City policy chief calls for greater Belt and Road engagement

The City of London's policy chairman, Catherine McGuinness, wants the capital's financial services companies to engage more closely with the China-led Belt and Road Initiative so the district can maintain its financial strength amid Brexit uncertainties.

"The huge complexity of financing projects along those routes – each country and each project would bring their own risks and complexities – London would be able to help," McGuinness told China Daily.

The City's expertise in project finance, green finance, insurance, financial product structuring, legal services, and the United Kingdom's historical familiarity with countries stretching from Asia to Europe along the region covered by the Belt and Road Initiative would all help, McGuinness said.

McGuinness, who is a financial lawyer, stepped into her new role this month. Just before that, she visited Hong Kong and Shenzhen to discuss Belt and Road collaboration with government representatives and private-sector practitioners.

For her, engaging with China has particular significance with London dealing with the stress of Brexit. According to the latest research by the law firm Freshfields, which was published in May, City banks could move at least 9,000 jobs abroad as a result of Brexit.

Brexit is also high on her agenda, McGuiness highlights three goals for her team: ensuring continued access to European markets, creating clarity and stability in the Brexit transition, and ensuring continued access to talent.

But she also admits Brexit prompts London to look further afield for opportunities. As far as relations with China are concerned, her predecessor Mark Boleat had a high profile. During Boleat's five-year tenure, several Chinese banks gained London branch licenses, London established an official renminbi clearing bank, and a currency swap line between China and the UK's central bank was established.

Those initiatives all turned London into a leading offshore renminbi hub. In the first three months of 2017, 36.3 percent of global offshore renminbi exchange transactions were conducted through London, which put the UK capital in the top spot for offshore renminbi foreign exchange transactions, even ahead of Hong Kong.

Asked what her China-related legacy would be, McGuiness said it would be Belt and Road engagement.

"It's a very visionary project, something we feel we are natural partners to take forward."

Proposed by President Xi Jinping in 2013, the Belt and Road Initiative looks to build infrastructure and trade links between Asia, Africa, Europe and beyond. Significantly, China pledged $124 billion for the initiative during the initiative's inaugural two-day forum in Beijing on the weekend.

McGuinness's optimism is backed by London's "unparalleled advantage to act as a natural partner" for the Belt and Road Initiative, said Helena Huang, China Economist at ICBC Standard Bank.

"The uniqueness of China's Belt and Road Initiative is its policy preference for infrastructure investment and for emerging and frontier markets where local currency markets are less well developed," said Huang, who explained that London's financial, legal, and advisory services can all help those emerging markets build financial strength.

Contact the writer at cecily.liu@mail.chinadailyuk.com