BEIJING: British treasurer Rachel Reeves said Saturday that London was a “natural home” for Chinese finance during a visit to Beijing in the shadow of bond market turmoil back home.
Reeves, whose formal title is chancellor of the exchequer, is the most senior British government official to visit China since then-prime minister Theresa May held talks with President Xi Jinping seven years ago.
The trip comes as the yield on British government bonds reached a 17-year high this week, further complicating the ruling Labour Party’s sputtering efforts to revitalise growth.
The increase makes it more costly for the government to finance current operations and repay debt, raising risks it will have to make spending cuts or hike taxes.
Speaking at the reopening of long-suspended finance talks between the two countries, Reeves said London was a “natural home for China’s financial services firms and your clients raising capital, and a launchpad for Chinese firms seeking to build a global footprint”.
She hailed “opportunities to deepen connections” on capital markets, but said both 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 £600 million ($732 million) for the British economy over the next five years, without giving specific details.
Her Chinese counterpart, Vice Premier He Lifeng, said experience showed that “as long as China and the UK respect each other... relations between our two countries can develop in a healthy way”.
Reeves faced pressure from the parliamentary opposition to stay home and address the financial crisis, but a spokesperson for Prime Minister Keir Starmer said this week she had not planned to cancel her “long-standing” trip.
On a visit to British bicycle-maker Brompton’s Beijing showroom earlier Saturday, Reeves acknowledged “moves in global financial markets over the last few days”, but said the fiscal rules she set out in her October budget were “non-negotiable”.
“Growth is the number one mission of this government, to make our country better off,” she said, adding that her visit would “unlock tangible benefits for British businesses”.
The governor of the Bank of England and the chief executive of the UK’s Financial Conduct Authority also took part in the visit.
Starmer has sought to reset the UK’s diplomatic relationship with China, balancing opportunities for trade and cooperation with the need to challenge Beijing on areas like human rights and the war in Ukraine.
In November, Starmer became the first British prime minister to meet Xi since 2018, when the pair spoke at the G20 summit in Brazil.
But trust is fragile following claims that a Chinese businessman used his links with Britain’s Prince Andrew to spy for the Communist Party, an allegation Beijing has dismissed as “preposterous”.
Reeves said Saturday that it was “important that we can have open and frank exchange” on issues where London and Beijing disagreed, including concerns around national security, market access and the impacts of
subsidies and industrial policy.
Other points of contention, she said, were “Russia’s illegal war in Ukraine... and Hong Kong, where we have concerns on rights and freedoms, but where we also have shared interests”.
In response, He repeated China’s long-standing position that it is “neither a creator of the Ukraine 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 giving Moscow political and economic support to wage a war of aggression.
Relations between the UK and China plummeted in 2020 after Beijing imposed a sweeping national security law on Hong Kong which severely curtailed freedoms in the former British colony.
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