London is 'natural home' for Chinese finance: UK treasurer

By Al Mayadeen English
Source: Agencies
11 Jan 2025 10:38
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British Chancellor of the Exchequer Rachel Reeves is the most senior British official to visit China since former PM Theresa May met with President Xi Jinping seven years ago.

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British Treasury chief Rachel Reeves (L) meets Chinese Vice Premier He Lifeng before the start of the Financial Services Summit in Beijing on January 11, 2025 (AFP)

British Chancellor of the Exchequer Rachel Reeves indicated on Saturday that London is a "natural home" for Chinese financial services as she commenced her visit to Beijing amid ongoing bond market instability in the UK.

Reeves, the most senior British official to visit China since former Prime Minister Theresa May met with President Xi Jinping seven years ago, arrived as yields on British government bonds reached a 17-year high this week, further complicating the Labour Party’s efforts to boost economic growth.

The rising bond yields have increased the cost of government borrowing, raising concerns over potential spending cuts or tax hikes to manage public finances.

Speaking at the relaunch of long-suspended financial discussions between the UK and China, Reeves emphasized London’s role as a strategic hub for Chinese financial firms and investors.

She 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."

"Across capital markets, we have opportunities to deepen connections between the UK and China," she added at Beijing's Diaoyutai State Guesthouse during a meeting with her Chinese counterpart, He Lifeng.

Reeves also underscored the need for closer regulatory cooperation as the financial relationship between the two nations deepens.

In his remarks, He welcomed the forum as a platform to advance the internationalization of the Chinese yuan, strengthen capital market ties, and boost collaboration in areas such as green finance.

Reeves faced domestic criticism for proceeding with the visit amid economic turmoil, but a spokesperson for Prime Minister Keir Starmer defended her "long-standing" commitment to the trip.

Growth is number one mission of UK government

Addressing the financial situation earlier on Saturday, Reeves acknowledged recent market volatility but reaffirmed the government’s fiscal rules she set out in her October budget, calling them "non-negotiable".

"Growth is the number one mission of this government, to make our country better off," she said at British bicycle maker Brompton's Beijing showroom.

She affirmed that "growth is the number one mission of this government, to make our country better off."

"That's why I'm in China, to unlock tangible benefits for British businesses exporting and trading around the world," Reeves added at British bicycle maker Brompton's Beijing showroom.

The trip also marked the resumption of the delayed China-UK financial services dialogue. China’s Foreign Ministry confirmed that discussions would cover macroeconomic policy, trade and investment, industrial cooperation, and financial regulation.

Ministry spokesperson Guo Jiakun explained that "China and the UK strengthening economic and financial cooperation accords with the two countries' interests... and will add certainty and inject new momentum into the development of the global economy."

In addition to Reeves, the delegation includes the Bank of England Governor and the UK Financial Conduct Authority’s Chief Executive.

Amid the collaborative focus, Reeves was prepared to address human rights concerns, according to a Starmer spokesperson. The UK has sought to recalibrate its diplomatic relationship with China following years of tension over trade, alleged human rights violations, and Beijing’s actions in Hong Kong.

Starmer met with Xi Jinping at the G20 summit in Brazil last November, marking the first such meeting since 2018. However, trust remains fragile, with recent allegations that a Chinese businessman exploited ties with Prince Andrew to spy for Beijing, a claim China has dismissed as "preposterous".