This year is set to be the starting point of EU and UK parting their ways. Brexit is going to work like a divorce for both parties in the sense that it will not be pretty. However, how much this divorce will affect their slightly far removed neighbors in the global village, like us, remains to be seen.
The European Union and China are two of the biggest traders in the world. China is now the EU’s 2nd trading partner and the EU is China’s biggest trading partner. At the 16th EU-China Summit held in 2013 both sides agreed to the launch of negotiations of a comprehensive EU-China Investment Agreement. The agreement will provide for progressive liberalization of investment and the elimination of restrictions for investors to each other’s market. On the other hand, the eighth UK-China Economic and Financial Dialogue took place last November. UK exports to China have grown rapidly and Britain is home to more Chinese investment than any other European country.
Let’s look across Taiwan Strait. The EU is Taiwan’s fourth trade partner after China, the USA and Japan. In 2011, Taiwan was the EU’s seventh largest trading partner in Asia. EU exports to Taiwan of semi-finished products, machinery and equipment. Over the past years the EU has been the major source of foreign direct investment in Taiwan. On the other hand, Taiwan was at number 37 on the UK’s list of top export markets for goods in 2014, and the UK’s eighth largest market in Asia Pacific. Taiwan invested a total of US$21.7 billion outbound in 2015. The UK is now the second largest investment destination for Taiwan. A total of US$1.7 billion investment went to the UK, accounting for 7.8% of Taiwan’s overall outbound FDI in 2015, or two-thirds of investment in Europe.
It appears that both mainland China and Taiwan have invested more heavily in UK than in the mainland EU. In the past decades, investing in the UK means investing in the EU. Now, this is going to change. There is no doubt that we need to reconsider how to balance our trades with the EU and with the UK. We can only hope that they separate peacefully without causing too much collateral damage to bystanders, like us in the Far East.