Facing market pain, UK’s Reeves says ‘pragmatic’ China ties will help growth

BEIJING: British finance minister Rachel Reeves, facing criticism for travelling to China during financial market turmoil at home, said on Saturday that “pragmatic and predictable” relations with Beijing would help boost economic growth and trade.

Under pressure from a sharp rise in British interest rates, Reeves defended her budget at the start of the two-day visit to China, where she is seeking to revive high-level economic and financial talks that have been frozen since 2019.

“The fiscal rules that I set out in my budget in October are non-negotiable, and growth is the number one mission of this government to make our country better off,” Reeves told reporters at a Brompton bicycle shop in Beijing.

“That’s why I’m in China to unlock tangible benefits for British businesses exporting and trading around the world to ensure that we have greater access to the second-largest economy in the world.”

The rise in British government borrowing costs, due in part to a global bond selloff, prompted comparisons with the 2022 “mini-budget” crisis that forced then-Prime Minister Liz Truss out of Downing Street.

However, this week’s market moves have been less sharp and there has so far been no evidence of the strain on institutional investors that forced the Bank of England into emergency bond purchases in 2022.

After her bicycle shop visit, Reeves met Vice President Han Zheng, telling him it was “important to have open and frank dialogue in areas where we agree, but also in areas where we have different views.”

Reeves joins the UK-China Economic and Financial Dialogue meeting in Beijing with Vice Premier He Lifeng later on Saturday, before travelling to Shanghai, accompanied by Bank of England Governor Andrew Bailey and other finance leaders.

She will discuss financial services, trade ties and the importance of cooperation on issues like climate change, the Treasury said.

Reeves’ visit follows a dialogue opened last year between Prime Minister Keir Starmer and President Xi Jinping, the first between the two countries’ leaders since 2018.

The approach taken by Starmer’s Labour government, elected in July, contrasts with that of the previous Conservative administration, which took a robust approach to differences with China - particularly over human rights, Hong Kong and allegations of Chinese espionage.

Asked on Thursday if Reeves would raise human-rights issues, Starmer’s spokesperson said her visit would fit with London’s stance that it would take a strategic approach to China and challenge it “robustly” when necessary.

Starmer has long described his desire to build a relationship with China that is “rooted in the UK’s national interests” by boosting trade, a task that may become more difficult if US President-elect Donald Trump follows through on his threat to impose tariffs on all imports.

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Asked whether Britain would follow Washington and Brussels in imposing tariffs on Chinese electric vehicles, Reeves said: “We keep issues under review but we make decisions in our national interest.”

British car manufacturers “like Jaguar Land Rover export substantially to Chinese markets, and we want to help them to grow.”

China is Britain’s fourth-largest trading partner, accounting for goods and services trade worth almost 113 billion pounds ($138 billion).