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Rachel Reeves is aiming to breathe new life into a project linking the London and Shanghai stock exchanges, touting financial services as the “highlight” of economic relations between Britain and China during a visit which begins on Saturday.
The Chancellor will argue for greater cooperation between Britain and China in bonds, pensions and capital markets as well as asset management, as she seeks to restart dialogue after a more than a five-year hiatus in high-level UK visits to the country.
The British government senses an opening to strengthen financial services ties with China as Donald Trump prepares to become US president after promising to take a tougher stance with Beijing, according to financiers briefed on the trip .
However, Reeves’ preparations for the three-day visit to Beijing and Shanghai were overshadowed by a sell-off in bond markets which this week pushed UK borrowing costs to their highest level since the 2008 financial crisis Conservative opposition politicians asked him to cancel the trip.
“We are witnessing an economic mess caused by Rachel Reeves, and the consequences of her disastrous budget continue to be felt. Yet, astonishingly, she made the choice to board a plane rather than stay and try to regain control,” said shadow chancellor Mel Stride.
“The Chancellor should turn around and return to the UK as a matter of urgency,” he added.
Reeves said Saturday after arriving in Beijing that the fiscal rules laid out in his October budget were “non-negotiable.”
The chancellor, who visited the Beijing store of British bicycle maker Brompton, said in comments reported by Reuters that she was in China “to unlock tangible benefits for British companies that export and trade around the world whole to ensure that we have better access to the second market. the largest economy in the world.
Speaking ahead of the trip, Reeves said she would find “common ground on trade and investment while being frank about our differences and upholding national security as the first duty of this government.”
She added: “We can build a long-term economic relationship with China that serves the national interest. »
The City of London is suffering from a lack of IPOs amid a steady flow of UK-listed companies moving their listings to other countries or going private.
Bank executives hope that Chinese companies that previously would have sought to list in the United States will instead choose to sell their shares in London if relations between Washington and Beijing deteriorate.
Shein, the Chinese online fast fashion retailer, filed confidential documents with British and Chinese regulators last year for an IPO in London with an expected market valuation of £50 billion.
That raised hopes among financiers that other Chinese companies could follow, despite controversy over allegations that Shein used forced labor in its sourcing of cotton from the northeastern Xinjiang region. western China.
Financial Conduct Authority chief executive Nikhil Rathi is accompanying Reeves on the three-day trip and may discuss Shein’s listing plans with his counterparts in Beijing. David Schwimmer, chief executive of the London Stock Exchange, is also part of the delegation.
Reeves saw the meetings as an opportunity to boost financial services exports to China, given that they currently represent only a fraction of those to the U.S. and EU, officials said.
The Shanghai-London stock link was launched with great fanfare in 2019, but has since struggled to gain traction. The aim was to encourage Chinese and British companies to list their shares in the respective countries.
But this was only done by six Chinese companies, raising $6.6 billion, and trading remained quiet. No British company has done this. The Chancellor hopes to facilitate this double registration between the United Kingdom and China.
The visit marks the resumption of the Sino-British economic and financial dialogue, a series of annual bilateral negotiations suspended since 2019 due to both the Covid-19 pandemic and the deterioration of diplomatic relations.
During his visit, Reeves will also meet executives from other British companies operating in China, including Jaguar Land Rover, Unilever and Diageo.
HSBC Chairman Mark Tucker, leading the trade delegation, and Standard Chartered Chairman José Viñals are among the City of London’s leading bankers with major Chinese operations this week.
The Governor of the Bank of England, Andrew Bailey, is also on the trip, alongside Baroness Shriti Vadera, chairman of insurer Prudential, Sir Douglas Flint, chairman of fund manager Abrdn, and Richard Oldfield, director of the manager of Schroders assets.
