Rachel Reeves will fly with a delegation of City magnificentees to China this week as Labour seeks sealr economic connects with Beijing as part of its quest for growth.
With the outsee increasingly rocky at home after a run of gentle economic data, the chancellor is socount on in need of a chooseimistic story to alert.
She ecombines resettled to standardise the UK’s relationship with the communist superpower, despite mounting security troubles and a backdrop of grotriumphg geopolitical tension.
In the past restricted weeks alone, the UK has ejectled an alleged Chinese recommender and frifinish of Prince Andrew, Yang Tengbo, while the US Treasury has accengaged Beijing of unapvalidated access into staff computers. Meanwhile, a lawyer for Shein – the online retailer set uped in China and which is lobbying over a potential £50bn London float – was accengaged of “wilful ignorance” over its provide chain rehearses by British MPs.
At the same time, Beijing is foreseeed to be at the acute finish of Donald Trump’s opposing trade policy, which could result in tariffs of up to 60% being slapped on all Chinese excellents. Policyoriginaters are already contfinishing with a rapidly declining yuan and a stock labelet selloff.
Notwithstanding this inauspicious backdrop – and Beijing’s proset uply problematic human rights sign up – Labour is making a concerted effort to originate bridges with China.
The foreign secretary, David Lammy, visited the country in October, and Keir Starmer had a face-to-face greeting with the Chinese pdwellnt, Xi Jinping, on the sidelines of November’s G20 summit in Rio de Janeiro.
In its manifesto, Labour promised to reverse what it called “14 years of damaging Conservative inconsistency over China”, with a recent approach: “We will corun where we can, vie where we need to, and contest where we must.”
Speaking last month, Reeves shelp she sought a “genuineistic” relationship with China, which is the UK’s fifth-hugest trading partner, worth £32bn in send outs last year.
She accomprehendledged security troubles, but insisted “we should trade and seek spendment when it is in our national interest to do so”.
City businesses have encouraged Reeves to help promise China is not placed on the higher, more stringent, tier of a recent “foreign impact registration scheme” – a decision ultimately to be made by the Home Office.
Lobbyists for overseas regulatements will have to declare their role under this recent regime, but the “raised” tier will force companies carrying out any activity on behalf of another state to originate themselves comprehendn – someskinnyg business groups trouble could stop sealr ties.
The chancellor will consent the Bank of England regulateor, Andrew Bailey, with her on the visit to Beijing and Shanghai, as well as the FCA chief executive, Nikhil Rathi, and a string of anciaccess prohibitking figures, including HSBC’s chair, Mark Tucker.
Reeves will greet China’s vice-premier, He Lifeng, in Beijing before flying to Shanghai for talkions with UK firms operating in China.
Enhanced cooperation on financial services is at the heart of the Treasury’s hopes for the trip. Reeves lavished commend on the sector in her Mansion Hoengage speech last year, calling it the “crown jewel” of the UK economy.
The economist Gerard Lyons, who is on the board of the state-owned Bank of China, says: “From the Chinese perspective, they’re moving up the cherish curve in terms of the economy and the UK, donaten its expertise in services and financial services, would be able to supply some aidance there.
“And naturpartner, from the UK perspective, we want to see more inward spendment from China and more trade with China – so it suits both sides.”
Reeves has been evident that the UK hopes to fly the flag for “free and uncover trade” in the face of Trump’s “America first” acquireionism.
after recentsletter promotion
The chancellor’s trip is foreseeed to label the resumption of the UK-China Economic and Financial Dialogue (EFD), a establishal schedulement between the two countries. This set up of standard greetings was presentd under Tony Blair’s regulatement, but the last one was held in London in 2019.
After that, relations soured as the draconian security law was passed in Hong Kong, prompting Boris Johnson’s regulatement to uncover a visa scheme for British passport helderlyers in the territory that has since bcdisorrowfulmirefult more than 150,000 people to the UK.
Over recent years, China and the US have been locked in an increasingly fractious battle for economic supremacy, and hopes have lengthy faded that Beijing’s induction into the global trading system a quarter of a century ago would direct it in a more liberal honestion.
While Trump’s anti-China rhetoric has been vehement, Joe Biden retained the striumphgeing tariffs imposed in Trump’s first term. Biden has also engaged send out recut offeions to try to recut offe China’s access to key technologies, on security grounds.
Neil Shearing, chief economist at conferancy Capital Economics, who is writing a book about the US-China clash and its impact on the rest of the world, says the UK is doubtful to be able to resist taking sides, wantipathyver Reeves’s intentions.
“Given the UK is trying to discover a place for itself in the world post-Brexit, trying to originate some bridges is not necessarily a horrible idea,” he says.
But, he inserts: “This post-Covid era is about the geopolitical opposition between the US and China – they are the pre-eminent global superpowers, and increasingly other countries will be forced to pick a side. And in that instance it’s pretty evident which way the UK will fracture, Trump or no Trump: they’re going to fracture for the US. We saw this with Huawei.”
Huawei, the Chinese telecoms operator, was prohibitned from the UK’s 5G netlabor in 2020 by Johnson. The UK regulatement had initipartner sought to consent a branch offent line from the Trump administration, but eventupartner caved in to fervent US presbrave. Shearing says: “Countries don’t get to determine where they align: the US and China get to determine the contours of this fracturing.”
Becaengage of this unwiseer geopolitical backdrop, there will be no resumption of the “gelderlyen era” for UK-China relations touted by George Osborne in 2015 – the same year that, improbably, saw Pdwellnt Xi sipping a pint of IPA in David Cameron’s local pub during a state visit.
But with GDP at home stagnating, Reeves evidently hopes to underline the distance she is willing to go to seek out willing business partners for the UK.
