British Treasurer Rachel Reeves said on Saturday that London was a “natural home” for Chinese finance during a visit to Beijing in the shadow of bond market turmoil at home.
Reeves, whose official title is Chancellor of the Exchequer, is the most senior British government official to visit China since Prime Minister Theresa May spoke to President Xi Jinping seven years ago.
The trip comes as the yield on British government bonds hit a 17-year high this week, further complicating the ruling Labor Party's faltering efforts to revitalize growth.
This increase makes it more expensive for the government to finance current operations and repay the debt, thus increasing the risk of having to reduce spending or increase taxes.
Speaking at the reopening of long-suspended financial negotiations between the two countries, Reeves said London was “a natural home for Chinese financial services companies and your clients raising capital, and a launching pad for businesses companies seeking to build a global footprint.
She welcomed “opportunities to deepen ties” in capital markets, but said the two countries needed to work more closely on “regulatory cooperation”.
At a later press briefing, Reeves said “common ground” had been found on financial services, trade, investment, climate change and other areas.
She said the total value of what had been agreed would be worth $US600 million ($732 million) to the UK economy over the next five years, without giving specific details.
His Chinese counterpart, Deputy Prime Minister He Lifeng, said experience showed that “as long as China and the United Kingdom respect each other… relations between our two countries can develop in a healthy way.”
Reeves has faced pressure from the parliamentary opposition to stay at home and deal with the financial crisis, but a spokesman for Prime Minister Keir Starmer said this week she had not not planning to cancel his “long-awaited” trip.
During a visit to British bicycle maker Brompton's showroom in Beijing earlier Saturday, Reeves acknowledged “movements in global financial markets over the past few days” but said the fiscal rules she laid out in his October budget were “non-negotiable”.
“Growth is the number one mission of this government, to improve the situation of our country,” she said, adding that her visit would “bring tangible benefits to British businesses”.
The visit was also attended by the Governor of the Bank of England and the Chief Executive of the UK's Financial Conduct Authority.
– Nice balance –
Starmer has sought to reset the UK's diplomatic relationship with China, balancing trade and cooperation opportunities with the need to challenge Beijing on areas such as human rights and the war in Ukraine.
In November, Starmer became the first British prime minister to meet Xi since 2018, when the two spoke at the G20 summit in Brazil.
But trust is fragile after allegations that a Chinese businessman used his ties to Britain's Prince Andrew to spy for the Communist Party, an allegation Beijing has called “absurd.”
Reeves said Saturday it was “important that we can have an open and frank exchange” on issues where London and Beijing disagree, including concerns about national security, market access and the impacts of subsidies and industrial policy.
Other points of contention, she added, were “Russia's illegal war in Ukraine… and in Hong Kong, where we have concerns about rights and freedoms, but where we have also common interests.
In response, he reiterated China's long-standing position that it is “neither one of the creators of the Ukrainian crisis nor a direct party” to the conflict.
He added that “Hong Kong can become a bridge to closer cooperation between our two sides.”
China is a long-time ally of Russia and has refused to condemn its invasion of Ukraine despite criticism from Western governments that Beijing is providing political and economic support for Moscow to wage an aggressive war.
Relations between the UK and China collapsed in 2020 after Beijing imposed a sweeping national security law on Hong Kong that significantly restricted freedoms in the former British colony.
mjw/sco
