The road – China is making substantial investment in ports and pipelines worldwide

Many are worried they could be used for military or other strategic purposes. No chinese reference to the maritime Silk Road is complete without mention of the voyages of Zheng He. The eunuch admiral, a Muslim at the Ming court, led seven voyages in the early 15th century in a fleet of vast sailing barges known as “treasure ships”. The official narrative is that he went abroad to spread peace, …

For the US and China, interdependence is a double-edged sword

Economic exchange can produce welfare gains, but it can also be used as a weapon. With the coronavirus outbreak, nature has reminded us how much the US and China are economically entangled. But politics is also involved as some in Washington form strategies for a second cold war and economic decoupling. Economic exchange can produce welfare gains for both sides, but it can also be used as a …

China’s dreams of world leadership are fading as its belt and road projects start to sour

The Belt and Road Initiative, hailed for promoting development, is coming under fire as debt burdens grow, reflecting a growing wariness of Beijing’s posturing as a global leader-in-waiting on an international stage that seeks to promote debate rather than censor it. President Xi Jinping has become accustomed to casting himself and China as natural heirs to the leadership of the global system. …

Investors need to position for a US-China clash of civilisations

A ‘great decoupling’ is under way between the incumbent superpower and its challenger. Financial markets welcomed last month’s truce in the long-running trade war between Washington and Beijing. But the “phase one” deal should fool no one. By parking core US complaints, including China’s weak intellectual property protection, forced technology transfer and pervasive state subsidies, the ceasefire …

UK-China ‘stand-alone’​ financial services FTA?

London’s financial services industry is likely to face barriers in its quest to continue selling its offerings into the EU Single Market after 31 December 2020. Will China take up the slack?

On the surface, it is a reasonably good fit – the City of London has expertise in depth, China has a vast market waiting to be supplied with retail financial products. And with a temporary lull in Trump’s brawl with China, US securities houses (already the main players in expanding their retail financial services presence in China) could become less welcome in the all-too-likely scenario of US-China trade hostilities resuming.

Australia was there, ready, with its iron ore and coal when China needed to build its physical infrastructure from the early 1980s. Now, in a reprise, London is ready and waiting to supply a vital component of China’s services infrastructure.

Let’s take a look at recent related developments:

2019, the year of the Pig, was auspicious for global asset managers wishing to enter, or scale up, their China operations. Increasingly relaxed policies and regulations, for the first time, allowed foreign financial institutions to apply for a licence to own 100% of their own retail product distribution business in China. More institutions will follow, but we are already seeing a number of major foreign entities, mainly American, including investment manager Fidelity International, in the process of applying for their own local licenses – a licence which will grant them access to the massive retail investment market in China.

However, in spite of the prevailing optimism, it is not destined to be an easy ride: the local competition is fierce and unforgiving. Throw Trumpian turbulence into the China mix and a lonely UK’s overarching need for any trade deal post Brexit, then the pieces may fall into perfect alignment.

In 2020, the Year of the Rat, we may see a torrent of clever, quick-thinking City rats heading to Beijing and Shanghai hoping to catch a ride on a potential UK-China financial services free trade agreement.

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