● The depreciation of the renminbi below 7 to the US dollar last week marks a significant development in the US-China trade war. ● In addition to increased production costs, companies may see a slight rise in the rate of inflation. ● Signals from Beijing indicate that after the initial drop, the renminbi is unlikely to devalue too dramatically, unless further developments in the trade war push Beijing towards a more aggressive monetary policy.
Tuesday 30th July marked the implementation of China’s revised Negative and Encouraged Lists for foreign investment by the National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM). These effectively act as a manual for foreign businesses in China to understand which sectors they are prohibited and restricted from investing in by the authorities, and which enjoy incentives.
The UK is scheduled to exit the European Union on the 31st October 2019. With the final two Conservative Party leadership candidates, Boris Johnson and Jeremy Hunt, refusing to rule out the possibility of a no-deal Brexit, British businesses must now prepare for the potential subsequent fallout. A no-deal Brexit would mean the end of the UK’s access to the European Single Market and Customs Union, replaced by alignment with World Trade Organisation rules on cross-border trade.
Earlier this month the Chancellor Philip Hammond hosted Chinese Vice Premier Hu Chunhua in London for this year’s EFD to discuss economic challenges and trade and investment opportunities between the UK and China. With the findings of BritCham’s inaugural Position Paper having informed the discussions between the two sides, Thursday’s briefing served as a valuable platform from which government and business could talk about how the market access barriers facing British companies were addressed.
The 10th UK China Economic and Financial Dialogue (EFD), held on Monday, has resulted in £503 million worth of deals between Chinese and British companies. The British Chamber of Commerce in China appreciates the commitment of both governments to an open, fair and non-discriminatory investment environment. We also welcome the inclusion in the EFD's agenda of several key matters raised by British business in the Chamber's Position Paper 2019.