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Speech by Ambassador Liu Xiaoming at The UK Financial Services Industry Beyond BREXIT Summit: Seize the Opportunity to be a Future Leader
Royal Garden Hotel London, 28th October 2019
2019/10/28

Chairman Anthony Belchambers,

Secretary John Glen,

Ladies and Gentlemen:

Good morning.

It is a real delight to attend the Beyond BREXIT Summit jointly hosted by City&Financial Global, the City of London, the TheCityUK and UK Finance.

As we all know, finance is at the centre of modern economy. It is in fact the lifeline of real economy. The UK is a financial power. Against the backdrop of BREXIT, the future of its financial sector is under intense scrutiny.

This year marks the 70th anniversary of the People's Republic of China and the 65th anniversary of China-UK diplomatic relations at the chargé d'affaires level. China is at a new historical starting point. So is China-UK relationship. Both countries are faced with a new situation and new opportunities in their financial cooperation.

Let me take the opportunity of this Summit to share with you my thoughts on China-UK financial cooperation.

In recently years, China-UK financial cooperation has made steady progress. It has been a highly integrated and mutually beneficial cooperation, showing multiple encouraging features.

First, there are multiple highlights.

At present, 35 large-scale Chinese financial institutions have operations in the UK. These include 8 Chinese banks that have set up branches in London to leverage the international status of the City of London and explore the global market.

In March, the China-UK joint venture Heng An Standard Life set up the first-ever foreign owned pension insurance business in China.

In June, the Shanghai-London Stock Connect was launched during the 10th EFD, marking the further integration of the capital markets of China and the UK.

In September, ICBC issued pound-denominated bonds at London Stock Exchange, the first ever by a Chinese bank. This has literally stepped on the accelerator for China-UK financial cooperation.

At the same time, British financial institutions have further expanded their business in China.

Second, there are multiple outcomes.

The UK is the first major Western country to join the AIIB, the first to inject capital into AIIB special fund and the first to sign the Guiding Principles on Financing the Development of the Belt and Road Initiative (BRI).

In January 2018, China Development Bank and Standard Chartered signed an MOU on 10 billion RMB for BRI projects.

Furthermore, the UK has all along played an important role in the internationalization of the RMB. London is already the world's largest RMB offshore trading centre and second largest RMB offshore clearing centre. In 2018, more than 30 RMB denominated bonds were listed in London.

Next week, I will attend an event by China Construction Bank to celebrate its five years as RMB clearing bank in London and to mark a total clearing volume of over 40 trillion RMB.

Third, there are multiple opportunities.

Both China and the UK are leaders in green finance and FinTech. In 2016, we co-hosted the G20 green finance study group and initiated the China-UK green finance taskforce to encourage financial institutions to strengthen innovation in green finance and connectivity in green bond market.

In November 2018, China and the UK jointly published the BRI green finance guidelines. Low-carbon sustainable development is incorporated into the BRI. This is a move in the direction of more effective management of environmental and social risks of investment. China-UK cooperation in green investment will have enormous potential.

FinTech has been a new area for China-UK financial cooperation. In 2016, the two countries announced the establishment of "FinTech Bridge China UK". The goal is to make FinTech a bridge for deepening China-UK business cooperation.

In February this year, Alipay acquired WorldFirst.

In March, Lord Mayor Estlin led a delegation to Shanghai, where the City of London and Lujiazui Financial District co-hosted a "FinTech forum" to explore new opportunities for cooperation.

Ladies and Gentlemen:

The Chinese economy is on the whole running smoothly. Structural adjustments have achieved optimising effect and long term prospects remain good.

  • The GDP by the end of the third quarter showed a 6.2% growth year on year, leading all major economies in the world.
  • Middle income population has exceeded 400 million and high quality human resource has topped 170 million.

Such strength in market potential and human resources will generate enormous power to drive economic growth in China as we continue to deepen reforms and open up wider to the outside world. According to the World Bank's Doing Business 2020 report, China's "ease of doing business" ranking has risen from 46 to 31. This is a vote of confidence in China's reform and opening up, and in China's economic prospects.

The one square mile is not only Britain's economic heart. It is also a leading financial, business and economic hub in the world. As Chinese businesses take roots here in the UK and gain strength for themselves, they are also powering the international financial services that London offers.

Looking ahead, China and the UK, one as an emerging financial power and the other as a traditional financial power, have a broad and promising future for cooperation. Here I sincerely hope that the financial sectors of our two countries will dovetail our strengths and take the lead in global financial cooperation.

First, we should strive to be the leader in building an open world economy.

Britain is known for its advanced financial industry, transparent market, sound legal system and highly internationalized financial services. These are the biggest attractions for financial institutions of all the countries including China to bring their investment here.

In China at the same time, we are adopting a host of opening-up measures in the financial sector. Recent months have seen China introducing multiple opening-up measures, including

  • opening up the credit rating market,
  • giving foreign banks access to Class-A lead underwriting business,
  • relaxing market access rules for foreign insurance companies,
  • and removing quota restriction on QFII.

China has taken concrete steps to open up its financial sector and hopes to join hands with the UK to strengthen mutually beneficial cooperation and contributing to building an open world economy.

Second, we should strive to be the leader in high quality BRI development.

China and the UK are natural partners in BRI cooperation. British enterprises are leading the world in financial and legal services as well as design and innovation. Chinese enterprises are strong in infrastructure, connectivity and financing. The two sides could leverage the BRI platform to strengthen cooperation in banking, investment, financing, insurance and asset management. There are also opportunities to create cooperation highlights in third markets, contribute to local economy and livelihood, and promote high-quality development of BRI.

Third, we should strive to be the leader in global innovation.

At present, the fourth industrial revolution and transformation has just begun. New technologies such as big data and cloud computing are upgrading, giving birth to new concepts such as FinTech, inclusive finance and green finance.

As a global financial centre, London has sound business environment and regulation, and rich expertise in financial management and operation. It is a fertile land for financial innovation and hi-tech enterprises.

China has a huge market and is quick at new tech application. It offers enormous potential for FinTech development.

Chinese and British businesses should seize the opportunities of digital, Internet and AI development, and join forces to explore means of innovative financial arrangement so that FinTech and other innovations will bring more benefit to more people in our countries and the rest of the world.

Ladies and Gentlemen:

Hong Kong is also an international financial centre. It is the headquarters of many British financial institutions hoping to expand their business in China. But recent situation in Hong Kong have caused extensive concern and inevitably affected the business environment.

I firmly believe that, with the strong support of Chinese Central Government and with the leadership of government of the Hong Kong Special Administrative Region, Hong Kong will bring an end to violence and restore law and order. Hong Kong will continue to be a financial bridge between the East and West. It will continue to display its charm and strength to the world. This oriental pearl will continue to shine.

I hope that British financial and business sector will keep your confidence in Hong Kong. I also hope to have your understanding and support.

Winston Churchill said, "The pessimist sees difficulty in every opportunity; the optimist sees the opportunity in every difficulty".

Britain is at a crucial stage of BREXIT. But I am confident that the UK will not lose its strength in financial services easily, and London will retain its status as an international financial centre.

I hope, and I believe, that the entrepreneurs of both China and the UK will seize the opportunities and overcome the challenges by enhancing cooperation in financial services and contributing more "golden fruits" to China-UK "Golden Era".

In conclusion, I wish the Summit great success!

Thank you.

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