00:00Gerard Lyons is a distinguished economist and senior independent director at the bank.
00:05of China and the UK, Gerard, welcome back to the programme, good to see you.
00:08Prime Minister Starmer saying that...
00:10China-UK relations are now in a good, strong place after this.
00:15How significant is it to be able to say that?
00:20It's very significant. The last year has seen a material change in the relation...
00:25...between the UK and China. This time a year ago, the economic and financial dialogue took...
00:30...place in Beijing. That was positive. Then we had a big trade meeting between the two countries...
00:35...in the summer. So it's very important that the UK Prime Minister made the first visit in eight years.
00:40The reality is that China is the second biggest economy in the world. It's Britain's third biggest...
00:45...trading partner. And there are key areas that both countries can compete...
00:50...and cooperate as well. In terms of cooperation, it's in terms of the green agenda.
00:55And China is just too big to ignore. And in all likelihood, China will become...
01:00...an even more important economy for Britain in the future, particularly...
01:05...if we build on this meeting in Beijing.
01:07You're immersed in this UK-China relationship...
01:10I mean, how do you assess the economic importance of China to the UK now?
01:15Well, it's very important, particularly actually if services...
01:20...start to really take off. When one looks at the bilateral relationship, the trade between the two...
01:25...countries is over £103 billion sterling. But Britain has a big trade...
01:30...deficit for about £70 billion. Basically, China...
01:35...export £70 billion, we export £30 billion. So the trade deficit is about £40 billion.
01:40The reality is this, that when you look at Britain's market share in China...
01:45...if it's less than 1%, that's not really going to improve. But in terms of services...
01:50...then Britain's market share is a low £2.7%. Now as China moves to...
01:55...the next stage of development, it will have to boost consumption in China...
02:00...it will move up the value curve, services will play a bigger role. There's a lot of opportunity...
02:05...there for Britain in terms of business, professional, financial services, as well as other...
02:10...areas such as AI. China and America lead on AI, but if you go down...
02:15...the list, Britain leads the next group, albeit a long way behind. So I think this is...
02:20...very important, as long as the detail follows up on the basis of the relationship...
02:25...that's been agreed in Beijing this time.
02:27It's a statement of the blindingly obvious, I guess...
02:30...to say it, but clearly global geopolitics are shifting. I mean, how do you see...
02:35...China-UK economic ties fitting into that shifting...
02:40...landscape?
02:41Okay, well the reality of the situation is that Britain...
02:45...will naturally align with the US when it comes to areas such as defence, security and...
02:50...intelligence. But there is clearly a red line and the other side of that in terms of business...
02:55...trade, professional services, economic development.
03:00There's lots of scope for Britain to deepen its relationship with China and indeed other countries...
03:05...around the world. And in terms of the trading relationship, it's not just China...
03:10...but both countries can cooperate together in terms of other markets as well.
03:14Britain has...
03:15...a relationship with China that Britain says is based on the three C's...
03:19...compete...
03:20...to challenge and cooperate. Businesses here in the UK would like another C...
03:25...added to that consistency. Therefore it's important that this political relationship...
03:30...we've seen over the last year...
03:32...gathers further ground. And I think the...
03:35...the city of London too will see lots of inward investment from Chinese banks...
03:39...I'm with the...
03:40...the bank of China here in London. So there's a lot that China can do in the UK...
03:44...particularly in the city of London...
03:45...and there's a lot that the UK can do in China, particularly in services...
03:48...and indeed help China...
03:50...kind of move up the value curve in services itself.
03:53And for businesses and investors...
03:55...watching...
03:56...the choreography of this visit...
03:58...I mean what are the...
03:59...key...
04:00...the vehicles that...
04:01...we should take away?
04:03Well...
04:04...the...
04:05...the most important one is the actual fact that it has taken place...
04:08...and that it is on the back...
04:10...of a number of bilateral meetings over the last year in terms of trade...
04:15...and economics and finance. This is the first meeting by UK...
04:20...or visit by UK Prime Minister to China for eight years. Now...
04:23...when I was in China at the end of last year...
04:25...one of the news items was about frosty relations between Germany and China...
04:30...since then we've seen France...
04:32...and China...
04:33...we've seen Canada and China...
04:35...have positive meetings. I think it's important for Britain to actually...
04:39...globally...
04:40...have good relations with all sorts of countries...
04:42...but particularly with the world's second biggest economy.
04:45...and coming back to your question...
04:46...the very fact that the meeting has taken place...
04:49...and the very fact...
04:50...that positive facts have come out of it...
04:52...is the real message to take away.
04:55Jared Lyons, good to see you. Thank you very much indeed...
04:57...for coming on the programme again.
04:59Jared Lyons, the Senior Independent...
05:00...and Director at the Bank of China in the UK.
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