UK-Hong Kong economic relations set to grow: Expert
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HONG KONG - The UK’s decision to withdraw its membership from the European Union (EU) has brought some turbulence to the global economy, but Tse Kwok-leung, Hong Kong-based head of economics and policy research at Bank of China (Hong Kong) Ltd, believes t
Tse on Friday told a forum themed “Economic Impact of Brexit to China and Asia” that Hong Kong companies are actively dealing with the turbulence brought by Brexit, including paying more attention to cash flow management to increase the ability to fight against fluctuation.
Besides financial risks, he suggests Chinese mainland and Hong Kong companies with European exposure weigh their decision to headquarter in London while waiting for the final negotiation result between the UK and the EU.
He also advises these companies to consider establishing two business centers for European business separately — one in London and the other in the EU — especially when new trading terms are still uncertain.
But he admitted London’s position as a global financial center won’t be replaced by any other EU city due to its many advantages including tax system and language convenience.
Apart from short-term risks, Brexit may spell new opportunities in the long run which deserve further attention, Tse said.
“The economic and trade relationship between China and the UK will be closer because they are strongly complementary to each other’s development,” he said, adding that China, a country that manufactured its way to prosperity, is in great need of financial services in which the UK excels.
Leaving the EU, the UK can negotiate a trade agreement with China more freely, he said, predicting China could be one of the first to conclude such an agreement with the UK, but it will take at least four or five years.
Sino-UK relations after Brexit will also shed new light on the significance of Hong Kong, he said.
At the same time, he believes, without the aid of the UK, the EU will also strengthen its ties with Hong Kong when it comes to cooperate with partners in the Asia-Pacific region, one of the world’s most significant emerging markets.
“More enterprises will establish their Asia headquarters in Hong Kong,” he said in an interview with China Daily after the forum, “and it is one of the most important opportunities.”
Singapore could also obtain such opportunities, he noted, so Hong Kong could be the base for the EU and UK’s business with the Chinese mainland, while Singapore could be the counterpart for the ASEAN (Association of Southeast Asian Nations) business.
