Brexit could impact China’s exports to Europe, say analysts


China’s exports to its biggest trade partner, the European Union (EU), could be impacted by a potential trade barrier between the UK and the EU in the wake of the UK’s vote to leave the EU, analysts warn.

“Chinese companies have been using Britain, a country that was highly supportive to free trade and investment, as a spring board to the vast but heavily regulated EU market. Brexit has cast doubts on the outlook,” reports Xinhua.

An important reason is the British government has lobbied the EU to grant China favourable treatment including recognition of its market economy status, which would help reduce trade barriers including anti-dumping duties imposed on Chinese goods.

The UK accounts for 2.6 per cent of China’s exports, while the European Union’s share is 13 per cent at present.

“While we believe China is well placed to withstand the near-term pressures of Brexit, rising protectionism is a structural threat to China’s exports,” say analysts from Macquarie Hong Kong.

Economists with China International Capital Corporation (CICC) said after the Bruit, under a baseline scenario, the growth in China’s exports to the EU would drop by five to six percentage points and China’s overall export growth would fall by one percentage point, dragging down China’s GDP growth by 0.2 percentage points.