Britain's choice, China's pain?

Britain's vote to leave the European Union sent shockwaves around the world, pummeling currency and equity markets and prompting the legal industry to brace for a wave of negotiations on issues ranging from M&A and partnership deals to trade agreements.

While Chinese leaders and academics have been quick to play down the impact and stress that the government has enough financial ammo to limit the fallout, law practitioners point out the huge stakes at hand. The UK is the largest recipient of Chinese investment into Europe, and China is the fifth-largest export market for British goods, according to a DLA Piper alert. Britain was also the first European country to join the Asian Infrastructure Investment Bank—Beijing's answer to Western multilateral financial institutions—while London is consolidating its position as a leading offshore renminbi hub.

The vote comes at an especially sensitive time, with Chinese outbound investment at its peak this year. While the pound's post-Brexit plunge will make British assets cheaper, Chinese companies may be wary of putting too much money on the table just yet, including those that were looking to acquire UK businesses as a gateway to the European market. The concerns include a potentially unsure risk outlook and the need for regulatory clarification of a number of trade-related matters.