(Bloomberg) — Chancellor of the Exchequer Rachel Reeves kicked off a two-day China visit Saturday, a landmark exchange highlighting the Labour government’s efforts to stay focused on long-term plans to get the British economy growing again even as fiscal concerns mount back home.
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Reeves, who had faced calls from Britain’s main opposition parties to cancel the trip because of market turmoil this week that put the UK government’s economic position in doubt, is seeking stable ties with China ahead of a meeting with Chinese vice premier He Lifeng in Beijing.
“We can build a long-term economic relationship with China that works in the national interest,” Reeves said in a statement issued by the Treasury. The UK wants to find “common ground on trade and investment while being candid about our differences and upholding national security as the first duty of this government,” she said.
The timing of the China trip is awkward for Reeves after a selloff in UK assets including gilts and the pound in recent days raised the prospect of her having to announce fresh spending cuts or tax increases to stabilize Britain’s fiscal position. The chancellor hasn’t yet addressed the market gyrations, instead continuing with her China itinerary.
Reeves is joined on the trip by Bank of England Governor Andrew Bailey, UK Financial Conduct Authority Chief Executive Nikhil Rathi and senior figures from banks including HSBC Holdings Plc. The trip is designed to revive high-level bilateral talks between Britain and China — on hold since the pandemic — and to consider areas of potential cooperation, including financial services.
Reeves is also planning to raise concerns over constraints on rights and freedoms in Hong Kong, along with China’s ongoing support for Russia’s war in Ukraine, the Treasury statement said.
The visit to China is part of Labour Prime Minister Keir Starmer’s efforts to mend relations with the world’s second-biggest economy after years of tensions under successive Conservative governments fueled by the pandemic, China’s crackdown on pro-democracy activists in Hong Kong and a series of cyberattacks and spying operations in Britain that UK officials have blamed on Beijing.
The British premier wants to promote growth domestically by encouraging foreign investment and boosting trade, and has described the relationship he’s seeking with China — which is the UK’s fourth-largest single trading partner — as based on “three Cs”: Cooperate, challenge and compete.
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For China, the meeting with Reeves comes as it is working to better relations with US partners ahead of Donald Trump’s return to the White House. President Xi Jinping’s government has made diplomatic overtures to steady ties with Japan, India and Australia in recent months, as Beijing braces for a possible tariff war with the US that could leave it seeking shelter in other markets.
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