Why the UK Election Will Provide a Positive Result for China-Britain Business

The surprise call by the British Prime Minister, Theresa May, to hold elections in early June will be welcomed by Beijing. The Chinese are mindful of British political influence in Europe, which is subject to change as a result of the Brexit vote, and of both political approval from Downing Street, and collaboration over bilateral trade. Despite a recent three year dip in overall China-British trade, there have been some encouraging recent signs of a 2017 recovery, and an increase of British exports to China.

The political issue with China, however, is that its system is based on a one-party state, and despite all the protestations about democracy, it remains embedded within this system. There are distinct advantages over democratic nations, archly observed by the Chinese Foreign Minister when the latest United States President was elected, commenting “This is the type of candidate that can happen in a democratic system” suggesting that Beijing was decidedly unimpressed.

The pros and cons of President Trump aside, the fundamental criticism over the democratic process from Beijing is the ongoing cycle of electing new leaders. In fact, it can be a problem for national development in democratic countries: some nations need long term visions and goals to be put into effect, and constantly changing government every four years arguably damages this. One could point to Mongolia on one side, a relatively small democracy, and India on the other, the world’s largest, where it could be argued in both cases the democratic process has not always been kind when measured against national progress. The lack of policy continuity remains the weak link in the democratic process, and is why Beijing will see the UK elections as a positive.

RELATED: China – UK Trade: The Effects of Brexit

Theresa May has a good point when it comes to her timing – the Conservative Party she leads is way ahead in opinion polls. Yet there are several issues to deal with. A currently small majority in parliament, the problem of being an unelected leader (she stepped into the role after David Cameron’s resignation), and the threats emanating from a Scottish government wishing to devolve, as well as the difficulty of Brexit negotiations on top of all this.

Despite these challenges, May’s Conservative Party is expected to win the election by a landslide. That fits in very well with Beijing, who prefer to see leadership continuity. May’s government is cautiously pro-Chinese, and a winning leader with a larger majority and with a mandate for another four years will be seen as what Beijing refers to as “sustainable politics”.

Knowing who will be in power, and what individuals and policies are likely to continue, will be music to Beijing’s ears. It should not be forgotten that while Brexit talks continue, the UK will need to replace EU free trade with other opportunities. For China, cementing a separate trade deal with a UK about to be free of the political constraints of the EU will be greeted with relief. In fact, the very face of British trade policy will change. I outlined some of the scenarios, including better engaging with China’s OBOR, the potential for revamping the Commonwealth, and the possibility of negotiating a Free Trade Agreement with the Eurasian Economic Union as part of relocating the traditional Western terminus of the Silk Road from Europe to London.

Dealing with a pro-Chinese London, eager to make a positive impact in going at it alone after it leaves the EU, hints at the promise of much closer British-Chinese collaboration. Beijing will be quietly satisfied if it can rely on the UK until the end of this decade, and possibly well beyond.

Dezan Shira & Associates and the United Kingdom: Country Brochure (Complimentary Download)
This year, Dezan Shira & Associates turns 25 years old in Asia. We retain extremely strong ties to the United Kingdom, employ numerous British nationals throughout Asia, and have serviced several hundred British companies in China and the Asian region at large since 1992. Explore Dezan Shira’s partnership with British investment in China in this brochure.

An Introduction to Doing Business in China 2017

This Dezan Shira & Associates 2017 China guide provides a comprehensive background and details of all aspects of setting up and operating an American business in China, including due diligence and compliance issues, IP protection, corporate establishment options, calculating tax liabilities, as well as discussing on-going operational issues such as managing bookkeeping, accounts, banking, HR, Payroll, annual license renewals, audit, FCPA compliance and consolidation with US standards and Head Office reporting.

Payroll Processing in China: Challenges and Solutions

In this issue of China Briefing magazine, we lay out the challenges presented by China’s payroll landscape, including its peculiar Dang An and Hu Kou systems. We then explore how companies of all sizes are leveraging IT-enabled solutions to meet their HR and payroll needs, and why outsourcing payroll is the answer for certain company structures. Finally, we consider the potential for China to emerge as Asia’s premier payroll processing center.

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