Mapping the Impact of Brexit: What Will It Mean for China-EU Relations?

Written by | Monday, May 29th, 2017
@Eubulletin

The EU-China relations are of critical importance for both the EU and China but also for the world at large given their contributions to the global economy. Until 2025, when the current framework governing their mutual ties will come to its end, a major factor shaping the interactions between both partners will be the impact of the UK’s decision to leave the EU. This process will unfold amidst wider global uncertainty as well as uncertainty surrounding the likely nature and details of the EU-British deal. The options do not include only so-called ‘hard’ and ‘clean’ Brexit but also a number of other possibilities such as the UK trying to mitigate the impact of a hard Brexit by moving closer to the bloc or alternatively moving further away. These options will be affected by intervening variables such as the responses from EU institutions, member states but also global players, including China.

The extent to which Brexit will have an impact on the EU-China ties will largely depend on China’s strategic approach to the bloc as well as the EU’s own trajectory over the next ten years. For China, the scale of the UK’s interactions with China means that relative standing of the EU – and with it its status as an important player in the current Chinese diplomatic approach – is likely to go down, made up for by more of a focus on wider Europe or individual member states. That impact will, however, also depend on particular issues. The EU27 as a trade and investment partner for China will be weaker after Brexit and especially the impact on finance and investment will be significant. This will likely also include a relative shift in Chinese investment in Europe away from the UK.

In policy terms, Brexit will probably weaken liberal voices on economic policy towards China. How the EU-China relations might be different following the Brexit will depend on the kind of the Brexit deal. In case of the soft option, the UK could be broadly aligned with the EU on China policy in terms of transactions and more stable relationships. A harder option would likely make it more difficult to develop the mutual relationship within the triangle EU-UK-China, which would create challenges especially in the areas in which the UK is stronger than the rest of Europe, such as financial services. Divergent policy approaches in areas such as the regulation of investment or trade agreements could also create problems between the EU and UK in dealings with China. Overall though, EU-China ties will always take precedence over UK-China relations from Beijing’s perspective due to their greater and truly global scale and broader significance.

‘Brexit: Implications for EU–China Relations’ – Research Paper by Tim Summers – Chatham House, The Royal Institute of International Affairs.

(The Research Paper can be downloaded here)

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