‘Global Britain’ has emerged as a key discourse; a set of nascent policies; as well as a framework to support a reorientation in trade beyond the EU in post Brexit Britain. The phrase was used by the government shortly after the 2016 Brexit referendum by the then Prime Minister, Theresa May, who used term to reflect “our ambitious vision for Britain after Brexit”. More recently, in the 2021 Integrated review, is has been transformed from political discourse to an ambitious economic project of tilting the UK’s foreign policy interests towards the Indo-Pacific.
However what this means in practice, and how achievable it is, remains unclear. Examining earlier UK international trade relations provides a valuable way of understanding the how foreign policy goals become enacted through economic practice, and the challenges as well as the opportunities this entails.
My new book, Respatialising Finance, makes such a contribution by examining how and why London’s financial district became enrolled into China’s wider strategy of internationalising its currency, the renminbi (or RMB) from the mid 2010s onwards. In so doing, it draws on in-depth interviews I conducted with financiers, policymakers and journalists involved in this process from 2015 onwards in London and Beijing.
RMB internationalisation has seen a rapid and relatively recent transformation in how China’s currency can be used globally. This geography has been transformed from a situation in the early 2000s in which flows of RMB in and out of mainland China were heavily restricted to one in which, as of March 2021, the RMB was the fifth most commonly used currency for payments internationally behind the US dollar, sterling, the Euro and the Yen.
RMB internationalisation has a distinctive geography. China has enrolled a number of international financial centres to support the process, initially in Hong Kong and Singapore. Since the mid 2010s, this geography expanded to include a number of European financial centres. Frankfurt, Luxembourg and London have all sought to capitalise on this opportunity by fostering closer links with China’s financial and monetary authorities in order to support their own development as key offshore, i.e. beyond mainland China, RMB hubs.
Respatialising Finance specificallyexamines how London became what one of my interviewees described as the ‘partner of choice’ for China within RMB internationalisation. My findings show that political support for developing London’s role were critical. This included policy actors focused on London’s financial district, notably the City of London Cooperation. However, my research also shows that support for closer Sino-UK economic relations from national government under David Cameron’s administration was critical. This support came alongside more longstanding socio-cultural links between China and the UK that are more frequently identified as being important to the development of financial clusters.
Reflecting on these findings, I emphasise the political as well as the economic relations that underpinned London’s role in RMB internationalisation. However, whilst at one level facilitating the development of London’s role in RMB internationalisation, the reliance on political support has also meant that the trajectory of Chinese financial growth in London has not been linear and remains uncertain.
For example, when the UK acts more cautiously with respect to attracting Chinese foreign direct investment, or when wider foreign policy relations between London and Beijing become more strained, as they did following David Cameron’s meeting with the Dalai Lama in 2012, so London’s development as an offshore RMB centre slowed.
Since I completed the research for the book, recent political developments mean that the 2010s form a high point in contemporary Sino-UK financial relations. Most notably, the UK’s departure from the EU in January 2021 has meant that China is increasingly seeking to diversify its international partners. For example, with respect to green finance, there are close links emerging between the EU and China, despite the UK being committed to developing its own approach to green finance post Brexit.
Furthermore, following David Cameron’s resignation as Prime Minister in the wake of the Brexit referendum result, subsequent UK administrations have been less clearly focused on developing close trade links with China, including in relation to finance. This trend has been exacerbated as US trade relations with China become increasingly fraught, seen most clearly in debates about whether the Chinese technologies company Huawei would be allowed to participate in initially US, but subsequently UK 5G mobile telephone networks.
The case of Chinese finance in London shows that attempts to reorientate trade relations, as set out in post Brexit ‘Global Britain’ visions, need to be understood as political as well as economic projects. Respatialising finance shows the value of examining how macro-economic projects, such as RMB internationalisation and ‘Global Britain’ are enacted, reproduced and challenged on the ground. It is through these everyday economic and political relations that the geographical imaginations of policy, are ultimately played out. Such an approach is likely to be valuable as the UK develops further its own post Brexit geographical imaginations.
About the author: Sarah Hall is a Professor of Economic Geography at the University of Nottingham. Supported by funding from the ESRC, the British Academy, The Leverhulme Trust and the Nuffield Foundation, her research centres on financial services in the UK, London’s international financial district and its relations with Europe, China and North America. Her research has been covered my leading media outlets including The Financial Times, the BBC, The New York Times, The Daily Telegraph and Wired magazine. She was appointed an Editor of Geoforum in 2013 and held a British Academy Mid Career Fellowship (2015-2017). She is currently a Senior Fellow with The UK in a Changing Europe where her work focuses on Brexit and the UK’s financial services sector. She was elected a fellow of The Academy of Social Sciences in 2020.
Suggested further reading
This post is based on Sarah’s new book in the RGS-IBG Book Series, released on 6th May 2021:
Hall, S. (2021) Respatialsing Finance: Respatialising Finance: Power, Politics and Offshore Renminbi Market Making in London. RGS-IBG Book Series, Oxford: Wiley.
Hall, S. (2017). Rethinking international financial centres through the politics of territory: renminbi internationalisation in London’s financial district. Transactions of the Institute of British Geographers, 42, 489 – 502. https://doi.org/10.1111/tran.12172