The UK’s Chancellor of the Exchequer, Rachel Reeves, arrived in China this weekend for the first UK-China Economic and Financial Dialogue (EFD) since 2019 in an effort to seek “common ground” on trade and investment with Beijing.
According to the UK Treasury department, Reeves met with her counterpart, Vice Premier He Lifeng, on Saturday for a series of conversations around the support for safe trade and investment.
It claims to have resulted in agreements worth GBP 600 million to the British economy as both sides agreed to deeper cooperation across areas such as financial services, trade, investment, and the climate to support secure growth.
“By finding common ground on trade and investment while being candid about our differences and upholding national security as the first duty of this government, we can build a long-term economic relationship with China that works in the national interest,” said Rachel Reeves.
“The agreements we’ve reached show that pragmatic cooperation between the world’s largest economies can help us boost economic growth for the benefit of working people – a priority of our Plan for Change. More widely, today is a platform for respectful and consistent future relations with China. One where we can be frank and open on areas where we disagree, protecting our values and security interests, and finding opportunities for safe trade and investment,” she said.
The minister is joined on her visit by the Indian-origin chief executive of the Financial Conduct Authority (FCA) Nikhil Rathi, Bank of England Governor Andrew Bailey and senior representatives from some of Britain’s biggest financial services firms.
Her visit comes at a time of turmoil for the UK economy, with the Opposition Tories accusing the minister of having “fled to China” rather than explain how she plans to fix the UK’s flatlining economy as the pound dropped, increasing government borrowing costs.
The government, however, is keen to highlight that the Chancellor’s visit is to follow up the meeting between Prime Minister Keir Starmer and President Xi Jinping at the G20 Summit last year.
The duo discussed deepening the economic and trade relationship shared by the UK and China, in order to yield mutual benefits, support growth, and have candid discussion on issues where our views differ.
As part of this, the Chancellor is expected to raise constraints on rights and freedoms in Hong Kong and to urge China to stop its “material and economic support for the Russian war effort in Ukraine”.
“This is part of the consistent, long term and strategic approach that the government is taking in managing the UK’s relations with China, rooted in UK and global interests. The government will cooperate where it can, compete where it needs to, and challenge where it must, including to protect our values and national security as the first duty of government,” the Treasury said.
Among the outcomes of Saturday’s EFD includes the granting of new licences and quota allocations for UK firms such as HSBC, Schroders, abrdn and Aspect Capital to enhance their business in China. Alongside this are initiatives to improve capital market connectivity – including a commitment to further enhance the UK-China Stock Connect and welcoming the launch of UK-China over-the-counter bond business – as well as initiatives on pensions, countering illicit finance and sustainable finance cooperation, the Treasury revealed.
China also announced plans to issue an inaugural overseas sovereign green bond – to be used to finance environmentally sustainable projects – in London during 2025.
The UK and China are also set to explore a Wealth Connect programme in recognition of the role asset management has to play in supporting growth.
While in Beijing, the Chancellor will also visit Brompton’s flagship store as the British bike brand celebrates its 50th anniversary year as a major success story for UK exports to China.
In addition to building on the financial services relationship, the UK-China EFD is aimed at bringing down barriers that British businesses face when looking to export or expand to China, supporting them to seize growth opportunities and follow in the footsteps of brands like Brompton, and other cornerstones of British culture and industry like Tata Jaguar Land Rover (JLR), Unilever and Diageo – three companies whom Reeves will also meet with during her visit.
Reeves is also to visit Shanghai on Sunday to engage with representatives across British and Chinese business. Alongside London, Shanghai is seen as a leading global financial centre which has long been important for UK-China economic and financial links, including in financial services with the landmark financial market connectivity initiative between the London Stock Exchange and the Shanghai Stock Exchange entering its sixth year.
According to official UK data, China is the UK’s fourth-largest single trading partner with a trade relationship worth almost GBP 113 billion and exports to China supporting over 455,000 jobs in Britain in 2020.