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China stresses stability, re-evaluates relationship with UK after Brexit

Ian Bremmer, Ph.D

(CNBC) – China underscored the importance of stability as it negotiates its economic transition and re-evaluates its relationship with Britain afterU.K. voters decided to leave the European Union (EU).

 On Monday, Chinese premier Li Keqiang sought to reassure that China would be able to maintain economic stability this year and in the long-term despite global financial markets being clobbered after the vote.

This came after Chinese foreign ministry spokesperson Hua Chunying Friday reiterated the government’s official line of respecting the choice made by the British people, according to a transcript of the ministry’s daily press briefing.

The People’s Bank of China on the same day said it had already prepared a contingency plan and would keep implementing a “stablecurrency policy.”

“China does not want Europe to fall apart. They don’t want a Trumppresidency. China understands that what they need right now is global stability,” said Ian Bremmer, founder and president of the Eurasia Group.

The communist country’s propaganda machine is also likely to take the opportunity to sing the virtues of a one-party state.

“China is now observing the Brexit event. This forms an argument for the policymakers and authorities in China to argue that (they) should never follow that path; that path of referendum, of separatism, will cause chaos not only for China but for the rest of the world,” Tsinghua University’s economics professor Li Daokui told CNBC on the sidelines of the World Economic Forum (WEF) in Tianjin.

“China will use this as a ‘bad example’ to strengthen the argument that the whole country should stay together,” Li said.

On Saturday, Chinese Communist Party newspaper Global Times was critical of the British referendum and what it meant for China.

“For the Chinese people, who are at a critical time to learn about globalization and democracy, they will continue to watch the consequence of Britain’s embracing of a “democratic” referendum,” the Global Times said in an editorial.

At the official level, however, the tone remained cordial.

Hua said China “attaches great importance” to its relations with the U.K. and is committed to continue to work on the relationship”, she added that Brexit is “sure to have repercussions in various ways, including but not limited to bilateral relations between China and the UK.”

Eurasia’s Bremmer said the outlook was not positive.

“There was a hope on the part of Britain that this was going to be a special friendship…That relationship is clearly not going to have the luster that a lot of people have expected,” he told CNBC on the sidelines of the WEF meeting in China.

Political uncertainty in the U.K. amid a leadership change is also likely to lead to fewer bilateral visits at high levels, said Bremmer.

“If you’re China (which is dealing with) the level of uncertainty over the future through electoral periods, through referendums, through governments collapsing, you don’t want a partner like that. You want a partner where no matter who’s in charge, the place is going to work the same way,” he added.

To be sure, Chinese officials acknowledged a broad fallout from the event even as they sought to reassure investors.

The ‘Brexit’ decision “will cast a shadow over the global economy, Reuters reported over the weekend, citing Lou Jiwei, China’s minister of finance, at the first annual meeting of the Asian Infrastructure Investment Bank in Beijing.

“The repercussions and fallout will emerge in the next five to 10 years,” said Lou.

But China will try to stress and maintain stability in the meantime–a silver lining in the current volatile environment, said Eurasia’s Bremmer.

“They absolutely want stability and that’s very different from the China we were thinking about five, ten years ago,” Bremmer added.

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