A Bank of China executive has backed the City of London to help manage the risk posed by Beijing’s mammoth infrastructure programme, the belt and road initiative.
Sun Yu, general manager of the bank’s London branch, said the capital’s powerhouse financial sector could be a “solution provider” for the 900 billion US dollar (£666 billion) project designed to bolster economic growth across Asia and the wider world.
The programme has been branded the modern day silk road and will include a string of developments spanning the globe, from a high-speed railway in east Africa, a port in Sri Lanka and bridges in Bangladesh.
Speaking to the Press Association, he said: “China wants to embrace globalisation. The belt and road initiative is a great opportunity, while risk management is also critical.
“Commercial banks can provide the right price for the risk. London is a financial centre for many countries along the belt and road. London could be a kind of solution provider for the belt and road initiative, because London has the expertise to devise a solution for the risks.”
Britain is on the hunt for economic opportunities and has been attempting to lay the groundwork for a host of new trade deals to ensure the UK economy can prosper once Brexit is enforced.
However, Asia has responded with a mixed view of Britain’s break from the European Union, amid fears that London’s position as a leading financial centre could be diminished.
Japan wrote to the Government in September urging it to remain in the EU following concerns that its banks will lose the passporting rights needed to trade across the EU.
Despite the political pressure, Japanese banks have already started to adjust their operations, with Daiwa, Sumitomo Mitsui Financial Group (SMFG), Nomura and Mizuho Securities all bolstering their presence in Frankfurt.
Chinese and Indian banks are better placed to ride out the disruption, as many already have financial operations spread throughout the UK and Europe.
On Brexit, Sun Yu added: “Most Chinese banks are to review how to better manage overseas business, e.g. make some integration.
“Brexit throws uncertainty to London’s role in the process of refining the overseas business structure of Chinese banks.”
He said The Bank of China has been operating in the UK for 88 years and London remains an important international base for the lender.
Focusing on the wider impact of Brexit on the City, Sun Yu added: “There might be some job relocation from London to the EU, but for London in the long term it is unlikely any EU city can replace London as a global financial centre.
“It has the language, the legal system, the talent pool and the time zone on its side.
“London is also the most internationalised, with foreign banks accounting for over 50% of total banking assets.
“There are more dollars traded in London than in New York, and more euros traded than in Frankfurt. London is the launch pad starting point for almost all foreign banks looking to internationalise.”