Brexit's benefit in the long term

A photo of Chinese yuan [Photo/VCG]

After the United Kingdom's vote to leave the European Union on Friday, stock markets in Europe, North America and Asia have plummeted.

Some Chinese economists worry that Brexit may cause difficulties for China's plan to strengthen its strategic partnership with the EU through the UK, and that a possible trade protectionist approach by the EU following the UK's departure will negatively affect China's trade with the bloc.

Such worries are unfounded in the long term. It is certain to have a short-term impact on China's exports. However, in the long run, the UK's exit from the EU will create favorable political and economic conditions for China's further "rise" on the world stage, given that an EU without Britain will weaken its previous advantages in its competition.

Therefore, there will be increased possibilities for China to replace the bloc to become the second-largest player in the global economy.

At the same time, the pound's weakened status also means more possibilities for the renminbi to become a more important international currency. If China can realize stable economic growth and low inflation, the renminbi is likely to be more widely used in the global financial market.

On Thursday, China's central bank authorized China Foreign Exchange Trade System to announce the yuan's direct trading with the Korean won, a further step toward pushing trade between China and the Republic of Korea.

The weak pound against the US dollar following the UK leaving the EU may mean increased depreciation pressures on the renminbi. However, it is believed that with the decline of the dollar's safety and the continuous growth of China's economy at the expected speed, the renminbi will finally become an international currency like the euro, pound and the Japanese yen.