CGTN Europe spoke to Gerard Lyons, Economist and Senior Independent Director at the Bank of China (UK).
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00:00Gerard Lyons is a senior independent director of the Bank of China in the UK.
00:06Well, the UK-China relationship is now warming up.
00:09It's gone through many different phases in the last decade.
00:12A decade ago, the relationship was very warm indeed.
00:15It was a golden era.
00:17The coolest point was probably in 2023.
00:20From a UK perspective, we had a refresh of what's called the Integrated Review,
00:24and then we had a new National Security Act.
00:27Both of those put China under the spotlight, so to speak.
00:31But since last summer, with a new Labour government in the UK,
00:34the relationship between the UK and China has certainly warmed up.
00:37The Prime Minister spoke with the President last October.
00:40We had the Foreign Secretary visiting China.
00:43Then in January of this year, we had the first economic and financial dialogue
00:48between the two countries for a number of years,
00:50and now we have the Foreign Minister visiting London.
00:53So a very warmer decade ago, then very cold two years ago, now much, much warmer.
00:59Let's talk specifically about trade and let's talk about business.
01:04What signal does this first UK-China strategic dialogue meeting in nearly seven years,
01:11what message does that send to global investors?
01:15Well, I think it's very positive in terms of the overall relationship between the UK and China.
01:20In terms of the message it sends, it's certainly a positive one.
01:24Now, when one looks at the relationship between the UK and China,
01:27one needs to differentiate between strategic and non-strategic areas.
01:32Strategic areas are defence, security, intelligence.
01:35Non-strategic is the overall business relationship.
01:38Now, the strategic relationship has, in many respects, held back the business relationship in recent years.
01:45So the fact that the strategic relationship itself is now being put on a firmer footing
01:50on the backdrop of the economic and financial dialogue,
01:53I think is a very positive one for the overall relationship.
01:57And also, coming back to your question about how the UK should be viewed internationally.
02:02When Wang Yi and David Lammy go home, what does a good outcome from this meeting look like?
02:10Well, this meeting is very much going to be focused on those strategic aspects
02:14in terms of the bilateral relationship and also given the global backdrop issues such as Ukraine.
02:20What I think is going to be important is not only that both sides see this in a positive light,
02:26but it's what comes next.
02:28So we've talked about the context.
02:30In some respects, the next big issue is what clear policies come out of this.
02:34And when one looks at UK-China trade, it's close to 89 to 90 billion pounds sterling.
02:41But within that, the UK has a big trade deficit.
02:44But more particularly, our service sector relationship is still quite low.
02:49China is Britain's fifth biggest overall trade partner.
02:53But in services, and Britain is one of the two biggest economies globally in terms of services,
02:58China is only our 12th biggest service sector trading relationship.
03:03And I think that's one of the areas I would be hoping to see significant improvement
03:07and movement on in the next year or so.
03:10In terms of the international landscape, what does the possibility of a UK-China reset
03:18in the relationship mean for the rest of the world?
03:22Yeah, well, the UK talks about the China relationship in terms of the three Cs,
03:27challenge, compete, cooperate.
03:30But in terms of your question, the other C is very important, namely consistency.
03:35The fact that we're now starting to see a consistent dialogue between both China and the UK is very positive.
03:43Naturally, there are going to be areas where both countries disagree.
03:46Naturally, there are going to be areas where both countries compete with one another.
03:50But at the same time, it's about the cooperation.
03:53So China will naturally want to invest more in the UK.
03:57And the UK naturally would like to see more service sector exports in particular towards China.
04:02But coming back to your question, from an international perspective,
04:05I think it's the consistency that will be the important message that comes out of this.