UK hopes for start of golden decade

President Xi Jinping shakes hands with visiting British Prime Minister David Cameron in Beijing, Dec 2, 2013. [Photo/Xinhua]

When President Xi Jinping arrives in the United Kingdom next Monday, the UK government will lay out the red carpet to demonstrate the importance it attaches to the relationship with China which some describe as being at the start of "a golden decade".

Like Xi, the UK Prime Minister David Cameron is in a strong position as leader. He has a clear majority in parliament, the opposition is weak and divided, and the economy is performing well. His main concern is winning a referendum on the UK's continuing membership of the European Union in the next two years.

When the influential UK finance minister, George Osborne, visited China recently, he said that the UK "wants to be China's best partner in the West". Osborne is a big fan of China. He backpacked around China as a student and has encouraged his daughter to learn Mandarin. He is the prime mover in the UK's approach toward China, arguing that both sides can benefit significantly from closer ties especially in the economic field.

The UK joined the Asia Infrastructure Investment Bank despite the objections of the United States. The UK has supported the renminbi becoming part of the International Monetary Fund's basket of reserve currencies. And the UK has taken the lead in promoting Chinese investment in Europe, including the sensitive information technology sector, again in the face of opposition from the US.

The UK is also keen to develop ties between the London and Shanghai stock markets and to develop London as a center for internationalization of the renminbi, including issuing RMB bonds.

These moves demonstrate the UK's underlying confidence in the Chinese economy. Cameron will, however, press Xi for an update on his economic reform plans arguing that all G20 members have a strong interest in the success of the Chinese economy. He will encourage Xi to fight protectionism and continue to open Chinese markets to outside investors.

Bilateral trade is growing fast with UK exports to China almost doubling since 2010. China is now the UK's sixth largest export market. Officials expect this trend to continue and UK exports could be worth over ￡30 billion ($45.91 billion) by 2020.