11th January 2025 – (Beijing) British Finance Minister Rachel Reeves commenced her visit to China on Saturday, aiming to rekindle dialogue with the world’s second-largest economy as U.K. borrowing costs surge.
Reeves, officially known as the Chancellor of the Exchequer, is the highest-ranking British government official to visit China since former Prime Minister Theresa May’s discussions with President Xi Jinping seven years ago.
Her trip coincides with a significant rise in UK government bond yields, which reached a 17-year high this week, complicating the Labour Party’s efforts to stimulate economic growth. This increase escalates the cost for the government to finance its operations and manage debt, heightening the likelihood of spending cuts or tax increases.
While acknowledging recent shifts in global financial markets, Reeves reaffirmed that the fiscal rules established in her October budget are “non-negotiable.” “Growth is the number one mission of this government, to make our country better off,” she stated at the Beijing showroom of British bicycle manufacturer Brompton. “That’s why I’m in China, to unlock tangible benefits for British businesses exporting and trading internationally.”
Despite opposition calls for her to remain in the U.K. to address the financial crisis, a spokesperson for Prime Minister Keir Starmer confirmed that Reeves had no intention of cancelling her long-planned trip to China.
During her visit, Reeves is set to meet with her Chinese counterpart, He Lifeng, for discussions focused on economic and financial matters. They may look to revive the long-dormant annual trade and investment dialogue and explore potential cooperation in areas such as financial services.
China’s foreign ministry announced that the two sides would engage in discussions on macroeconomic policy, economic globalisation, trade, investment, and financial market development. Spokesman Guo Jiakun stated, “Strengthening economic and financial cooperation between China and the U.K. aligns with the interests of both countries and will add certainty and inject new momentum into the global economy.”
The visit also includes participation from the Governor of the Bank of England and the Chief Executive of the U.K.’s Financial Conduct Authority.
In light of the complex relationship between the two nations, a spokesperson for Starmer indicated that Reeves was prepared to address human rights issues during her discussions. Starmer has aimed to recalibrate the UK’s diplomatic stance towards China after tensions heightened under previous Conservative leadership due to trade disputes, human rights concerns, and Beijing’s actions in Hong Kong.
In November, Starmer became the first British Prime Minister to meet Xi since 2018 during the G20 summit in Brazil. However, trust remains tenuous, particularly following allegations that a Chinese businessman used connections with Prince Andrew to spy for the Communist Party, claims that Beijing has dismissed as “preposterous.”
On Thursday, British Foreign Secretary David Lammy elaborated on London’s strategy of “progressive realism” in managing relations with China, advocating for “pragmatic engagement” in areas of mutual interest, such as trade, climate change, global health, and AI regulation. However, he asserted that Britain would confront China on clear threats, including sanctioning companies aiding Russia’s invasion of Ukraine and advocating for the release of Hong Kong democracy advocate Jimmy Lai, as well as addressing human rights abuses in Xinjiang against Muslim minorities.
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