"We are starting to see a consistent dialogue between China and the UK"

CGTN Europe

CGTN Europe spoke to Gerard Lyons, Economist and Senior Independent Director at the Bank of China (UK).

Transcript

00:00Gerard Lyons is a senior independent director of the Bank of China in the UK.

00:06Well, the UK-China relationship is now warming up.

00:09It's gone through many different phases in the last decade.

00:12A decade ago, the relationship was very warm indeed.

00:15It was a golden era.

00:17The coolest point was probably in 2023.

00:20From a UK perspective, we had a refresh of what's called the Integrated Review,

00:24and then we had a new National Security Act.

00:27Both of those put China under the spotlight, so to speak.

00:31But since last summer, with a new Labour government in the UK,

00:34the relationship between the UK and China has certainly warmed up.

00:37The Prime Minister spoke with the President last October.

00:40We had the Foreign Secretary visiting China.

00:43Then in January of this year, we had the first economic and financial dialogue

00:48between the two countries for a number of years,

00:50and now we have the Foreign Minister visiting London.

00:53So a very warmer decade ago, then very cold two years ago, now much, much warmer.

00:59Let's talk specifically about trade and let's talk about business.

01:04What signal does this first UK-China strategic dialogue meeting in nearly seven years,

01:11what message does that send to global investors?

01:15Well, I think it's very positive in terms of the overall relationship between the UK and China.

01:20In terms of the message it sends, it's certainly a positive one.

01:24Now, when one looks at the relationship between the UK and China,

01:27one needs to differentiate between strategic and non-strategic areas.

01:32Strategic areas are defence, security, intelligence.

01:35Non-strategic is the overall business relationship.

01:38Now, the strategic relationship has, in many respects, held back the business relationship in recent years.

01:45So the fact that the strategic relationship itself is now being put on a firmer footing

01:50on the backdrop of the economic and financial dialogue,

01:53I think is a very positive one for the overall relationship.

01:57And also, coming back to your question about how the UK should be viewed internationally.

02:02When Wang Yi and David Lammy go home, what does a good outcome from this meeting look like?

02:10Well, this meeting is very much going to be focused on those strategic aspects

02:14in terms of the bilateral relationship and also given the global backdrop issues such as Ukraine.

02:20What I think is going to be important is not only that both sides see this in a positive light,

02:26but it's what comes next.

02:28So we've talked about the context.

02:30In some respects, the next big issue is what clear policies come out of this.

02:34And when one looks at UK-China trade, it's close to 89 to 90 billion pounds sterling.

02:41But within that, the UK has a big trade deficit.

02:44But more particularly, our service sector relationship is still quite low.

02:49China is Britain's fifth biggest overall trade partner.

02:53But in services, and Britain is one of the two biggest economies globally in terms of services,

02:58China is only our 12th biggest service sector trading relationship.

03:03And I think that's one of the areas I would be hoping to see significant improvement

03:07and movement on in the next year or so.

03:10In terms of the international landscape, what does the possibility of a UK-China reset

03:18in the relationship mean for the rest of the world?

03:22Yeah, well, the UK talks about the China relationship in terms of the three Cs,

03:27challenge, compete, cooperate.

03:30But in terms of your question, the other C is very important, namely consistency.

03:35The fact that we're now starting to see a consistent dialogue between both China and the UK is very positive.

03:43Naturally, there are going to be areas where both countries disagree.

03:46Naturally, there are going to be areas where both countries compete with one another.

03:50But at the same time, it's about the cooperation.

03:53So China will naturally want to invest more in the UK.

03:57And the UK naturally would like to see more service sector exports in particular towards China.

04:02But coming back to your question, from an international perspective,

04:05I think it's the consistency that will be the important message that comes out of this.

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