the UK's most important trading partners, as it is its sixth largest export partner, and its second largest in terms of imports, after Germany.

Hammond said that the UK should deal with Brexit in a way that minimizes the economic impact on the economy in the short term and maximizes the benefit in the long term. "We have hugely increased our trade with China, investment both by British companies into China and by Chinese entities into the UK," said the chancellor during the meeting of G20 finance ministers which took place in July in Chengdu, China. "Once we are out of the EU, then I have no doubt on both sides we will want to cement that relationship into a firmer structure in a bilateral way that's appropriate."

A free trade deal between China and the UK could become a multi-billion pound affair involving a large number of commercial markets and financial sectors.

Pearson told Beijing Review that what she'd like to see from a potential FTA is greater ease of access to the Chinese market for services like insurance, banking, law, professional services and in return, greater ease of access to the UK for China-manufactured goods and investment in infrastructure.

But aside from these areas, what else can both parties offer each other in terms of socioeconomic exchanges?

"I think the UK has been global for centuries, so I think they can help Chinese banks to think globally," she said. "But in return, Chinese banking can give the UK system an awareness of the Chinese market, which they sorely lack. How people like to do investment in China is completely different to how they like to do it in the UK."

For example, based on a report in May by the Rosen Consulting Group and the Asia Society, a non-profit educational organization, between 2010-15, Chinese buyers invested upward of $300 billion in the U.S. real estate market.

As China looks to shift its main economic engine from traditional manufacturing industries to investment targeting consumption and innovation, an FTA with the UK could also be a boon for the nation's creative industries. "In the future, we'll be branding not just for the European and the U.S. consumer, but for the Chinese consumer," said Pearson, who claimed that the Chinese consumer market will probably become the biggest, eventually.

Nonetheless, Wuttke noted that achieving such an agreement would not be a walk in the park. "How interested will China be in deepening links with the UK in a period of time when anything is in total uncertainty?" Adding to concerns of instability, the UK side also has to reconsider what leverage they have before engaging other countries in such talks.

"What is their bargaining power against the second largest economy in the world in real GDP terms? What do you have to give except good will?" Wuttke was reserved on the UK's prospects of an FTA, saying that, "to get something sensible out of China these days is very, very difficult. Britain has to find its feet with the European continent first and foremost."

Becoming a bridesmaid

Regardless of the future relationship between the two countries, opportunities and losses for businesses in China and the UK are likely to continue. But China's business environment is filled with impediments for foreign companies looking to take a slice of the lucrative market composed of 1.3 billion people. Earlier in August, one of the world's most valuable startups—ride-hailing company Uber—folded under market pressure after bleeding $2 billion in China and merged with home-grown rival Didi Chuxing. What can foreign companies do to get a leg up in one of the world's most challenging markets?

"The one bit of advice I give to British businesses is to 'learn to be the bridesmaid'," said Pearson, who asserted that you have to lose somewhat to win in China. Pearson coined this concept as "parallel opportunity for profit" after realizing that the way to win in China is to lose—by grafting yourself onto people in China in a mutually beneficial manner. "If you want to access the Chinese market, get with the program! Britain has to realize that the center of economic gravity is now closer to Shanghai than Sheffield."

Vedio: Clare Pearson on the 2016 G20 Hangzhou Summit

For more G20 articles, please scan

Copyedited by Chris Surtees

Comments to liuyunyun@bjreview.com