British politicians, led by chancellor George Osborne, have been drumming up business for the UK on a visit to China this week.
Osborne announced a plan to streamline visa applications by Chinese citizens. They will now be able to apply for a tourist visa with the same form they use to request permission to enter the 26-nation Schengen zone in Europe, rather than needing a separate visa for Britain.
Several building deals, including Chinese cash for the redevelopment of Manchester airport, were announced.
Financial links are being developed too. Sterling will be allowed to trade directly with the yuan and UK investors’ access to China’s stock and bond markets will improve.
China’s banks could now be allowed to establish branches in Britain, rather than the subsidiaries they currently run. So they will be subject to their own banking regulations rather than London’s.
What the commentators said
“Britain once had nothing to offer China but silver and opium,” said John Foley on Breakingviews. Now it’s holidays, banks and building sites. It’s about time we deepened ties with China, said The Times. We get twice as much investment from the Middle Kingdom as any other European state.
But China is still only the 14th-largest destination for British services, and the seventh-largest for our exports overall. Streamlining the visa application process is especially welcome. Only 127,000 Chinese visited Britain in 2010, while France and Germany each got more than 500,000.
The financial deals “may come to be seen as a watershed for both nations”, said The Daily Telegraph. The politburo gains “the global access it needs” and the City could bloom once more after being buffeted by the banking crisis.
As China opens up, currency trading and investment into the region will flourish and it makes sense for London to “want the biggest slice of that pie”. It’s already the world’s top foreign exchange centre.
However, allowing Chinese banks to set up branches is potentially risky, as UK regulators will have scant control over their activities.
Should a Chinese bank get into trouble having lured in British savers with high interest rates, “it could be messy”, agreed Ian King in The Times. Besides, would China ever allow a British bank to operate there subject to UK, not local regulations? “What do you think?”
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